THIRD DIVISION
MARINA
Z. REYES;
ALFREDO A. FRANCISCO; ANGELITA Z. GARCIA;ALFREDO Z.
FRANCISCO,
JR; ARMANDO Z. FRANCISCO; ALMA C. FRANCISCO;EUGENIA Z. LUNA;
CLARITA Z. ZABALLERO, LEONARDO Z. ZABALLERO, JR,and TEODORO Z.
ZABALLERO,
in substitution of LEONARDO M. ZABALLERO;AUGUSTO M.
ZABALLERO;
FRINE A. ZABALLERO; ELENA FRONDA ZABALLERO;VICTOR GREGORIO
F. ZABALLERO; MARIA ELENA F. ZABALLERO;LOURDES
ZABALLERO-LAVA;
SOCORRO EMILIA ZABALLERO-YAP;and TERESITA F.
ZABALLERO,
Petitioners, |
G.R.
No.
147511
January 20, 2003
-versus-
NATIONAL HOUSING
AUTHORITY,
Respondent.
D E C I S I O N
PUNO,
J.:
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This is an appeal by
certiorari from the
decision of the Court of Appeals in CA-GR CV No.
51641
dated September 29, 2000[1]
affirming the judgment of the Regional Trial Court of Quezon City,
Branch
79 which dismissed the complaint for forfeiture of rights filed by
herein
petitioners, as well as the Resolution dated March 13, 2001 denying
petitioners’
motion for reconsideration.chanrobles virtuallaw libraryred
Records show that in
1977, respondent National Housing Authority (NHA) filed separate
complaints
for the expropriation of sugarcane lands, particularly Lot Nos. 6450,
6448-E,
6198-A and 6199 of the cadastral survey of Dasmariñas, Cavite
belonging
to the petitioners, before the then Court of First Instance of Cavite,
and docketed as Civil Case Nos. T.G.-392, T.G.-396 and T.G.-417. The
stated
public purpose of the expropriation was the expansion of the
Dasmariñas
Resettlement Project to accommodate the squatters who were relocated
from
the Metropolitan Manila area. The trial court rendered judgment
ordering
the expropriation of these lots and the payment of just compensation.
This
was affirmed by the Supreme Court in a decision rendered on October 29,
1987 in the case of NHA vs. Zaballero[2]
and which became final on November 26, 1987.[3]chanrobles virtuallaw libraryred
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On February 24, 1989,
the expropriation court (now Branch 18, Regional Trial Court of
Tagaytay
City) issued an Order[4]
the dispositive portion of which reads:
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"WHEREFORE, and
resolving
thus, let an Alias Writ of Execution be immediately issued and that:chanrobles virtuallaw libraryred
(1) The Register of
Deeds of the Province of Cavite is hereby ordered to transfer, in the
name
of the plaintiff National Housing Authority, the following:
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(a)
Transfer
Certificate No. RT-638 containing an area of 79,167 square meters
situated
in Barrio Bangkal, Dasmariñas, Cavite;
(b)
Transfer
Certificate of Title No. T-55702 containing an area of 20,872 square
meters
situated in Barrio Bangkal, Dasmariñas, Cavite;
(c)
Transfer
Certificate of Title No. RT-639 and RT-4641 covering Lot Nos. 6198-A
and
6199 with an aggregate area of 159,985 square meters
also situated in Barrio Bangkal, Dasmariñas, Cavite.chanrobles virtuallaw libraryred
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(2) Plaintiff National
Housing Authority is likewise hereby ordered, under pain of contempt,
to
immediately pay the defendants, the amounts stated in the Writ of
Execution
as the adjudicated compensation of their expropriated properties, which
process was received by it according to the records, on September 26,
1988,
segregating therefrom, and in separate check, the lawyer’s fees in
favor
of Atty. Bobby P. Yuseco, in the amount of P322,123.05, as sustained by
their contract as gleaned from the records, with no other deduction,
paying
on its own (NHA) account, the necessary legal expenses incident to the
registration or issuance of new certificates of title, pursuant to the
provisions of the Property Registration Law (PD 1529);chanrobles virtuallaw libraryred
(3) Defendants, however,
are directed to pay the corresponding capital gains tax on the subject
properties, directing them additionally, to coordinate with the
plaintiff
NHA in this regard, in order to facilitate the termination of this
case,
put an end to this controversy and consign the same to its final rest."
