Eminent Domain and Taxation
Eminent Domain and Taxation
Eminent Domain and Taxation
A. In General
1. Republic vs. de Castellvi, August 15, 1974
Facts:
After the owner of a parcel of land that has been rented and occupied by the
government in 1947 refused to extend the lease, the latter commenced
expropriation proceedings in 1959. During the assessment of just compensation,
the government argued that it had taken the property when the contract of lease
commenced and not when the proceedings began. The owner maintains that the
disputed land was not taken when the government commenced to occupy the
said land as lessee because the essential elements of the “taking” of the
property under the power of eminent domain, namely (1) entrance and
occupation by condemnor upon the private property for more than a momentary
period, and (2) devoting it to a public use in such a way as to oust the owner and
deprive him of all beneficial enjoyment of the property, are not present.
Issue:
Whether or not the taking of property has taken place when the condemnor has
entered and occupied the property as lessee.
Held:
No, the property was deemed taken only when the expropriation proceedings
commenced in 1959.
In the case at bar, these elements were not taken when the government entered
and occupied the property under a contract of lease. Therefore, the "taking" of
the Castellvi property should not be reckoned as of the year 1947 when the
Republic first occupied the same pursuant to the contract of lease, and that the
just compensation to be paid for the Castellvi property should not be determined
on the basis of the value of the property as of that year. The lower court did not
commit an error when it held that the "taking" of the property under expropriation
commenced with the filing of the complaint in this case.
B. Necessity of Taking
FACTS:
The City of Manila, plaintiff herein, prayed for the expropriation of a portion of a
private cemetery for the conversion into an extension of Rizal Avenue. Plaintiff
claims that it is necessary that such public improvement be made in the said
portion of the private cemetery and that the said lands are within their jurisdiction.
Defendants herein answered that the said expropriation was not necessary
because other routes were available. They further claimed that the expropriation
of the cemetery would create irreparable loss and injury to them and to all those
persons owing and interested in the graves and monuments that would have to
be destroyed.
The lower court ruled that the said public improvement was not necessary on the
particular-strip of land in question. Plaintiff herein assailed that they have the right
to exercise the power of eminent domain and that the courts have no right to
inquire and determine the necessity of the expropriation. Thus, the same filed an
appeal.
ISSUE:
Whether or not there was necessity in the taking of the portion of a private
property for public use.
HELD:
The very foundation of the right to exercise eminent domain is a genuine
necessity, and that necessity must be of a public character. The ascertainment of
the necessity must precede or accompany, and not follow, the taking of the land.
The record does not show conclusively that the plaintiff has definitely decided
that there exists a necessity for the appropriation of the particular land described
in the complaint. The municipal board believed at one time that other land might
be used for the proposed improvement, thereby avoiding the necessity of
distributing the quiet resting place of the dead.
In the present case, even granting that a necessity exists for the opening of the
street in question, the record contains no proof of the necessity of opening the
same through the cemetery. The record shows that adjoining and adjacent lands
have been offered to the city free of charge, which will answer every purpose of
the plaintiff.
Issue:
Is the Republic liable for just compensation if in enforcing the legal easement of
right-of-way on a property, the remaining area would be rendered unusable and
uninhabitable?
Held:
"Taking," in the exercise of the power of eminent domain, occurs not only when
the government actually deprives or dispossesses the property owner of his
property or of its ordinary use, but also when there is a practical destruction or
material impairment of the value of his property. Using this standard, there was
undoubtedly a taking of the remaining area of Andaya's property. True, no
burden was imposed thereon and Andaya still retained title and possession of the
property. But, as correctly observed by the Board
and affirmed by the courts a quo, the nature and the effect of the floodwalls
would deprive Andaya of the normal use of the remaining areas. It would prevent
ingress and egress to the property and turn it into a catch basin for the
floodwaters coming from the Agusan River.
Facts:
The Court of Appeals Decision as well as its Resolution, affirming the decision of
the Regional Trial Court of Danao City, Branch 25 which granted the complaint
for expropriation filed by herein petitioner National Power Corporation (NPC)
against herein respondents "Petrona Dilao et al." are being assailed in the
present Petition for Review on Certiorari. To implement its Leyte-Cebu
Interconnection Project, the NPC filed before the Regional Trial Court of Danao
City a complaint for expropriation of parcels of land situated at Baring and
Cantumog, Carmen, Cebu against Dilao and siblings, and Enriquez. A day after
the complaint was filed , NPC filed an urgent ex parte motion for the issuance of
writ of possession of the lands. Dilao filed her Answer with Counterclaim while
Enriquez did not. On May 9, 1996, Branch 25 of the RTC Danao, issued an Order
granting NPC’s motion for the issuance of writ of possession. It then appointed a
Board of Commissioners to determine just compensation.
Issue: Whether or not the just compensation for right-of-way easement being
expropriated is proper.
Ruling:
There are two stages in every act of expropriation. The first is concerned with the
determination of the authority of the plaintiff to exercise the power of eminent
domain and the propriety of its exercise in the context of the facts involved in the
suit. The second phase of the eminent domain action is concerned with the
determination by the court of “the just compensation for the property sought to be
taken.” The order fixing the just compensation on the basis of the evidence
before the commissioners would be final. In the case at bar, the easement of
right-of-way is definitely a taking under the power of eminent domain.
