Primary Holding

Presidential Decrees No. 76, 464, 794, and 1533, which limit just compensation to the lower of the owner’s declared value or the assessor’s value, are unconstitutional and void as they encroach upon the judiciary’s inherent power to determine just compensation in expropriation cases.

Background

The Export Processing Zone Authority (EPZA) sought to expropriate private land owned by San Antonio Development Corporation for the Mactan Export Processing Zone. EPZA attempted to base just compensation on valuations stipulated in Presidential Decrees, which were significantly lower than the market value. The trial court appointed commissioners to determine just compensation under Rule 67 of the Rules of Court, prompting EPZA to file this petition questioning the court's authority to do so.

Facts

• 1. President of the Philippines issued Proclamation No. 1811 to establish an export processing zone in Lapu-Lapu City.
• 2. The proclamation included privately owned land belonging to San Antonio Development Corporation.
• 3. EPZA offered to purchase the land based on valuation in P.D. No. 464, which was rejected by the landowner.
• 4. EPZA filed an expropriation complaint and sought a writ of possession, which was granted.
• 5. The trial court, upon failing to reach an agreement on just compensation, appointed commissioners as per Rule 67 of the Rules of Court to determine just compensation.
• 6. EPZA argued that Presidential Decrees, particularly P.D. No. 1533, superseded Rule 67 and limited just compensation to the lower of the declared value or assessor's value, making commissioner appointments unnecessary.

Arguments of the Petitioners

• 1. Presidential Decrees No. 76, 464, 794, and 1533 have repealed or superseded Sections 5 to 8 of Rule 67 of the Revised Rules of Court regarding the determination of just compensation in expropriation cases.
• 2. P.D. No. 1533 is the applicable law and provides the exclusive and mandatory method for determining just compensation, which should be based on the fair market value declared by the owner or determined by the assessor, whichever is lower.
• 3. Appointing commissioners under Rule 67 is unnecessary and improper as P.D. No. 1533 has already vested the power to determine just compensation in the assessor and property owner through administrative appeals.
• 4. The method prescribed in P.D. No. 1533 is valid and constitutional.

Arguments of the Respondents

• 1. The respondent judge, acting in his capacity, maintained the court's power and duty to determine just compensation judicially.
• 2. The appointment of commissioners under Rule 67 of the Rules of Court is a valid and necessary procedure for ascertaining just compensation in expropriation cases.
• 3. The Presidential Decrees, by limiting the court's discretion in determining just compensation, are unconstitutional as they encroach upon judicial prerogatives and violate due process.
• 4. Just compensation must be fair and should reflect the market value of the property at the time of taking, considering various factors, not just the declared value or assessor's value.

Issues

• 1. Whether Presidential Decrees No. 76, 464, 794, and 1533 validly repealed or amended Sections 5 to 8 of Rule 67 of the Revised Rules of Court, specifically concerning the appointment of commissioners in expropriation cases.
• 2. Whether the method of determining just compensation prescribed in P.D. No. 1533, limiting it to the lower of the owner's declared value or assessor's value, is constitutional.
• 3. Whether the courts retain the power to determine just compensation independently and appoint commissioners under Rule 67, or are bound by the valuation methods outlined in the Presidential Decrees.

Ruling

• 1. The Supreme Court ruled in favor of the respondent judge and against the petitioner EPZA.
• 2. The Court held that the Presidential Decrees, specifically P.D. No. 1533, are unconstitutional insofar as they prescribe the method of determining just compensation in expropriation proceedings by limiting it to the owner’s declared value or the assessor’s value, whichever is lower.
• 3. The Court emphasized that the determination of just compensation is a judicial function vested in the courts, not the executive or legislative branches.
• 4. The method prescribed by the decrees constitutes an impermissible encroachment on judicial prerogatives and renders the court a mere rubber stamp.
• 5. Rule 67 of the Revised Rules of Court, including the appointment of commissioners, remains the valid procedure for determining just compensation.
• 6. The decrees are void because they violate the constitutional guarantee of just compensation and due process by unduly restricting the court’s ability to ascertain fair market value.