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For the alleged failure
of respondent NHA to comply with the above order, petitioners filed on
April 28, 1992 a complaint[5]
for forfeiture of rights before the Regional Trial Court of Quezon
City,
Branch 79, in Civil Case No. Q-92-12093. They alleged that respondent
NHA
had not relocated squatters from the Metropolitan Manila area on the
expropriated
lands in violation of the stated public purpose for expropriation and
had
not paid the just compensation fixed by the court. They prayed that
respondent
NHA be enjoined from disposing and alienating the expropriated
properties
and that judgment be rendered forfeiting all its rights and interests
under
the expropriation judgment. In its Answer,[6]
respondent NHA averred that it had already paid a substantial amount to
herein petitioners and that the expropriation judgment could not be
executed
in view of several issues raised by respondent NHA before the
expropriation
court (now Branch 18, RTC, Tagaytay City) concerning capital gains tax,
registration fees and other expenses for the transfer of title to
respondent
NHA, as well as the claims for attorney’s fees of Atty. Joaquin Yuseco,
Jr., collaborating counsel for petitioners. Ocular inspections[7]
conducted by the trial court on the subject properties show that:chanrobles virtuallaw libraryred
"1. 80% of Lot No. 6198-A
with an area of 120,146 square meters is already occupied by relocatees
whose houses are made of light materials with very few houses partly
made
of hollow blocks. The relocatees were relocated only on (sic) March of
1994; chanrobles virtuallaw libraryred
2. Most of the area
covered by Lot No. 2075 is almost occupied by houses and structures,
most
of which are made of concrete materials. These houses are not being
occupied
by squatters relocated to the said lot by the defendant NHA;chanrobles virtuallaw libraryred
3. Lot No. 6199 is also
occupied by concrete houses and structures but likewise there are no
relocatees
in said lot. A large area of the same is still unoccupied."chanrobles virtuallaw libraryred
On September 29, 1995,
the trial court rendered judgment dismissing the complaint. Finding
that
the failure of respondent NHA to pay just compensation and of
petitioners
to pay capital gains tax are both unjustified and unreasonable, the
trial
court held that: (1) respondent NHA is not deemed to have abandoned the
public purpose for which the subject properties were expropriated
because
the relocation of squatters involves a long and tedious process. It
ruled
that respondent NHA actually pursued the public purpose of the
expropriation
when it entered into a contract with Arceo C. Cruz involving the
construction
of low cost housing on the expropriated lots to be sold to qualified
low
income beneficiaries; (2) there is no condition imposed in the
expropriation
judgment that the subject properties shall revert back to its original
owners in case the purpose of expropriation is terminated or abandoned;
(3) the payment of just compensation is independent of the obligation
of
herein petitioners to pay capital gains tax; and (4) in the payment of
just compensation, the basis should be the value at the time the
property
was taken. On appeal, the Court of Appeals affirmed the decision of the
trial court.chanrobles virtuallaw libraryred
Petitioners are now
before us raising the following assignment of errors:chanrobles virtuallaw libraryred
"1. The Honorable Court
of Appeals had decided a question of substance not in accord with
justice
and equity when it ruled that, as the judgment of the expropriation
court
did not contain a condition that should the expropriated property be
not
used for the intended purpose it would revert to the condemnee, the
action
to declare the forfeiture of rights under the expropriation judgment
can
not prosper; chanrobles virtuallaw libraryred
2. The Honorable Court
of Appeals decided a question of substance not in accord with
jurisprudence,
justice and equity when it ruled that the non-payment is not a ground
for
forfeiture;chanrobles virtuallaw libraryred
3. The Honorable Court
of Appeals erred in not declaring the judgment of expropriation
forfeited
in light of the failure of respondent to use the expropriated property
for the intended purpose but for a totally different purpose."chanrobles virtuallaw libraryred
The petition is not
impressed with merit.chanrobles virtuallaw libraryred
Petitioners contend
that respondent NHA violated the stated public purpose for the
expansion
of the Dasmariñas Resettlement Project when it failed to
relocate
the squatters from the Metro Manila area, as borne out by the ocular
inspection