Considering the nature and effect of the installation of the transmission lines, the
limitation imposed by NPC against the use of the land for an indefinite period
deprives private respondents of its ordinary use. It cannot be opposed that NPC’s
complaint merely involves a simple case of mere passage of transmission lines
over Dilao et. Al’s sproperty. Aside from the actual damage done to the property
transversed by the transmission lines, the agricultural and economic activity
normally undertaken on the entire property is unquestionably restricted and
perpetually hampered as the environment is made dangerous to the occupant’s
life and limb.
The just compensation recommended, which was approved by the trial court, to
be just and reasonable compensation for the expropriated property of Dilao and
her siblings.
FACTS:
NAIA 3, a project between the Government and the Philippine International Air
Terminals Co., Inc (PIATCO) was nullified. The agreement had authorized
PIATCO to build a new international airport terminal (NAIA 3), as well as a
franchise to operate and maintain the said terminal during the concession period
of 25 years.
HELD:
The government should pay reasonable expenses incurred in the construction of
the Terminal. Indeed it should, otherwise it will be unjustly enriching itself at the
expense of Piatco and, in particular, its funders, contractors and investors — both
local and foreign. After all, there is no question that the State needs and will
make use of Terminal III, it being part and parcel of the critical infrastructure and
transportation-related programs of the government.
The structures comprising the NAIA IPT III facility are almost complete and that
funds have been spent by PIATCO in their construction. For the government to
take over the said facility, it has to compensate respondent PIATCO as builder of
the said structures. The compensation must be just and in accordance with law
and equity for the government can not unjustly enrich itself at the expense of
PIATCO and its investors.
D. Public Use
1. Mactan-Cebu International Airport Authority vs. Lozada, Sr.,
February 25, 2010
FACTS:
Respondents are the owners of a certain Lot 88 located in Lahug which
was the subject of one expropriation suit for the expansion and improvement of
the Lahug Airport. In 1961he trial court rendered judgement in favor of the
Republic and ordered the latter to pay the owner, the fair market value of said Lot
at P3.00 per sq. meter with consequential damages.
The affected landowners appealed. But while pending appeal, the Air
Transportation Office came into an agreement with the land owner wherein the
owners of the lots affected by the expropriation proceedings would either not
appeal or withdraw their appeals in consideration of a commitment the the
expropriated lots would be resold at the price they were expropriated in the even
that ATO abandons the Lahug Airport.
The projected improvements and expansions on the Lahug Airport was not
pursued. The landowners immediately contacted the CAA Director about the
repurchase but they were told that it may still be used as an emergency DC-3
Airport.
ISSUE:
Whether or Not the landowners can repurchase a land that was expropriated for
a certain use but was never really used the same way?
RULING:
Yes, the landowners can repurchase such land.
It is well settled that the taking of private property by the Government's power of
eminent domain is subject to two mandatory requirements: (1) that it is for a
particular public purpose; and (2) that just compensation be paid to the property
owner. These requirements partake of the nature of implied conditions that
should be complied with to enable the condemnor to keep the property
expropriated.
More particularly, with respect to the element of public use, the expropriator
should commit to use the property pursuant to the purpose stated in the petition
for expropriation filed, failing which, it should file another petition for the new
purpose. If not, it is then incumbent upon the expropriator to return the said
property to its private owner, if the latter desires to reacquire the same.
Otherwise, the judgment of expropriation suffers an intrinsic flaw, as it would lack
one indispensable element for the proper exercise of the power of eminent
domain, namely, the particular public purpose for which the property will be
devoted. Accordingly, the private property owner would be denied due process of
law, and the judgment would violate the property owner's right to justice, fairness,
and equity.
In light of these premises, we now expressly hold that the taking of private
property, consequent to the Government's exercise of its power of eminent
domain, is always subject to the condition that the property be devoted to the
specific public purpose for which it was taken. Corollarily, if this particular
purpose or intent is not initiated or not at all pursued, and is peremptorily
abandoned, then the former owners, if they so desire, may seek the reversion of
the property, subject to the return of the amount of just compensation received. In
such a case, the exercise of the power of eminent domain has become improper
for lack of the required factual justification.
If x x x land is expropriated for a particular purpose, with the condition that when
that purpose is ended or abandoned the property shall return to its former owner,
then, of course, when the purpose is terminated or abandoned the former owner
reacquires the... property so expropriated. If x x x land is expropriated for a public
street and the expropriation is granted upon condition that the city can only use it
for a public street, then, of course, when the city abandons its use as a public
street, it returns to the former... owner, unless there is some statutory provision to
the contrary. x x x. If, upon the contrary, however, the decree of expropriation
gives to the entity a fee simple title, then, of course, the land becomes the
absolute property of the expropriator, whether it be the State, a... province, or
municipality, and in that case the non-user does not have the effect of defeating
the title acquired by the expropriation proceedings. x x x.
In the expropriation suit, the trial court ruled that the expropriation of such
lot and others is justified and was a lawful exercise of the right of eminent
domain. No appeal was taken and judgement became final and executory.
