SOCORRO M. ZABALLERO, MARINA Z. REYES, ELENA F. ZABALLERO, SOCORRO Z. FRANCISCO, EUGENIA ZABALLERO, LEONARDO M. ZABALLERO AND AUGUSTO M. ZABALLERO, PETITIONERS, VS. NATIONAL HOU…

These petitions were
consolidated as they arose from the same set of facts,
involve the same parties and the same subject matter for resolution.

G.R.
No. L-49291-92 is an
appeal by certiorari of the Decision and Resolution of the Seventh
Division of the Court of Appeals dated October 16, 1978 and November 14,
1978, respectively, nullifying the orders of the then Court of First Instance
of Cavite in Civil Cases Nos.
T.G.-392 and T.G.-417. 
On the other hand, G.R. No. 61237-39 is a petition for review by
certiorari of the final decision of the CFI of Cavite
in the consolidated Civil Cases Nos. T.G. 392, 396 and 417,
involving the expropriation of Lot Nos. 6450, 6448-E, 6198-A and 6199 of the
cadastral survey of Dasmarinas, Cavite, specifically on the issue
of just compensation.

The record shows that in
1977, the National Housing Authority (NHA) instituted separate complaints for
expropriation of sugarcane lands belonging to the Zaballeros,
situated in the municipality of Dasmarinas, Cavite.  The
stated public purpose of these expropriation case is
the expansion of the Dasmarinas Resettlement Project
to accommodate the squatters who were relocated from the Metropolitan Manila
area.

The first complaint,
docketed as Civil Case No. T.G.-392, was filed on February
14, 1977 and amended
on June 29, 1977
to implead other parties.  This complaint called for the expropriation
of Lot 6450 of the cadastral survey of Dasmarinas, Cavite with an area of 79,167 square meters which the NHA
alleged to have an assessed value of P31,670.00 as
shown by the tax declaration and “that on the basis of this valuation, the
lawful and reasonable provisional value of the property sought to be
expropriated is P79,170.00 as per assessor’s market value as per P.D.
76.” (Complaint, Civil Case No. T.G.-392).

This complaint alleged
the fact that the plaintiff NHA had deposited with the Philippine
National Bank (PNB), Cavite City Branch, the amount
of P446,770.00 which included the amount of P31,670.00
representing the assessed value of the property sought to be expropriated, as
evidenced by the certificate of deposit issued by said bank.  A similar statement was made in the complaint
for expropriation docketed as Civil Case No. T.G.-417 with the difference in
the amount of the assessed value which was fixed at P60,394.02.

Upon motion filed by the
plaintiff NHA on February 22, 1977, the trial court issued a writ of possession
dated May 19, 1977
commanding the Provincial Sheriff to transfer possession of Lot 6450 to the NHA.

On April
11, 1977, a similar case was filed against Leonardo M. Zaballero involving the latter’s sugarcane land (Lot
No. 6448-E of the cadastral survey of Dasmarinas, Cavite) containing an area of 20,872 square meters
and docketed before the CFI of Cavite as Civil Case
No. T.G.-396.  The
complaint likewise included a statement as to the sum of P8,350.00 deposited by
the plaintiff NHA with the same PNB Branch.  The NHA’s motion
for a writ of possession was granted on June 30, 1977.

The third complaint filed
on July 22, 1977
(Civil Case No. T.G.-417) sought the expropriation of Lots 6198-A and 6199
covered by T.C.T. Nos. RT-639 and RT-641, respectively, with an aggregate area
of 159,985 square meters, also of the cadastral survey of Dasmarinas,
Cavite.  It also alleged that on the
basis of the assessed value of the two lots, “the lawful and reasonable
provisional value of the property sought to be expropriated is P152,777.24 as per assessor’s market value per P.D. 76.”
(Complaint, Civil Case No. T.G.-417, p. 4).

The answers of the
defendants Zaballeros in the expropriation cases
denied, among others, the right of NHA to expropriate their properties and
prayed for the dismissal of the complaints.  Negotiations were however undertaken by the
parties and after some time, the owners of the land conceded to NHA the right
to expropriate.  The Zaballeros
agreed to the immediate voluntary delivery of the land under expropriation,
subject to the payment of just compensation to be ascertained first by
negotiation and should this fail, through judicial adjudication.  The NHA accordingly took over possession and
use of the Zaballero properties.  The parties tried to negotiate a mutually acceptable market value of the land
and, failing to reach an agreement thereon, the matter was submitted for
judicial determination.