conducted by the trial court which showed that most of the expropriated
properties remain unoccupied. Petitioners likewise question the public
nature of the use by respondent NHA when it entered into a contract for
the construction of low cost housing units, which is allegedly
different
from the stated public purpose in the expropriation proceedings. Hence,
it is claimed that respondent NHA has forfeited its rights and
interests
by virtue of the expropriation judgment and the expropriated properties
should now be returned to herein petitioners. We are not persuaded.chanrobles virtuallaw libraryred
The 1987 Constitution
explicitly provides for the exercise of the power of eminent domain
over
private properties upon payment of just compensation. More
specifically,
section 9, Article III states that private property shall not be taken
for public use without just compensation. The constitutional restraints
are public use and just compensation.chanrobles virtuallaw libraryred
Petitioners cannot insist
on a restrictive view of the eminent domain provision of the
Constitution
by contending that the contract for low cost housing is a deviation
from
the stated public use. It is now settled doctrine that the concept of
public
use is no longer limited to traditional purposes. Here, as elsewhere,
the
idea that "public use" is strictly limited to clear cases of "use by
the
public" has been abandoned. The term "public use" has now been held to
be synonymous with "public interest," "public benefit," "public
welfare,"
and "public convenience."[8]
The rationale for this new approach is well explained in the case of
Heirs
of Juancho Ardona, et al. vs. Reyes, et al.,[9]
to wit:chanrobles virtuallaw libraryred
"The restrictive view
of public use may be appropriate for a nation which circumscribes the
scope
of government activities and public concerns and which possesses big
and
correctly located public lands that obviate the need to take private
property
for public purposes. Neither circumstance applies to the Philippines.
We
have never been a laissez faire State. And the necessities which impel
the exertion of sovereign power are all too often found in areas of
scarce
public land or limited government resources.chanrobles virtuallaw libraryred
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The taking to be valid
must be for public use. There was a time when it was felt that a
literal
meaning should be attached to such a requirement. Whatever project is
undertaken
must be for the public to enjoy, as in the case of streets or parks.
Otherwise,
expropriation is not allowable. It is not anymore. As long as the
purpose
of the taking is public, then the power of eminent domain comes into
play.
As just noted, the constitution in at least two cases, to remove any
doubt,
determines what is public use. One is the expropriation of lands to be
subdivided into small lots for resale at cost to individuals. The other
is in the transfer, through the exercise of this power, of utilities
and
other private enterprise to the government. It is accurate to state
then
that at present whatever may be beneficially employed for the general
welfare
satisfies the requirement of public use."chanrobles virtuallaw libraryred
The act of respondent
NHA in entering into a contract with a real estate developer for the
construction
of low cost housing on the expropriated lots to be sold to qualified
low
income beneficiaries cannot be taken to mean as a deviation from the
stated
public purpose of their taking. Jurisprudence has it that the
expropriation
of private land for slum clearance and urban development is for a
public
purpose even if the developed area is later sold to private homeowners,
commercials firms, entertainment and service companies, and other
private
concerns.[10]chanrobles virtuallaw libraryred
Moreover, the Constitution
itself allows the State to undertake, for the common good and in
cooperation
with the private sector, a continuing program of urban land reform and
housing which will make at affordable cost decent housing and basic
services
to underprivileged and homeless citizens in urban centers and
resettlement
areas.[11]
The expropriation of private property for the purpose of socialized
housing
for the marginalized sector is in furtherance of the social justice
provision
under Section 1, Article XIII of the Constitution which provides that:chanrobles virtuallaw libraryred
"SECTION 1. The Congress
shall give highest priority to the enactment of measures that protect
and
enhance the right of all the people to human dignity, reduce social,
economic,
and political inequalities, and remove cultural inequities by equitably
diffusing wealth and political power for the common good.