When the Mactan International Airport started operating, the Lahug Airport
was ordered closed, thus this suit by such a respondent. He initially wanted his
lot to be returned to him and he would return the money he received as payment
for the expropriation. He later on filed an amended complaint and maintained that
by virtue of the closure of the Lahug Airport, the original purpose for which the
property was expropriated had ceased or otherwise been abandoned, and title to
the property had therefore reverted to him. He further alleged that when the
original judgment of expropriation had been handed down, and before they could
file an appeal thereto, the CAA offered them a compromise settlement whereby
they were assured that the expropriated lots would be resold to them for the
same price as when it was expropriated in the event that the Lahug Airport would
be abandoned. Gopuco claims to have accepted this offer. However, he failed to
13
present any proof on this matter, and later admitted that insofar as the said lot
was concerned, no compromise agreement was entered into by the government
and the previous owners.
ISSUE:
WON private land is expropriated for a particular public use, and that
particular public use is abandoned, does its former owner acquire a
cause of action for recovery of the property?
RULING:
No, When land has been acquired for public use in fee simple,
unconditionally, either by the exercise of eminent domain or by purchase, the
former owner retains no rights in the land, and the public use may be abandoned
or the land may be devoted to a different use, without any impairment of the
estate or title acquired, or any reversion to the former owner. but If the land is
expropriated for a particular purpose, with the condition that when that purpose is
ended or abandoned the property shall return to its former owner, then, of
course, when the purpose is terminated or abandoned the former owner
reacquires the property so expropriated.
Eminent domain is generally described as "the highest and most exact idea of
property remaining in the government" that may be acquired for some public
purpose through a method in the nature of a forced purchase by the State. Also32
The only direct constitutional qualification is thus that "private property shall not
be taken for public use without just compensation." This prescription is intended
36
In this case, the judgment on the propriety of the taking and the adequacy of the
compensation received have long become final. We have also already held that
the terms of that judgment granted title in fee simple to the Republic of the
Philippines. Therefore, pursuant to our ruling in Fery, as recently cited in Reyes
v. National Housing Authority, no rights to Lot No. 72, either express or implied,
38
FACTS:
Barangay Sindalan through its Barangay Captain filed a Complaint for
eminent domain against respondent spouses, Jose Magtoto III and Patricia
Sindayan. The spouses are registered owners of the parcel of land where a
portion of it is sought to be converted by the petitioner as Barangay Sindalan’s
feeder road. The alleged public purposes sought to be served by the
expropriation were stated in Barangay Resolution No. 6.
ISSUE:
WON the proposed exercise of the power of eminent domain would be for
a public purpose.
RULING:
No.
Considering that the residents who need a feeder road are all subdivision lot
owners, it is the obligation of the Davsan II Subdivision owner to acquire a right-
of-way for them. However, the failure of the subdivision owner to provide an
access road does not shift the burden to petitioner. To deprive respondents of
their property instead of compelling the subdivision owner to comply with his
obligation under the law is an abuse of the power of eminent domain and is
patently illegal. Without doubt, expropriation cannot be justified on the basis of an
unlawful purpose.
Public funds can be used only for a public purpose. In this proposed
condemnation, government funds would be employed for the benefit of a private
individual without any legal mooring. In criminal law, this would constitute
malversation.
E. Just Compensation
1. NPC vs. Spouses Zabala, January 30, 2013
FACTS:
Napocor filed a complaint for eminent domain on the property owned by
the spouses Zabala in Balanga City Bataan. Napocor needed an easement of
right of way over the affected areas for its 230 KV Limay-Hermosa Transmission
Lines. The Commissioner submitted their Recommendation of P 150/ sq. meter
of just compensation. The spouses wanted their lot to be valuated at P250/ sq.
meter. For the just compensation. Napocor prayed that the report be recommitted
to the commissioners for the modification of the report and substantiation of the
same with reliable and competent documentary evidence based on the value of
the property at the time of its taking. The Commissioners filed their Final Report
fixing the just compensation at P500/ sq. meter.
The RTC rendered judgement in its partial decision and ordered the
payment of just compensation at P150/ sq. meter/
Napocor appealed because it contended that the Commissioner’ reports
are not supported by documentary evidence. Napocor also said that the RTC did
not apply Section 3A of RA 6395 which limits its liability to easement fee of not
more than 10% of market value of the property traversed by its transmission
lines.
ISSUE: Whether or not the RTC erred in fixing the amount of Php 150 per square
meter as the fair market value of the property subject of the easement right of
way of Napocor.
RULING:
The petition is partly meritorious.
Section 3A of RA 6395 cannot restrict the constitutional power of the
courts to determine just compensation. The payment of just compensation for
private property taken for public use is guaranteed no less by our Constitution
and is included in the Bill of Rights. As such, no legislative enactments or
executive issuances can prevent the courts from determining whether the right of
the property owners to just compensation has been violated. It is a judicial
function that cannot be usurped by any other branch or official of the government.
Statutes and executive issuances fixing or providing for the method of computing
just compensation are not binding on courts and at best are treated as mere
guidelines in ascertaining the amount thereof.
The C has held in a long line of cases that since the high-tension electric
current passing through the transmission lines will perpetually deprive the
property owners of the normal use of their land, it is only just and proper to
require Napocor to recompense them for the full market value of their property.
The just compensation of P150/ sq. meter as fixed by the RTC is not
supported by evidence. Just compensation cannot be arrived at arbitrarily.
Several factors must be considered, such as but not limited to acquisition cost,
current market value of like but not limited properties, tax value of the
condemned property, its size, shape and location. But before these factors can
be considered and given weight, the same must be supported by documentary
evidence.