Doctrines

• 1. Eminent Domain: The inherent power of the State to take private property for public use upon payment of just compensation.
• 2. Just Compensation: The full and fair equivalent of the loss sustained by the property owner, determined at the time of taking. It is a judicial function to ascertain just compensation.
• 3. Judicial Prerogative: The inherent power and duty of the judiciary to interpret laws and resolve legal disputes, including the determination of just compensation in expropriation cases. The legislature cannot dictate how courts should determine just compensation to the point of rendering judicial function merely ministerial.
• 4. Due Process: Ensures fairness and opportunity to be heard in legal proceedings. Limiting just compensation to arbitrarily low values without judicial discretion violates due process.
• 5. Separation of Powers: The principle that divides governmental powers among the legislative, executive, and judicial branches. The decrees violated this by encroaching upon the judicial function.

Key Excerpts

• 1. "The determination of 'just compensation' in eminent domain cases is a judicial function."
• 2. "The method of ascertaining just compensation under the aforecited decrees constitutes impermissible encroachment on judicial prerogatives. It tends to render this Court inutile in a matter which under the Constitution is reserved to it for final determination."
• 3. "Just compensation means the value of the property at the time of the taking. It means a fair and full equivalent for the loss sustained."
• 4. "We return to older and more sound precedents. This Court has the duty to formulate guiding and controlling constitutional principles, precepts, doctrines, or rules."

Precedents Cited

• 1. Municipality of Daet v. Court of Appeals: Cited for the definition of just compensation as the equivalent of the property's value at the time of taking.
• 2. J.M. Tuason & Co., Inc. v. Land Tenure Administration: Reaffirmed the meaning of just compensation as fair and full equivalent for the loss sustained.
• 3. Garcia v. Court of Appeals: Emphasized that market value considers all capabilities and uses of the property, not just current use.
• 4. Republic v. Santos: Stated that the court is not bound by the commissioners' report and can substitute its own estimate.
• 5. Manila Railroad Company v. Velasquez: Affirmed the court's power to substitute its own estimate of value.
• 6. National Housing Authority v. Reyes: Distinguished and essentially overruled, where the court had previously yielded to P.D. No. 464; the present case explicitly abandons the doctrine of NHA v. Reyes.
• 7. Capitol Subdivision, Inc. v. Province of Negros Occidental: Cited regarding components of just compensation, including interest and consequential damages.
• 8. Lina v. Purisima: Used to highlight the importance of judicial independence and not abdicating judicial authority.
• 9. Province of Pangasinan v. CFI Judge of Pangasinan: Further emphasized judicial independence.
• 10. Uy v. Genato: Cited to underscore that limiting just compensation can deprive landowners of due process.
• 11. Salonga v. Cruz Pano: Invoked to stress the judiciary's role in vitalizing constitutional rights.
• 12. Mercado v. Court of First Instance of Rizal: Cited along with Salonga v. Cruz Pano for the judiciary's mission.
• 13. Gideon v. Wainwright: Used as an analogy to argue against abruptly breaking with well-considered precedents and to justify returning to sound constitutional principles.
• 14. Betts v. Brady: Referenced in Gideon v. Wainwright as a case representing a break from sound precedents, which Gideon corrected.

Statutory and Constitutional Provisions

• 1. Constitution of the Philippines (implied): Provisions on Eminent Domain (taking private property for public use with just compensation), Due Process, and Separation of Powers.
• 2. Rule 67, Sections 5 to 8, Revised Rules of Court: Procedure for determining just compensation in expropriation cases, including appointment of commissioners.
• 3. Presidential Decree No. 76: On valuation of property for taxation and other purposes; basis for just compensation.
• 4. Presidential Decree No. 464 (Section 92): Real Property Tax Code; basis for payment of just compensation in expropriation proceedings.
• 5. Presidential Decree No. 794 (Section 92): Amendment to P.D. No. 464 regarding just compensation.
• 6. Presidential Decree No. 1533 (Section 1): Further amendment on determining just compensation in eminent domain proceedings.
• 7. Presidential Decree No. 66: Empowering EPZA to acquire property for export processing zones.
• 8. Proclamation No. 1811: Presidential Proclamation reserving land for Mactan Export Processing Zone.
• 9. General Order No. 3 (September 21, 1972): Mentioned in the context of judicial authority and independence.
• 10. Real Property Tax Code: Referred to in relation to assessor's valuation and tax declarations.