To this end, the State
shall require the acquisition, ownership, use and disposition of
property
and its increments."chanrobles virtuallaw libraryred
It follows that the
low cost housing project of respondent NHA on the expropriated lots is
compliant with the "public use" requirement.chanrobles virtuallaw libraryred
We likewise do not subscribe
to petitioners’ contention that the stated public purpose was abandoned
when respondent NHA failed to occupy the expropriated lots by
relocating
squatters from the Metro Manila area. The expropriation judgment
declared
that respondent NHA has a lawful right to take petitioners properties
"for
the public use or purpose of expanding the Dasmariñas
Resettlement
Project." The taking here is absolute, without any condition,
restriction
or qualification. Contrary to petitioners’ submission, the ruling
enunciated
in the early case of Fery vs. Municipality of Cabanatuan,[12]
is still good and sound doctrine, viz.:
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"x x x If, for example,
land is expropriated for a particular purpose, with the condition that
when that purpose is ended or abandoned the property shall return to
its
former owner, then, of course, when the purpose is terminated or
abandoned
the former owner reacquires the property so expropriated. x x x If,
upon
the contrary, however, the decree of expropriation gives to the entity
a fee simple title, then, of course, the land becomes the absolute
property
of the expropriator
x x x.chanrobles virtuallaw libraryred
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."chanrobles virtuallaw libraryred
Petitioners further
aver that the continued failure of respondent NHA to pay just
compensation
for a long period of time justifies the forfeiture of its rights and
interests
over the expropriated lots. They demand the return of the expropriated
lots. Respondent NHA justifies the delay to pay just compensation by
reason
of the failure of petitioners to pay the capital gains tax and to
surrender
the owners’ duplicate certificates of title.chanrobles virtuallaw libraryred
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In the recent case
of Republic of the Philippines vs. Court of Appeals, et al.,[13]
the Court ruled that non-payment of just compensation does not entitle
the private landowners to recover possession of their expropriated
lots.
Thus:chanrobles virtuallaw libraryred
"Thus, in Valdehueza
vs. Republic where the private landowners had remained unpaid ten years
after the termination of the expropriation proceedings, this Court
ruled
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‘The points in dispute
are whether such payment can still be made and, if so, in what amount.
Said lots have been the subject of expropriation proceedings. By final
and executory judgment in said proceedings, they were condemned for
public
use, as part of an airport, and ordered sold to the government. x x x.
It follows that both by virtue of the judgment, long final, in the
expropriation
suit, as well as the annotations upon their title certificates,
plaintiffs
are not entitled to recover possession of their expropriated lots -
which
are still devoted to the public use for which they were expropriated -
but only to demand the market value of the same.chanrobles virtuallaw libraryred
Said relief may be granted
under plaintiffs’ prayer for such other remedies, which may be deemed
just
and equitable under the premises.’
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The Court proceeded
to reiterate its pronouncement in Alfonso vs. Pasay City where the
recovery
of possession of property taken for public use prayed for by the unpaid
landowner was denied even while no requisite expropriation proceedings
were first instituted. The landowner was merely given the relief of
recovering
compensation for his property computed at its market value at the time
it was taken and appropriated by the State.chanrobles virtuallaw libraryred
The judgment rendered
by the Bulacan RTC in 1979 on the expropriation proceedings provides
not
only for the payment of just compensation to herein respondents but
likewise
adjudges the property condemned in favor of petitioner over which
parties,
as well as their privies, are bound. Petitioner has occupied, utilized
and, for all intents and purposes, exercised dominion over the property
pursuant to the judgment. The exercise of such rights vested to it as
the
condemnee indeed has amounted to at least a partial compliance or
satisfaction
of the 1979 judgment, thereby preempting any claim of bar by
prescription
on grounds of non-execution. In arguing for the return of their
property
on the basis of non-payment, respondents ignore the fact that the right
of the expropriating authority is far from that of an unpaid seller in
ordinary sales, to which the remedy of rescission might perhaps apply.