Under Section 8, Rule 67 of the Rules of Court, the trial court may accept
or reject whether in whole or in part., the commissioners report which is merely
advisory and recommendatory in character. It may also recommit the report or
set aside the same and appoint new commissioners. In this case, however, in
spite of the insufficient and flawed reports of the Commissioners and Napocors
objections thereto, the RTC eventually adopted the same. It shrugged off
Napocors protestations and limited itself to the reports submitted by the
Commissioners.
On October 16, 1996, AFC and HPI received separate notices of land
acquisition and valuation of their properties from the DARs Provincial Agrarian
Reform Officer. AFCs land was valued at P86,900,925.88, while HPIs property
was valued at P164,478,178.14. HPI and AFC rejected these valuations for being
very low. But Dar requested the Land Bank of the Philippines (LBP) to deposit
P26,409,549.86 in AFCs bank account and P45,481,706.76 in HPIs bank
account which amounts the petitioners then withdrew. The titles over AFC and
HPIs properties were thereafter cancelled and new ones were issued on
December 9, 1996 in the name of the Republic of the Philippines.
On September 25, 2001, the RTC resolved the consolidated cases, fixing
the just compensation for the petitioners 1,338.6027 hectares of land at
P1,383,179,000.00, with interest on this amount at the prevailing market interest
rates, computed from the taking of the properties on December 9, 1996 until fully
paid, minus the amounts the petitioners already received under the initial
valuation.
The RTC modified its ruling and fixed the interest rate of 12% per annum
from the time the complaint was filed until finality of the decision. The third
division of this court affirmed the ruling of the RTC. On MR, the 12% interest was
deleted on the balance of the awarded just compensation. They justified such
deletion by the finding that the LBP did not delay the payment of just
compensation as it had deposited the pertinent amounts due to AFC and HPI
within fourteen months after they filed their complaints for just compensation with
the RTC. ANother MR was then filed.
RULING:
Yes, the amounts LBP deposited before although withdrawn by the
petitioners were nothing but partial payments that only amounted to 5% of the
P1,383,179,000 actual value of the expropriated properties. This could not be
considered a fair exchange of values at the time of the taking.
While the LBP immediately paid the remaining balance on the just
compensation due to the petitioners after this Court ahd fixed the value of the
expropriated properties, it overlooks one essential fact- from the time that the
State took petitioners’ properties until the time that the petiitoners were fully paid,
almost 12 long years passed. This is the rationale for imposing the 12% interest-
in order to compensate the petitioners for the income they would have made had
they been properly compensated for their properties AT THE TIME OF THE
TAKING.
The interest, however erroneous it may be, cannot be inequitable and
unconscionable because it resulted directly from the application of law and
jurisprudence- standards that have taken into account fairness and equity in
setting the interest rate due for the use or forbearance of money.
Suffice it to say tht public interest refers to what will benefit the public, not
necessarily the government and its agencies whose task is to contribute to the
benefit of the public.
Just compensation is defined as the full and fair equivalent of the property
taken away from its owner by the expropriator. It has been repeatedly stressed
by this Court that 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 “compensation” to convey
the idea that the equivalent to be rendered for the property to be taken shall be
real, substantial, full and ample.
FACTS:
In 1938, the Republic instituted a special civil action for expropriation of Lots 932
and 939 for the purpose of establishing a military reservation for the Philippine
Army. Lots were registered in the names of Gervasia and Eulalia Denzon. CFI
ordered the Republic to pay the Denzons the sum of P4,062.10 as just
compensation. The Denzons appealed to the CA but it was dismissed.
In 1950, one of the heirs of the Denzons, filed with the National Airports
Corporation a claim for rentals for the two lots, but it "denied knowledge of the
matter." In 1961, Lt. Cabal rejected the claim but expressed willingness to pay
the appraised value of the lots within a reasonable time. For failure of the
Republic to pay for the lots, the Denzons’ successors-in-interest (Francisca
Galeos-Valdehueza and Josefina Galeos-Panerio) filed with the same CFI an
action for recovery of possession with damages against the Republic and AFP
officers in possession of the property.
CFI ruled in favor of Valdehueza and Panerio but titles of the said lots came with
the annotation "subject to the priority of the National Airports Corporation to
acquire said parcels of land… ". Valdehueza and Panerio were ordered to
execute a deed of sale in favor of the Republic.
On appeal, SC held that Valdehueza and Panerio are still the registered owners
of Lots 932 and 939, there having been no payment of just compensation by the
Republic, but they are not entitled to recover possession of the lots but may only
demand the payment of their fair market value.
ISSUE:
Whether the Republic has retained ownership of Lot 932 despite its failure to pay
respondent’s predecessors-in-interest the just compensation pursuant to the
judgment of the CFI rendered as early as May 14, 1940.
HELD:
No.
Under Section 9, Article III of the Constitution: “Private property shall not be
taken for public use without just compensation.” The Republic disregarded the
foregoing provision when it failed and refused to pay respondents predecessors-
in-interest the just compensation for Lots 932 and 939. Obviously, defendant-
appellant Republic evaded its duty of paying what was due to the landowners.
The expropriation proceedings had already become final in the late 1940s and
yet, up to now, or more than 50 years after, the Republic had not yet paid the
compensation fixed by the court while continuously reaping benefits from the
expropriated property to the prejudice of the landowner.
The recognized rule is that title to the property expropriated shall pass from the
owner to the expropriator only upon full payment of the just compensation.