After the joinder of issues and settlement negotiations, the Zaballeros
filed in Civil Cases Nos. T.G.-392
and T.G.-417 separate motions for partial and/or provisional payment of the market
value of the 228,113 square meters of
sugar land actually taken for
exclusive use by the NHA.  The two motions with identical
prayers read as follows:

WHEREFORE, defendants respectfully pray that, pending agreement on
the final valuation of defendants’ property and/or Court’s order, defendants
respectfully pray that (sic) an order
be issued directing the Cavite City Branch of the
Philippine National Bank to release plaintiff’s deposit of P446,770.00 unto defendants, as and by way of provisional and/or
partial payment on defendants’ property subject matter of the instant
litigation and already taken over and being used by plaintiff.

By way of answer to the
abovementioned motions, the plaintiff NHA filed a pleading entitled
“Comment on the Defendants’ Motion for Partial and/or Provisional
Payment” wherein it interposed no objection to the partial and/or
provisional payments to the defendants of the just compensation of the property
in question provided said compensation be based on their declaration as to the
fair market value under Pres. Dec. No. 76 or the assessor’s market value under
the respective tax declarations, whichever is lower, pursuant to Pres. Dec. No.
794.

Hearings on the motions
were held on October 17 and 25, 1978 where it was stipulated that the evidence
adduced thereat will likewise form part of the parties’ evidence on the merits
of the case.  The NHA presented no
evidence to rebut the P9.50 per square meter valuation testified to and
documented by the Zaballeros but insisted that the
tax declarations as to the current market value of the properties
be made the basis of payment.

The trial court in an
order dated December 13, 1977 granted the said motions.  On January 5, 1978 the the court
amended the dispositive portion of the said order to
read as follows:

WHEREFORE, the Cashier-Vice President of the Philippine National
Bank, Escolta, Manila is hereby ordered to release and deliver to the defendants
and/or their duly authorized representative the sum of P466,770.00  deposited with it by plaintiff NHA, as and by way of partial and/or provisional payment
of the properties under expropriation in these cases.

In this order, the trial
court fixed the value of the expropriated property at P7.75 per square meter.

Not convinced of the
reasoning of the trial court, the NHA filed a motion for reconsideration but
the same was denied in an order dated January 19, 1978.  The
NHA then went to the Court of Appeals on a petition for certiorari.  Finding the petition to be meritorious, the
appellate court rendered judgment nullifying the above orders of the trial
court and required the Zaballeros to return to the
PNB the amount of P466,770.00.  As stated, this decision of the Court of
Appeals is the subject matter of the appeal in G.R. No. L-49291-92.

In Civil
Case No. TG-396, however,
the defendant Leonardo M. Zaballero, instead of
asking for partial payment, moved for the delivery of the deposit on January 26, 1981.  On February
4, 1981, the trial
Court ordered the immediate release of the amount of P8,350.00
deposited by the plaintiff with the PNB in favor of the
defendant.

Subsequent
to the issuance of the trial court order in Civil Cases No. TG-392 and No.
TG-417, the parties entered into pre-trial. 
The three expropriation cases were subsequently consolidated after which
the trial court issued a pre-trial order on December 17, 1980, which reads as follows:

When this case was called for pre-trial, the parties stipulated
that in view of the issues raised in the pleadings, and considering that the
parties have already presented evidence regarding the question of just
compensation, and it appearing that there is no dispute regarding the right of
eminent domain being exercised by the plaintiff corporation, that all the
evidences so far presented during the hearing of the various incidents shall be
considered reproduced as evidence
during the hearing without prejudice on the part of the parties to present additional evidence if they so desire,
regarding the actual reasonable valuation of the subject  properties. 
(Annex “F” to G.R. No. 61237-39, Rollo, p. 104).

On March 9,
1982, the three
cases were considered submitted for decision insofar as the defendants Socorro Zaballero, Elena F. Zaballero,
Eugenia Zaballero, and Leonardo M. Zaballero were concerned. 
The order, however, allowed defendants Marina Z. Reyes, Socorro Z.
Francisco and Augusto M. Zaballero
to present additional evidence regarding the fair market value of the subject
properties.