An in rem proceeding, condemnation acts upon the property. After
condemnation,
the paramount title is in the public under a new and independent title;
thus, by giving notice to all claimants to a disputed title,
condemnation
proceedings provide a judicial process for securing better title
against
all the world than may be obtained by voluntary conveyance.
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We, however, likewise
find the refusal of respondent NHA to pay just compensation, allegedly
for failure of petitioners to pay capital gains tax and surrender the
owners’
duplicate certificates of title, to be unfounded and unjustified.chanrobles virtuallaw libraryred
First, under the expropriation
judgment the payment of just compensation is not subject to any
condition.
Second, it is a recognized rule that although the right to enter upon
and
appropriate the land to public use is completed prior to payment, title
to the property expropriated shall pass from the owner to the
expropriator
only upon full payment of the just compensation. In the case of
Association
of Small Landowners in the Phils., Inc., et al. vs. Secretary of
Agrarian
Reform,[14]
it was held that:chanrobles virtuallaw libraryred
"Title to property which
is the subject of condemnation proceedings does not vest the condemnor
until the judgment fixing just compensation is entered and paid, but
the
condemnor’s title relates back to the date on which the petition under
the Eminent Domain Act, or the commissioner’s report under the Local
Improvement
Act, is filed.chanrobles virtuallaw libraryred
x x x Although the right
to appropriate and use land taken for a canal is complete at the time
of
entry, title to the property taken remains in the owner until payment
is
actually made.chanrobles virtuallaw libraryred
In Kennedy v. Indianapolis,
the US Supreme Court cited several cases holding that title to property
does not pass to the condemnor until just compensation had actually
been
made. In fact, the decisions appear to be uniformly to this effect. As
early as 1838, in Rubottom v. McLure, it was held that ‘actual payment
to the owner of the condemned property was a condition precedent to the
investment of the title to the property in the State’ albeit ‘not to
the
appropriation of it to public use.’ In Rexford v. Knight, the Court of
Appeals of New York said that the construction upon the statutes was
that
the fee did not vest in the State until the payment of the compensation
although the authority to enter upon and appropriate the land was
complete
prior to the payment. Kennedy further said that ‘both on principle and
authority the rule is x x x that the right to enter on and use the
property
is complete, as soon as the property is actually appropriated under the
authority of law for a public use, but that the title does not pass
from
the owner without his consent, until just compensation has been made to
him.’"
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Our own Supreme Court
has held in Visayan Refining Co. v. Camus and Paredes, that:chanrobles virtuallaw libraryred
If the laws which we
have exhibited or cited in the preceding discussion are attentively
examined
it will be apparent that the method of expropriation adopted in this
jurisdiction
is such as to afford absolute reassurance that no piece of land can be
finally and irrevocably taken from an unwilling owner until
compensation
is paid. x x x.chanrobles virtuallaw libraryred
With respect to the
amount of the just compensation still due and demandable from
respondent
NHA, the lower courts erred in not awarding interest computed from the
time the property is actually taken to the time when compensation is
actually
paid or deposited in court. In Republic, et al. vs. Court of Appeals,
et
al.,[15]
the Court imposed interest at 12% per annum in order to help eliminate
the issue of the constant fluctuation and inflation of the value of the
currency over time, thus:chanrobles virtuallaw libraryred
"The constitutional
limitation of ‘just compensation’ is considered to be the sum
equivalent
to the market value of the property, broadly described to be the price
fixed by the seller in open market in the usual and ordinary course of
legal action and competition or the fair value of the property as
between
one who receives, and one who desires to sell, it being fixed at the
time
of the actual taking by the government. Thus, if property is taken for
public use before compensation is deposited with the court having
jurisdiction
over the case, the final compensation must include interests on its
just
value to be computed from the time the property is taken to the time
when
compensation is actually paid or deposited with the court. In fine,
between
the taking of the property and the actual payment, legal interests
accrue
in order to place the owner in a position as good as (but not better
than)
the position he was in before the taking occurred.