Clearly, without full payment of just compensation, there can be no transfer of
title from the landowner to the expropriator. Otherwise stated, the Republic’s
acquisition of ownership is conditioned upon the full payment of just
compensation within a reasonable time.
The first is concerned with the determination of the authority of the plaintiff to
exercise the power of eminent domain and the propriety of its exercise in the
context of the facts involved in the suit. It ends with an order, if not of dismissal of
the action, of condemnation declaring that the plaintiff has a lawful right to take
the property sought to be condemned, for the public use or purpose described in
the complaint, upon the payment of just compensation to be determined as of the
date of the filing of the complaint.
The second phase of the eminent domain action is concerned with the
determination by the court of the just compensation for the property sought to be
taken. This is done by the court with the assistance of not more than three
commissioners.
When Valdehueza and Panerio mortgaged Lot 932 to respondent in 1964, they
were still the owners and their title had not yet passed to the petitioner Republic.
In fact, it never did.
Eminent Domain; Due Process; One of the basic principles in our Constitution is
that no person shall be deprived of his private property without due process of
law, and in expropriation cases, an essential element of due process is that there
must be just compensation whenever private property is taken for public use;
Undoubtedly, over 50 years of delayed payment cannot, in any way, be viewed
as fair.—One of the basic principles enshrined in our Constitution is that no
person shall be deprived of his private property without due process of law; and
in expropriation cases, an essential element of due process is that there must be
just compensation whenever private property is taken for public use. Accordingly,
Section 9, Article III, of our Constitution mandates: “Private property shall not be
taken for public use without just compensation.” The Republic disregarded the
foregoing provision when it failed and refused to pay respondent’s predecessors-
in-interest the just compensation for Lots 932 and 939. The length of time and
the manner with which it evaded payment demonstrate its arbitrary high-
handedness and confiscatory attitude. The final judgment in the expropriation
proceedings (Civil Case No. 781) was entered on April 5, 1948. More than half of
a century has passed, yet, to this day, the landowner, now respondent, has
remained empty-handed. Undoubtedly, over 50 years of delayed payment
cannot, in any way, be viewed as fair. This is more so when such delay is
accompanied by bureaucratic hassles. Apparent from Valdehueza is the fact that
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 the two lots, the National Airports Corporation denied knowledge of the
claim of respondent’s predecessors-in-interest. Even President Garcia, who sent
a letter to the Civil Aeronautics Administration and the Secretary of National
Defense to expedite the payment, failed in granting relief to them. And, on
September 6, 1961, while the Chief of Staff of the Armed Forces expressed
willingness to pay the appraised value of the lots, nothing happened.
Same; Same; Just compensation embraces not only the correct determination of
the amount to be paid to the owners of the land but also the payment for the land
within a reasonable time from its taking.—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 from its taking. Without prompt payment, compensation cannot
be considered ‘just.’ ” In jurisdictions similar to ours, where an entry to the
expropriated property precedes the payment of compensation, it has been held
that if the compensation is not paid in a reasonable time, the party may be
treated as a trespasser ab initio.
Same; Same; Failure of the Republic to pay the landowner and his predecessors-
in-interest for a period of 57 years rendered the expropriation process
incomplete.—In Municipality of Biñan v. Garcia this Court ruled that the
expropriation of lands consists of two stages, to wit: “x x x The first is concerned
with the determination of the authority of the plaintiff to exercise the power of
eminent domain and the propriety of its exercise in the context of the facts
involved in the suit. It ends with an order, if not of dismissal of the action, “of
condemnation declaring that the plaintiff has a lawful right to take the property
sought to be condemned, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the
date of the filing of the complaint” x x x. The second phase of the eminent domain
action is concerned with the determination by the court of “the just compensation
for the property sought to be taken.” This is done by the court with the assistance
of not more than three (3) commissioners. x x x. It is only upon the completion of
these two stages that expropriation is said to have been completed. In Republic
v. Salem Investment Corporation, we ruled that, “the process is not completed
until payment of just compensation.” Thus, here, the failure of the Republic to pay
respondent and his predecessors-in-interest for a period of 57 years rendered the
expropriation process incomplete.
Same; Same; The Republic’s failure to pay just compensation for 57 years
cannot but be construed as a deliberate refusal to pay which makes the recovery
of possession in order.—The Republic now argues that under Valdehueza,
respondent is not entitled to recover possession of Lot 932 but only to demand
payment of its fair market value. Of course, we are aware of the doctrine that
“non-payment of just compensation (in an expropriation proceedings) does not
entitle the private landowners to recover possession of the expropriated lots.”
This is our ruling in the recent cases of Republic of the Philippines vs. Court of
Appeals, et al., and Reyes vs. National Housing Authority. However, the facts of
the present case do not justify its application. It bears stressing that the Republic
was ordered to pay just compensation twice,the first was in the expropriation
proceedings and the second, in Valdehueza. Fifty-seven (57) years have passed
since then. We cannot but construe the Republic’s failure to pay just
compensation as a deliberate refusal on its part. Under such circumstance,
recovery of possession is in order. In several jurisdictions, the courts held that
recovery of possession may be had when property has been wrongfully taken or
is wrongfully retained by one claiming to act under the power of eminent domain
or where a rightful entry is made and the party condemning refuses to pay the
compensation which has been assessed or agreed upon; or fails or refuses to
have the compensation assessed and paid.