A final determination of
the amount of just compensation was rendered in the trial court’s decision
dated April 7,1982 the dispositive
portion of which reads as follows:

WHEREFORE, judgment is hereby rendered:

In Civil Case
No. TG-392:

*           *           *

2)  Sentencing the plaintiff
National Housing Authority to pay the defendants SOCORRO M. ZABALLERO, ELENA F.
ZABALLERO, EUGENIA M. ZABALLERO, and LEONARDO M. ZABALLERO a just compensation
for their respective proportionate or aliquot shares in the abovecited
subject property at the rate of P7.75 per sq. m., inclusive of the
proof-sustained disturbance compensation;

3)  Fixing and determining
that the just compensation for the entire property subject of this case,
consisting of 79,167 sq. m., in the aggregate amount of P613,544.25.  However, the amount of P154,515.97
heretofore delivered to and received by all the defendants in compliance with the order of 13 December
1977, as corrected by the order of 7 February 1978, shall also be deducted from
said amount, thereby leaving a balance
of P459,028.38 due and payable to all the defendants;

*           *           *

In
Civil Case No. TG-396:

*           *           *

2)  Sentencing the plaintiff
National Housing Authority to pay the defendant LEONARDO M. ZABALLERO a just
compensation for the abovecited property at the rate
of P7.75 per sq. m., inclusive of the proof-sustained disturbance compensation;

3)  Fixing and determining
that the just compensation for the entire property subject of this case,
consisting of 20,872 sq. m., in the aggregate sum of P161,758.00.  However,
the amount of P8,350.00 heretofore delivered to and received by the
defendant in compliance with the order of 4 February 1981, shall be deducted
from said amount, thereby leaving a balance of P153,408.00 due and
payable to the defendant LEONARDO M. ZABALLERO;

*           *           *

In
Civil Case No. TG-417:

*           *           *

2)  Sentencing the plaintiff
National Housing Authority to pay the defendants SOCORRO M. ZABALLERO, ELENA F.
ZABALLERO, EUGENIA M. ZABALLERO, and LEONARDO
M. ZABALLERO a just compensation for their respective proportionate or aliquot
shares in the above-cited properties at the rate of P7.75 per sq. m., inclusive of the proof-sustained disturbance compensation;

3)  Fixing and determining
that the just compensation for all the properties subject of this case,
consisting of an aggregate area of 159,985 sq. m., in the aggregate sum of
P1,239,883.75.  However, the amount of P312,254.13
heretofore delivered to and received by
all the defendants in compliance with the order of 13 December 1977, as
corrected by the order of 7 February 1978, shall be deducted from said amount,
thereby leaving a balance of P972,629.62
due and payable to all the defendants;

*           *           *

SO ORDERED.

In
all these three cases, the plaintiff NHA was ordered to pay the costs.

This Court notes that the
dispositive portion of said decision did not include
payment of the determined just compensation to the defendants Marina Z. Reyes,
Socorro Z. Francisco and Augusto M. Zaballerro because of the reservation they made with
respect to presenting additional evidence on the fair market value of the
subject properties.  However, it appears
that the abovenamed individuals submitted themselves
to the judgment of the trial court as shown in their Comment to the Petition of
NHA, the prayer of which reads as follows:

WHEREFORE, respondents respectfully pray that the decision of the
court a quo dated 7 April 1982 be affirmed in
toto, with award of such other reliefs as may be just and equitable in the premises.  (Comment, G.R. No. 61237-39, Rollo, p.148).

The April 7, 1982
Decision is the subject matter of the petition in G.R. No.
61237-39.  In a Resolution dated
September 16, 1982, this Court issued a temporary restraining order enjoining the
trial court and the Zaballeros from executing the
decision of April 7, 1982, such restraining order to be effective and continuing until otherwise ordered.

In summary, there are two
legal issues for resolution which are raised in these
consolidated cases, namely:

I.  Whether or not it was proper for the trial court to order partial and/or provisional payment of just compensation before
trial on the merits have begun; and

II.  Whether
or not the Government by itself or through it authorized agencies may be
compelled to pay by way of just compensation for properties expropriated, an
amount greatly in excess of the limits prescribed by Pres. Dec. No. 76, as
amended by Section 92 of Pres. Dec. No. 464 and further amended by Pres. Dec. Nos. 794, 1224, 1259 and 1533.

I.  On the first issue, it
is the Zaballeros‘ position that the partial payment
of compensation is a sine qua non to government
take-over of property and that the only reason why the trial court had to touch
and intrude into the issue of just compensation was for the purpose of
determining whether or not the claimed partial payment is reasonable. 
The NHA, on the other hand, contends that it does not object to
provisional payment so long as the same is in accordance with the Presidential
Decrees.  However, it disagreed with the
manner by which the trial court fixed the provisional value of the expropriated
properties saying that in effect, just
compensation was already determined when the trial court was not in a position
to do so because there was no pre-trial yet.