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x x x This allowance
of interest on the amount found to be the value of the property as of
the
time of the taking computed, being an effective forbearance, at 12% per
annum should help eliminate the issue of the constant fluctuation and
inflation
of the value of the currency over time. Article 1250 of the Civil Code,
providing that, in case of extraordinary inflation or deflation, the
value
of the currency at the time of the establishment of the obligation
shall
be the basis for the payment when no agreement to the contrary is
stipulated,
has strict application only to contractual obligations. In other words,
a contractual agreement is needed for the effects of extraordinary
inflation
to be taken into account to alter the value of the currency."chanrobles virtuallaw libraryred
Records show that there
is an outstanding balance of P1,218,574.35 that ought to be paid to
petitioners.[16]
It is not disputed that respondent NHA took actual possession of the
expropriated
properties in 1977.[17]
Perforce, while petitioners are not entitled to the return of the
expropriated
property, they are entitled to be paid the balance of P1,218,574.35
with
legal interest thereon at 12% per annum computed from the taking of the
property in 1977 until the due amount shall have been fully paid.
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WHEREFORE, the appealed
judgment is modified as follows:
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1. Ordering respondent
National Housing
Authority
to pay petitioners the amount of P1,218,574.35 with legal interest
thereon
at 12% per annum computed from the taking of the expropriated
properties
in 1997 until the amount due shall have been fully paid;
2.
Ordering
petitioners to pay the capital gains tax; and
3.
Ordering
petitioners to surrender to respondent National Housing Authority the
owners’
duplicate certificates of title of the expropriated properties upon
full
payment of just compensation.
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SO ORDERED.chanrobles virtuallaw libraryred
Panganiban,
Sandoval-Gutierrez,
Corona and Carpio-Morales, JJ., concur.chan
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____________________________
Endnotes:
[1]
Penned by Associate Justice Remedios A. Salazar-Fernando, with Quirino
D. Abad Santos, Jr. and Salvador J. Valdez, Jr, JJ., concurring; Annex
A, Petition; Rollo, pp. 49-66.
[2]
155 SCRA 224 (1987).chanrobles virtuallaw libraryred
[3]
Exhibit B; Original Records, Volume 2, p. 305.
[4]
Exhibit I; ibid., pp. 318-322.chanrobles virtuallaw libraryred
[5]
Original Records, Volume 1, pp. 1-5.
[6]
Ibid., pp. 10-14.chanrobles virtuallaw libraryred
[7]
Commissioner’s Report issued in compliance with the Order dated July
13,
1994; Original Records, Volume 2, p. 407; Commissioner’s Report issued
in compliance with the Order dated November
11, 1994; ibid., p. 653.chanrobles virtuallaw libraryred
[8]
Heirs of Juancho Ardona, et al. vs. Reyes, et al., 125 SCRA 220 (1983).
[9]
Supra.chanrobles virtuallaw libraryred
[10]
Supra.chanrobles virtuallaw libraryred
[11]
Section 9, Article XIII, 1987 Constitution.
[12]
42 Phil 28 (1921).
[13]
G.R. No. 146587, July 2, 2002.chanrobles virtuallaw libraryred
[14]
175 SCRA 343 (1989).chanrobles virtuallaw libraryred
[15]
G.R. No. 146587, July 2, 2002.chanrobles virtuallaw libraryred
[16]
Original Records, Volume 3, pp. 731-732.
[17]
See Zaballero, et al. vs. NHA, et al., supra, pp. 226-227.chanrobles virtuallaw libraryred |