Same; 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, 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
owner concerned shall have the right to recover possession of his property.—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,” 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. In Cosculluela v.
Court of Appeals, 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.” Republic vs. Lim, 462 SCRA 265,
G.R. No. 161656 June 29, 2005
Facts:
Spouses “Tecson” are the co-owners of a land which is among the private
properties traversed by MacArthur Highway in Bulacan, a government project
undertaken sometime in 1940. The taking was taken without the requisite
expropriation proceedings and without their consent. In 1994, Heracleo
demanded the payment of the fair market value of the property. The DPWH
offered to pay 0.70 centavos per sqm., as recommended by the appraiser
committee of Bulacan. Unsatisfied, Heracleo filed a complaint for recovery of
possession with damages. Favorable decisions were rendered by the RTC and
the CA, with valuation of P 1,500 per sqm and 6% interest per annum from the
time of filing of the until full payment. The SC Division reversed the CA ruling and
held that computation should be based at the time the property was taken in
1940, which is 0.70 per sqm. But because of the contrasting opinions of the
members of the Division and transcendental importance of the issue, the case
was referred to the En Banc for resolution.
Issue: WON the just compensation should be fixed at the time of the actual
taking by the government. (YES)
Held:
is taken before the filing of an expropriation suit, and even if it is the property
owner who brings the action for compensation.
• The RTC and CA found that the FMV of the property in 1940 was
P0.70/sq.m. Therefore it should be used in determining the amount due
respondents instead of the higher value which is P1,500. While disparity in the
amounts is obvious and may appear inequitable to respondents as they would be
receiving such outdated valuation after a very long period. It is equally true that
they are also remiss in guarding against the cruel effects of belated claim. The
concept of just compensation DOES NOT imply fairness to the property owner
alone. Compensation must be just not only to the property owner, but also to the
public which ultimately bears the cost of expropriation.
• Petitioners had been occupying the property for more than 50 years
without the benefit of expropriation proceedings. In taking respondents’ property
without the benefit of expropriation proceedings and without payment of just
compensation, petitioners acted in disregard of respondents’ proprietary rights
which cannot be allowed by the Court. For this they are entitled to compensation
in the form of actual/compensatory damages (6% on value of land at the time of
taking in 1940 until full payment).
Issue:
WON the City of Mandaluyong may validly and legally exercise its power of
eminent domain by implementing a resolution pursuant to Art. 36, Rule VI of the
IRR of RA No. 7160.
Ruling:
The Court held that the City of Mandaluyong may enact the necessary
ordinance and institute expropriation proceedings for as long as it has complied
with all other legal requirements. The basis for the exercise power of eminent
domain by local government unit is Section 19 of R.A. No. 7160. Despite the
existence of legislative grant, it is still the duty of the courts to determine whether
the power of eminent domain is being exercised in accordance with the
delegating law. The courts have the obligation to determine whether the
expropriation proceedings is over a particular private property, is exercised for
public use, there is payment of just compensation and there was a valid offer
made to the owner of the property but was not accepted. Section 19 of the Code
requires an ordinance, not a resolution, for the exercise of the power of eminent
domain. An ordinance is necessary to authorize the filing of a complaint with the
proper court. Rule 67 of the Rules of Court states that although the award of just
compensation is indispensable, it is the last stage of the expropriation
proceedings. It cannot be arrived without an initial finding by the court that there
is a lawful right to take the property sought to be expropriated for public use. The
reliance of the respondents to Article 36 (a), Rule VI of the IRR, which requires
only a resolution to authorize the exercise the power of eminent domain, is
untenable. Section 19 of RA 7160, the law itself, surely prevails over said rule. It
is unquestionable that the law is controlling and cannot be amended by a mere
administrative rule.
Notes-notes lng gihapon ni: LOL
Same; Same; The power of eminent domain may be validly delegated to local
government units, other public entities and public utilities.—The power of eminent
domain is essentially legislative in nature. It is firmly settled, however, that such
power may be validly delegated to local government units, other public entities
and public utilities, although the scope of this delegated legislative power is
necessarily narrower than that of the delegating authority and may only be
exercised in strict compliance with the terms of the delegating law.
Same; Same; Requisites to be complied with by the local government unit in the
exercise of the power of eminent domain.—The courts have the obligation to
determine whether the following requisites have been complied with by the local
government unit concerned: 1. An ordinance is enacted by the local legislative
council authorizing the local chief executive, in behalf of the local government
unit, to exercise the power of eminent domain or pursue expropriation
proceedings over a particular private property. 2. The power of eminent domain is
exercised for public use, purpose or welfare, or for the benefit of the poor and the
landless. 3. There is payment of just compensation, as required under Section 9,
Article III of the Constitution, and other pertinent laws. 4. A valid and definite offer
has been previously made to the owner of the property sought to be
expropriated, but said offer was not accepted.
Same; Same; An ordinance, not a resolution, is required for the exercise of the
power of eminent domain.—In the present case, the City of Mandaluyong seeks
to exercise the power of eminent domain over petitioners’ property by means of a
resolution, in contravention of the first requisite. The law in this case is clear and
free from ambiguity. Section 19 of the Code requires an ordinance, not a
resolution, for the exercise of the power of eminent domain.