The Court of Appeals
considered the order of the trial court dated December 13, 1977
as referring only to the two motions
for partial payment (Decision in C.A.-G.R. Nos. SP-07925 and SP-07926, Rollo, p. 113). 
That the hearings on the two motions was not a trial on the issue of
just compensation is supported by the
agreement between the parties that the evidence adduced during the hearings would
only form part of the parties’ evidence
on the merits of the case, and by the fact that after the trial judge issued
the questioned orders, he set the
two cases for expropriation for pre-trial on April 3, 1977.  In
fixing the price of the expropriated property per square meter, the trial court
did so for the purpose of determining the amount of provisional payment and not
for the purpose of finally adjudicating the question on just compensation.  This being the case, there is no need for a pre-trial before the trial court could ascertain the provisional value of the
land.  More so that
during the hearings on the motion for partial payment, the parties were given the opportunity to adduce evidence as to the fair market value of the
property.  The trial court, therefore, had ample basis
for determining the provisional value of the land.

Rule 67 of the Rules of
Court on Eminent Domain is silent on the matter of provisional payment pending
the determination of just compensation but Philippine jurisprudence on the subject is not.  In the case of Republic of the Philippines v. Pasicolan [112
Phil. 517, (1961)]; 2 SCRA 626]
this Court recognized the collection made by the landowner of the amount
deposited on the provisional payment of the expropriated lots.  The Court ruled as follows:

. . . The sum of P3,240.00 was deposited by the Government as a condition precedent to
its right to take possession of said lots, pursuant to Rule 69, section 3
(now Rule 67, section 2) of the Rules
of Court.  The collection of said sum by
the Salases was a recognition not merely of that right which was perfected
upon the making of said deposit, unless the court fixed another amount as the
provisional value of the lots, but also, of the compliance with said
condition.  It thus rendered such right
effective and executory. . .

The purpose of the
preliminary deposit was spelled out in Visayan
Refining Co. v. Camus and
Paredes, [40 Phil. 550 (1919)]:

. . . for it is obvious that this preliminary deposit serves
the double purpose of a prepayment upon
the value of the property, if finally
expropriated; and as an indemnity against damage in the eventuality that
the proceedings should fail of consummation. . . (Underscoring supplied).

Considering that the
owners do not dispute the right of NHA to expropriate the
properties, the release of the amount deposited in favor of the Zaballeros served the purpose of a prepayment on the value of the expropriated
properties pending the final determination of just compensation by the
trial court in accordance with Rule 67
of the Rules of Court.  By virtue of
section 2, Rule 67, the trial judge ascertains and fixes the provisional value
of the expropriated property to determine the amount of deposit to be made
before the plaintiff shall have the right to enter upon the possession of the
property involved.  If the trial court is
allowed to do this, and where, as in the case at bar, the defendants have
conceded to plaintiff’s authority to expropriate and the plaintiff had already
taken possession of the property, equity dictates that provisional compensation
be ordered in favor of the owners.

The present case must be
distinguished from that of Republic of the Philippines v. Guido [83 Phil. 934 (1949)] wherein this court
annulled an order of the trial court authorizing the withdrawal of a portion of the amount deposited which was claimed by the
defendant-landowner as payment for unpaid back and current rentals
due from some tenants occupying
the land subject of the expropriation.  Quoting the pertinent portion of that decided case:

After the careful study of this case and of the issues involved, We agree with
the petitioner that the issuance of the
order of the trial court of April 13, 1948, was unwarranted and illegal.  Even assuming for a moment that the money
deposited in court in condemnation proceeding in order to give possession of
the land to the plaintiff is subject to the payment of damages consisting of
rentals, in a case where the defendant landowner, as in the present case, is
still in possession of the land, still the law contemplates that said damages be assessed during the condemnation proceedings and that they
were caused thereof.  The amount of P7,534.52, authorized
by the trial court in its order of April 13, 1948 to be paid out of the deposit made in
court, according to the very respondent Guido, includes rentals due and payable
as far back as July, 1946.  Inasmuch as the condemnation proceedings were
commenced only after December 31, 1947, the date of the authority given by the
President of the Philippines to institute condemnation proceedings, it is obvious
that said unpaid rentals, assuming them to be damages in expropriation
proceedings, were caused long before the institution of these condemnation
proceedings, and consequently, were not
caused by reason thereof.  Furthermore,
there is force in the contention of the petitioner that if, pending
condemnation proceedings, that amount of the deposit required by the court so
that possession of the land may be given to the plaintiff is diminished, not
only once but continually as is feared in the present case in order to pay for
the supposed damages consisting of rentals due and payable by the tenants of
the land, then the time will come when the amount of the deposit would be so
inadequate as to render precarious the provisional
possession given to the plaintiff, unless said plaintiff, from time to time,
made further deposits to keep the original amount intact. . .

