REPUBLIC OF THE PHILIPPINES, GENERAL ROMEO ZULUETA, COMMODORE EDGARDO GALEOS, ANTONIO CABALUNA, DOROTEO MANTOS & FLORENCIO BELOTINDOS, PETITIONERS, VS. VICENTE G. LIM, RESPONDENT.

Republic versus Lim

The Case

This is the case of Republic versus Lim, decided by the Supreme Court in June 2005. The Republic of the Philippines, joined by several military officers in possession of the land, asks the Court to overturn a judgment declaring Vicente Lim the absolute owner of a parcel of land in Cebu City. The Republic insists it acquired the land through an expropriation judgment that became final in the late nineteen forties. The case matters because it confronts the oldest question in eminent domain: when does title actually pass to the government? The Court answers that the government does not own what it has never paid for, and that more than half a century of nonpayment is not delay but confiscation.

Procedural History

The story begins in the Court of First Instance of Cebu, which rendered the expropriation judgment in May 1940. The landowners appealed, but the Court of Appeals dismissed the appeal in March 1948, and an entry of judgment was made in April 1948. When the Republic still refused to pay, the successors-in-interest filed an action for recovery of possession with damages. The Court of First Instance ruled for them in July 1962, adjusting the value of the lots and ordering payment with interest. That ruling was appealed directly to the Supreme Court, which affirmed it in May 1966 in the earlier case of Valdehueza versus Republic.

Years later, Vicente Lim, who had acquired one of the lots through a foreclosure of mortgage, filed a complaint for quieting of title before the Regional Trial Court of Cebu City against the military officers and, later, the Republic. The trial court ruled for Lim in May 2001, declaring him the absolute and exclusive owner with the right of possession. The Republic appealed to the Court of Appeals, which affirmed in September 2003. The Republic then filed a petition for review on certiorari with the Supreme Court. The Court denied the petition outright in March 2004 and denied reconsideration with finality in May 2004. After further motions, the Court took another hard look at the issue and rendered this decision.

Facts

In September 1938, the Republic filed an expropriation action over two lots in the Banilad Friar Land Estate in Lahug, Cebu City, to establish a military reservation. After depositing nine thousand five hundred pesos, the Republic took possession. In May 1940, the trial court ordered the Republic to pay the owners, the Denzons, the sum of four thousand sixty-two pesos and ten centavos as just compensation. The judgment became final and was entered in April 1948. Yet the Republic never paid.

The heirs spent years chasing payment. In 1950 the National Airports Corporation denied knowledge of their claim. Even a presidential letter directing the agencies to expedite the claim produced nothing. In 1961 the heirs sued to recover possession. The trial court ruled for them, and in 1966 the Supreme Court affirmed, holding that they remained the registered owners because no compensation had been paid, but that they could not recover possession and could only demand the fair market value, fixed at sixteen thousand two hundred forty-eight pesos and forty centavos with six percent interest. The Republic did not pay that either.

Meanwhile, the heirs had mortgaged one lot to Vicente Lim in 1964. When they failed to pay, the mortgage was foreclosed in 1976, and a new title was issued in Lim's name. In 1992, Lim filed an action to quiet title against the military officers occupying the land and against the Republic. Both the trial court and the Court of Appeals ruled that he was the owner, and the Republic came to the Supreme Court.

Issues

• Whether or not the Republic retained ownership of the expropriated lot despite its failure to pay just compensation under a judgment that became final in 1948.
• Whether or not the private landowner may recover possession of property taken under eminent domain when the government fails to pay just compensation for more than fifty years.
• Whether or not the public use of the property by the military bars the landowner from recovering it.

Applicable Provisions

Section 9, Article III of the Constitution provides:

Private property shall not be taken for public use without just compensation.

This is the provision the Republic disregarded, and the Court treats it not as a grant of power but as a limitation on the expropriator.

Section 2, Rule 52 of the 1997 Rules of Civil Procedure provides:

No second motion for reconsideration of a judgment or final resolution by the same party shall be entertained.

The Court cites this to note that the Republic's motion for clarification was really a prohibited second motion for reconsideration.

Ruling

On the first issue, the Court holds that the Republic did not retain ownership. The recognized rule is that title passes to the expropriator only upon full payment of just compensation. The Court quotes its own precedent: 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. Expropriation has two stages, the determination of the authority to expropriate and the determination of just compensation, and it is only upon completion of both that expropriation is complete. Since the process is not completed until payment, fifty-seven years of nonpayment rendered the expropriation incomplete.

On the second issue, the Court acknowledges the general doctrine that nonpayment of just compensation does not entitle the landowner to recover possession. But it refuses to apply that doctrine here, because the Republic was ordered to pay twice and defied both orders. The Court construes the failure to pay as a deliberate refusal, and under such circumstance recovery of possession is in order. It also holds that just compensation embraces payment within a reasonable time from the taking, and that without prompt payment compensation cannot be considered just.

On the third issue, the Court holds that public use by the military does not bar recovery. An individual cannot be deprived of his property for the public convenience, and mere expediency will not excuse constitutional shortcuts.

Doctrine

• Title passes only upon full payment. Title to expropriated property passes from the owner to the expropriator only upon full payment of just compensation. The government's acquisition of ownership is conditioned upon full payment within a reasonable time.
• Just compensation includes promptness. Just compensation embraces not only the correct determination of the amount but also payment within a reasonable time from the taking. Without prompt payment, compensation cannot be considered just.
• The constitutional guarantee is a limitation. Section 9, Article III is not a grant but a limitation of power, strictly interpreted against the expropriator and liberally in favor of the property owner.
• The exception on possession. As a rule, nonpayment does not entitle the landowner to recover possession. But where the government's failure to pay amounts to a deliberate refusal, as after decades of defiance of final judgments, recovery of possession is in order.

Disposition

The Supreme Court denied the Republic's petition and affirmed the ruling that Vicente Lim is the absolute and exclusive owner of the lot with the right of possession.

Remember This

Memorize this line: without full payment of just compensation, there can be no transfer of title from the landowner to the expropriator. Examiners use this case to test the two stages of expropriation and the exception allowing recovery of possession when the government's nonpayment is a deliberate refusal.