BENGUET CONSOLIDATED, INC., (NOW BENGUET CORPORATION), PETITIONER, VS. REPUBLIC OF THE PHILIPPINES, RESPONDENT.

Benguet Consolidated versus Republic of the Philippines

The Case

This is a petition for review of a decision of the Intermediate Appellate Court in an expropriation case, brought by Benguet Consolidated, Inc., now Benguet Corporation, against the Republic of the Philippines. The Republic had condemned the corporation's four mining claims for the permanent site of the Philippine Military Academy. The case matters because it settles two enduring questions: whether a perfected mining claim is beyond the reach of eminent domain, and how just compensation is measured and paid when the government takes property before paying for it.

Procedural History

The Republic filed a complaint for expropriation before the then Court of First Instance of Benguet and Baguio against ten defendants, including Benguet Consolidated. The trial court entered an order of condemnation declaring that the Republic had the lawful right to take the property upon payment of just compensation. A Board of Commissioners was formed and submitted a report recommending payment of 43,703 pesos and 37 centavos to the ten defendants as just compensation. The trial court rejected the Commissioners' Report and made its own findings, and in its decision awarded various sums to the defendants but omitted any award to Benguet Consolidated. After the corporation filed a motion for clarification, a motion for new trial and reconsideration, a motion to reopen, and a second motion for clarification, the trial court fixed the just compensation for the surface area of the four claims at 128,051 pesos and 82 centavos, with interest at six percent per annum from May 6, 1950 until fully paid, plus attorney's fees equal to five percent of the sum fixed. The motion to reopen was denied. Only the Republic and Benguet Consolidated appealed. The Intermediate Appellate Court reversed and set aside the trial court's decision, condemned the mineral claims for the public use stated in the complaint, and ordered the Republic to pay the defendants, including 7,532 pesos and 46 centavos to Benguet Consolidated. The corporation then filed this petition for review with the Supreme Court.

Facts

On June 18, 1958, the Republic filed a complaint for expropriation against ten defendants, among them Benguet Consolidated, Inc. The Republic stated that it needed the property to establish and maintain a permanent site for the Philippine Military Academy, a training institution for officers of the Armed Forces under the Department of National Defense. It averred that it had occupied the area since May 6, 1950 and had installed permanent buildings and improvements worth no less than three million pesos, in the belief that the area was unoccupied portions of the public domain.

The corporation's four mining claims, with a total area of 25.1082 hectares, were located as follows: Jean on May 18, 1933; Dolores Fr on May 15, 1933; Nugget Fr on August 24, 1930; and Smoke on May 11 and 12, 1933. The corporation moved to dismiss, arguing that the Republic did not need and had not occupied its claims, that the terrain was rugged and useless to the Academy, and that the expropriation of its mineral claims violated the law. The hearing on the motion was held in abeyance pending a possible amicable settlement, and the trial court nonetheless issued an order of condemnation. The corporation took exception, and the trial court placed on record that the corporation had not waived its right to challenge the condemnation.

A Board of Commissioners conducted ocular inspections and received documentary evidence and the testimony of mining experts. It found that the exploration and development work on the corporation's claims was insufficient to estimate their mineral value, that no ore body had been found, and that only the surface rights could be valued. Using the Schedule of Assessed Values of Mineral Lands, it classified the claims as non-producing unpatented claims at 300 pesos per hectare, producing 7,532 pesos and 46 centavos. The trial court initially rejected the report but later computed its own award on the same surface-value basis.

Issues

• Whether or not the condemnation of the petitioner's mineral claims is contrary to law and applicable jurisprudence.
• Whether or not an order of condemnation may be entered before a motion to dismiss is resolved.
• Whether or not the amount of 7,532 pesos and 46 centavos is just compensation for the condemned mining claims.
• Whether or not the petitioner is entitled to legal interest from the time the government took over the mining claims until payment.

Applicable Provisions

The decision applies the rule on eminent domain stated in the Bill of Rights, which provides:

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

This is the constitutional basis for the taking of the petitioner's mining claims and for the award of just compensation.

The decision also applies the Rules of Court on condemnation, which provide:

If the motion to dismiss is overruled, or if no motion to dismiss has been presented, the court may enter an order of condemnation.

This provision governs the sequence of steps in expropriation and bears on the petitioner's procedural objection.

Ruling

On the first issue, the Court held that the petitioner's arguments have no merit. The filing of expropriation proceedings itself recognizes that the property is no longer part of the public domain, for the power of eminent domain refers to the power of government to take private property for public use. If the mineral claims were public, there would be no need to expropriate them. The fact that the location of a mining claim has been perfected does not bar the Government's exercise of the power of eminent domain, which covers all forms of private property, tangible or intangible, and includes rights attached to land.

On the second issue, the Court acknowledged the rule in the Nieto case that no order of condemnation may be entered if the motion to dismiss has not been passed upon and overruled. But here the ruling on the motion was deferred pending settlement, and the trial court expressly recorded that the corporation had not waived its right to challenge the condemnation. More decisively, the Court found the petitioner estopped. In its motion for new trial and reconsideration, the corporation stated that it did not dispute the government's right to exercise eminent domain and that its concern was just compensation. Having abandoned its earlier stand, it could no longer question the condemnation.

On the third issue, the Court found no reason to disturb the findings of the appellate court. A court may reject a Commissioners' Report when the amount allowed is palpably inadequate, but the petitioner did not support its claim that the award was ridiculously low. The commissioners were experienced mining engineers, held sixty-four hearings, considered ore reserves, base metal concentrates and gypsum deposits, and conducted an ocular inspection. The petitioner did not even file an opposition to the Commissioners' Report in the lower court.

On the fourth issue, the Court held that the appellate court should have provided for the payment of legal interest from the time the government took over the mining claims until payment, following the rule that interest runs as a matter of law and follows as a matter of course from the right of the landowner to be placed in as good a position as money can accomplish as of the date of the taking.

Doctrine

• A perfected mining claim is private property and is subject to the power of eminent domain; the filing of expropriation proceedings recognizes that the property is no longer part of the public domain.
• The power of eminent domain covers all forms of private property, tangible or intangible, including rights attached to land.
• A party that abandons its objection to the condemnation and confines itself to the question of just compensation is estopped from later questioning the propriety of the expropriation.
• A Commissioners' Report may be rejected only when the amount allowed is palpably inadequate; absent contrary evidence, the findings of fact of the appellate court are respected.
• Just compensation includes legal interest from the date of taking until payment, because the owner is entitled to be placed in as good a position as money can accomplish as of the date of the taking.

Disposition

The petition was denied, the decision of the Intermediate Appellate Court was affirmed, and the case was modified only by adding the payment of legal interest from the time the government took over the mining claims until full payment.

Remember This

The single line to memorize is that a perfected mining claim is private property, and the government may take it for public use upon payment of just compensation with legal interest from the date of taking. Examiners use this case to test the scope of eminent domain over mining claims and the rule on interest as an integral part of just compensation.