The foregoing quotation explains why this Court in the Guido case annulled the order of the trial
court.  What the defendant-landowner
claimed in that case was the payment of rentals due from
some tenants on the ground that the amount being collected represented the
amount deposited by the tenants.  This
allegation not having been established, the Court refrained from ruling upon
it.  The case at bar, however, involved
collection of the amount deposited by way of partial and/or provisional payment
of just compensation to which petitioners were undoubtedly entitled.  The Guido case is therefore inapplicable.

II.  The
second issue, raised by the NHA, pertains to the trial court’s final
adjudication of the question of just compensation.  The NHA posits that applying the provisions
of Pres. Dec. No. 76, as amended, the just compensation for the Zaballero properties should be only P1.00 per square meter
and not P7.75 as determined by the trial
court.

The question relative to the basis for fixing just compensation
in eminent domain cases is not new.  This
has been dealt with squarely in the recently decided case of Export Processing
Zone Authority v. Dulay
(G.R. No. 59603, April 29, 1987) and reiterated in Ignacio v. Guerrero (G.R. No. L-49088, May 29, 1987). 
This Court in the EPZA case declared the provisions of the Pres.
Dec. Nos. 76, 464, 794, and 1533, unconstitutional and void insofar as they
pegged the basis for determining just compensation to the fair market value
declared by the owner or administrator of the property, or the market value as
determined by the assessor, whichever is lower. 
Citing precedents on the matter of just compensation, this Court held in the EPZA case that:

The determination of “just compensation” in eminent
domain cases is a judicial function.  The
executive department or the legislature may make the initial determinations but
when a party claims a violation of the guarantee in the Bill of Rights that
private property may not be taken for public use without just compensation, no statute, decree, or
executive order can mandate that its own determination shall prevail over the
court’s findings.  Much less can the courts be precluded from looking into the
“just-ness” of the decreed compensation.

The trial court correctly
applied the law on the matter of just compensation in rendering the disputed
decision of April 7, 1982.  In
the words of the trial court:

Since courts must first construe acts of government conformably
with the Constitution, the proper, nay, inexorable, meaning to be given the
cited Presidential Decrees should be that the rules therein enumerated are intended merely to provide
guidelines for the courts as they go about their functions of determining just
compensation.  The plaintiff, therefore,
may not impute upon the presidency the unconstitutional intent of direct
executive determination of just compensation in the promulgation of the cited
decrees and as a delegate of presidential powers, the National
Housing Authority certainly cannot rise higher than its principal’s
constitutional source of authority.  (Decision, G.R. No. 61237-39 Rollo, p. 57).

In arriving at the P7.75
per square meter valuation, the trial court considered the evidence presented
by the Zaballeros consisting of documents and the
testimony of Marina Z. Reyes on
the following:  (1) the classification and use for which the expropriated property
is suited; (2) the developmental costs
for improving the land; (3) the value declared by the owners; (4) the selling
price of similar lands in the vicinity; (5) the reasonable “disturbance
compensation” for the removal and/or demolition of certain improvements on
the land and for the value of the sugar cane crops, trees and other
improvements thereon.  The court
consequently overruled, and rightly so, the NHA’s insistence that the just
compensation should be set at P1.00 per square meter, which is the assessed
market value.

With respect to the NHA’s contention that the trial court erred in awarding
“disturbance compensation” of P1.75 per square meter, in addition to
the declared value of P6.00 per square meter adopted by the trial court
as the fair market value of the expropriated property, this Court finds that although it was
erroneously denominated, this amount actually represents consequential losses
to the owners of the property for the removal and/or demolition of
certain improvements and the value of sugar cane crops and fruit trees existing
on the expropriated land at the time of the taking.  Undoubtedly, this is a factor to
be taken into account in fixing the just compensation.

WHEREFORE, the Court in G.R. No. L-49291-92 hereby GRANTS the petitions and
SETS ASIDE the Court of Appeals decision and resolution dated October 16, 1978
and November 14, 1978, respectively; and in G.R. No. 61237-39 DENIES the petitions and AFFIRMS the April 7, 1982 Decision of the trial court with the
provision that defendants MARINA Z. REYES, SOCORRO Z. FRANCISCO and AUGUSTO M.
ZABALLERO should likewise be paid just compensation for their respective proportionate shares in the subject
properties at the rate of P7.75 per square meter inclusive of the consequential
losses deducting from the total value of their land whatever partial or
provisional payment they had receives and paying them the balance
plus costs.  The temporary restraining
order issued by this Court on September
16, 1982 is hereby LIFTED and
SET ASIDE.

SO ORDERED.

Teehankee, C.J., Yap, Fernan, Melencio-Herrera,
Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, and Sarmiento, JJ., concur.

Narvasa, J., no part.