FACTS:
Petitioners are owners of parcels of land with a total area of about 20,424 square
meters. On November 8, 1995, the Sangguniang Bayan of the Municipality of
Panay issued Resolution No. 95-29 authorizing the municipal government
through the mayor to initiate expropriation proceedings. A petition for
expropriation was thereafter filed on April 14, 1997 by the Municipality of Panay
(respondent) before the RTC of Roxas City. Petitioners filed a Motion to Dismiss
alleging that the taking is not for public use but only for the benefit of certain
individuals; that it is politically motivated because petitioners voted against the
incumbent mayor and vice-mayor; and that some of the supposed beneficiaries
of the land sought to be expropriated have not actually signed a petition asking
for the property but their signatures were forged or they were misled into signing
the same. RTC denied petitioners’ Motion to Dismiss. On October 1, 1997, the
trial court issued an Order appointing three persons as Commissioners to
ascertain the amount of just compensation for the property. Petitioners filed a
"Motion to Hold in Abeyance the Hearing of the Court Appointed Commissioners
to Determine Just Compensation and for Clarification of the Court’s Order dated
October 1, 1997" which was denied by the trial court on November 3, 1997. MR
was also denied. At CA, it dismissed the Petition for Certiorari. It held that the
petitioners were not denied due process. MR was also denied. Hence, this
present petition.
RULING:
Under Sec. 19 of R.A. No. 7160, which delegates to LGUs the power of eminent
domain, it is clear therefore that several requisites must concur before an LGU
can exercise the power of eminent domain, to wit:
2. The power of eminent domain is exercised for public use, purpose or welfare,
or for the benefit of the poor and the landless.
The Court in no uncertain terms have pronounced that a local government unit
cannot authorize an expropriation of private property through a mere resolution of
its lawmaking body. R.A. No. 7160 otherwise known as the Local Government
Code expressly requires an ordinance for the purpose and a resolution that
merely expresses the sentiment of the municipal council will not suffice.
Ordinance vs Resolution:
Additionally, the two are enacted differently -- a third reading is necessary for an
ordinance, but not for a resolution, unless decided otherwise by a majority of all
the Sanggunian members. If Congress intended to allow LGUs to exercise
eminent domain through a mere resolution, it would have simply adopted the
language of the previous Local Government Code. But Congress did not. In a
clear divergence from the previous Local Government Code, Sec. 19 of R.A.
[No.] 7160 categorically requires that the local chief executive act pursuant to an
ordinance. x x x
local autonomy, the court cannot grant judicial sanction to an LGU’s exercise of
its delegated power of eminent domain in contravention of the very law giving it
such power.
Notes:
On appeal, the Court of Appeals partially granted the petition. It nullified the
Order of Expropriation except with regard to the writ of possession. It upheld the
decision of the RTC that in issuance of writ of possession, prior determination of
the existence of public purpose is necessary.
ISSUE:
HELD:
Before a local government unit may enter into the possession of the property
sought to be expropriated, it must (1) file a complaint for expropriation sufficient
in form and substance in the proper court and (2) deposit with the said court at
least 15% of the property's fair market value based on its current tax declaration.
The law does not make the determination of a public purpose a condition
precedent to the issuance of a writ of possession.
Note:
Eminent Domain; Writs of Possession; The law does not make the determination
of a public purpose a condition precedent to the issuance of a writ of
possession.—Before a local government unit may enter into the possession of
the property sought to be expropriated, it must (1) file a complaint for
expropriation sufficient in form and substance in the proper court and (2) deposit
with the said court at least 15% of the property’s fair market value based on its
current tax declaration. The law does not make the determination of a public
purpose a condition precedent to the issuance of a writ of possession. Francia,
Jr. vs. Municipality of Meycauayan, 549 SCRA 53, G.R. No. 170432 March 24,
2008
POWER OF TAXATION
A. Definition and Concept of Taxation
Issue:
Whether or not the Collector of Internal Revenue correctly disallowed the P75,
000.00 deduction claimed by private respondent Algue Inc., as legitimate
business expenses in its income tax returns.
Ruling:
No, The Supreme Court agrees with the respondent court that the amount of the
promotional fees was not excessive. The P75,000.00 was 60% of the total
commission. This was a reasonable proportion, considering that it was the
payees who did practically everything, from the formation of the Vegetable Oil
Investment Corporation to the actual purchase by it of the Sugar Estate
properties.
The claimed deduction by the private respondent was permitted under the
Internal Revenue Code and should therefore not have been disallowed by the
petitioner.
Action:
A petition for review of the Decision and the Resolution of the CA finding NPC
liable to pay franchise tax to City of Cabanatuan.
Fact:
NAPOCOR, the petitioner, is a government-owned and controlled corporation
created under Commonwealth Act 120. It is tasked to undertake the
“development of hydroelectric generations of power and the production of
electricity from nuclear, geothermal, and other sources, as well as, the
transmission of electric power on a nationwide basis.”
For many years now, NAPOCOR sells electric power to the resident Cabanatuan
City. Pursuant to Sec. 37 of Ordinance No. 165-92, the respondent assessed the
petitioner a franchise tax representing 75% of 1% of the former’s gross receipts
for the preceding year.
Petitioner, whose capital stock was subscribed and wholly paid by the Philippine
Government, refused to pay the tax assessment. It argued that the respondent
has no authority to impose tax on government entities. Petitioner also contend
that as a non-profit organization, it is exempted from the payment of all forms of
taxes, charges, duties or fees in accordance with Sec. 13 of RA 6395, as
amended.
Issue:
(1) Is the NAPOCOR excluded from the coverage of the franchise tax simply
because its stocks are wholly owned by the National Government and its charter
characterized is as a ‘non-profit organization’?
(2) Is the NAPOCOR’s exemption from all forms of taxes repealed by the
provisions of the Local Government Code (LGC)?
Held:
(1) NO. To stress, a franchise tax is imposed based not on the ownership but on
the exercise by the corporation of a privilege to do business. The taxable entity is
the corporation which exercises the franchise, and not the individual
stockholders. By virtue of its charter, petitioner was created as a separate and
distinct entity from the National Government. It can sue and be sued under its
own name, and can exercise all the powers of a corporation under the
Corporation Code.
To be sure, the ownership by the National Government of its entire capital stock
does not necessarily imply that petitioner is not engaged in business.
(2) YES. One of the most significant provisions of the LGC is the removal of the
blanket exclusion of instrumentalities and agencies of the National Government
from the coverage of local taxation. Although as a general rule, LGUs cannot
impose taxes, fees, or charges of any kind on the National Government, its
agencies and instrumentalities, this rule now admits an exception, i.e. when
specific provisions of the LGC authorize the LGUs to impose taxes, fees, or
charges on the aforementioned entities. The legislative purpose to withdraw tax
privileges enjoyed under existing laws or charter is clearly manifested by the
language used on Sec. 137 and 193 categorically withdrawing such exemption
subject only to the exceptions enumerated. Since it would be tedious and
impractical to attempt to enumerate all the existing statutes providing for special
tax exemptions or privileges, the LGC provided for an express, albeit general,
withdrawal of such exemptions or privileges. No more unequivocal language
could have been used.
B. Theory and Basis of Taxation
FACTS: The petitioner sold more than 2M boardfeet of logs to General Lumber
Co. with the agreement that the latter would pay the sales taxes. The CIR, upon
consultation officially advised the parties that the bureau interposes no objection
so long as the tax due shall be covered by a surety. General Lumber complied,
but later failed, with the surety, to pay the tax liabilities, and so the respondent
collector required the petitioner to pay thru a letter dated August 30, 1955. Twice
did the petitioner filed a request for reconsideration before finally submitting the
denied request for appeal before the Court of Tax Appeals. The CTA dismissed
the appeal as it was clearly filed out of time. The petitioner had consumed thirty-
three days from the receipt of the demand, before filing the appeal. Petitioner
argued that in computing the 30-day period in perfecting the appeal the letter of
the respondent Collector dated January 30, 1956, denying the second request for
reconsideration, should be considered as the final decision contemplated in
Section 7, and not the letter of demand dated August 30, 1955.
HELD: No. This contention is untenable. We cannot countenance that theory that
would make the commencement of the statutory 30-day period solely dependent
on the will of the taxpayer and place the latter in a position to put off indefinitely
and at his convenience the finality of a tax assessment. Such an absurd
procedure would be detrimental to the interest of the Government, for "taxes are
the lifeblood of the government, and their prompt and certain availability is an
imperious need."
C. Double Taxation
FACTS:
Respondent paid the local business tax only as a manufacturers as it was
expressly exempted from the business tax under a different section and which
applied to businesses subject to excise, VAT or percentage tax under the Tax
Code. The City of Manila subsequently amended the ordinance by deleting the
provision exempting businesses under the latter section if they have already paid
taxes under a different section in the ordinance. This amending ordinance was
later declared by the Supreme Court null and void. Respondent then filed a
protest on the ground of double taxation. RTC decided in favor of Respondent
and the decision was received by Petitioner on April 20, 2007. On May 4, 2007,
Petitioner filed with the CTA a Motion for Extension of Time to File Petition for
Review asking for a 15-day extension or until May 20, 2007 within which to file its
Petition. A second Motion for Extension was filed on May 18, 2007, this time
asking for a 10-day extension to file the Petition. Petitioner finally filed the Petition
on May 30, 2007 even if the CTA had earlier issued a resolution dismissing the
case for failure to timely file the Petition.
ISSUES:
(1) Has Petitioner’s the right to appeal with the CTA lapsed?
(2) Does the enforcement of the latter section of the tax ordinance constitute
double taxation?
HELD:
(1) NO. Petitioner complied with the reglementary period for filing the petition.
From April 20, 2007, Petitioner had 30 days, or until May 20, 2007, within which
to file their Petition for Review with the CTA. The Motion for Extension filed by the
petitioners on May 18, 2007, prior to the lapse of the 30-day period on 20 May
2007, in which they prayed for another extended period of 10 days, or until 30
May 2007, to file their Petition for Review was, in reality, only the first Motion for
Extension of petitioners. Thus, when Petitioner filed their Petition via registered
mail their Petition for Review on 30 May 2007, they were able to comply with the
period for filing such a petition.
(2) YES. There is indeed double taxation if respondent is subjected to the taxes
under both Sections 14 and 21 of the tax ordinance since these are being
imposed: (1) on the same subject matter — the privilege of doing business in the
City of Manila; (2) for the same purpose — to make persons conducting business
within the City of Manila contribute to city revenues; (3) by the same taxing
authority — petitioner City of Manila; (4) within the same taxing jurisdiction —
within the territorial jurisdiction of the City of Manila; (5) for the same taxing
periods — per calendar year; and (6) of the same kind or character — a local
business tax imposed on gross sales or receipts of the business.