Export Processing Zone Authority vs. Dulay

The determination of just compensation in eminent domain cases is a judicial function that cannot be usurped by the legislature or executive through statutory or decree limitations that restrict the court's discretion to appoint commissioners and evaluate all relevant factors affecting property value.

During martial law, President Marcos issued several decrees (P.D. 76, 464, 794, 1533) attempting to standardize just compensation by limiting it to the lower of the owner's declared value or the assessor's valuation. These decrees effectively eliminated judicial discretion in determining fair market value and sought to replace the detailed valuation process under Rule 67 with a mechanical selection between two administrative figures.

• Filed with CFI Cebu, Branch XVI (Lapu-Lapu City) — complaint for expropriation with prayer for writ of possession
• October 21, 1980: Writ of possession issued authorizing EPZA to take immediate possession
• December 23, 1980: Private respondent filed answer
• February 13, 1981: Pre-trial terminated; parties agreed sole issue was just compensation
• February 17, 1981: Order of condemnation issued; commissioners appointed to ascertain just compensation
• June 19, 1981: Commissioners submitted consolidated report recommending P15.00 per square meter
• July 29, 1981: EPZA filed Motion for Reconsideration and Objection to Commissioner's Report, arguing P.D. 1533 superseded Rule 67
• November 14, 1981: Trial court denied motion; EPZA given 10 days to file objection to report
• February 9, 1982: EPZA filed petition for certiorari and mandamus with preliminary restraining order with the SC

• EPZA is a government agency empowered under P.D. No. 66 to acquire property for export processing zones
• January 15, 1979: President issued Proclamation No. 1811 reserving land in Lapu-Lapu City for the Mactan Export Processing Zone
• Proclamation included 4 parcels (22,328 sq.m.) owned by San Antonio Development Corporation (private respondent)
• EPZA offered to purchase based on Section 92 of P.D. No. 464 — parties failed to agree on price
• EPZA filed expropriation case and took possession via writ
• Commissioners recommended P15.00/sq.m. as fair and reasonable value
• EPZA contended P.D. No. 1533 limited compensation to lower of owner-declared or assessor-determined value, making commissioner proceedings unnecessary
• Tax declarations presented by EPZA were made pre-martial law when land values were significantly lower; private respondent purchased the lots for development purposes at prices higher than the assessed values

• P.D. No. 1533 repealed Sections 5-8 of Rule 67 regarding appointment of commissioners; the decree provides the exclusive and mandatory mode for determining just compensation
• Just compensation must not exceed the lower value between: (a) market value declared by the owner, or (b) market value determined by the assessor
• Assessors and property owners have been vested with power to fix market value, with appeals available to the Local Board of Assessment Appeals (LBAA) and Central Board of Assessment Appeals (CBAA), satisfying due process
• Courts merely apply the statutory formula; the decree represents valid exercise of legislative power that does not upset established concepts of justice

• P.D. No. 1533 is unconstitutional as it encroaches on judicial power to determine just compensation and denies due process
• Tax declarations are prepared for taxation purposes and do not reflect true market value, especially when outdated (pre-martial law values)
• The decree denies owners the opportunity to prove actual fair market value through evidence and commissioners' evaluation
• Rule 67 procedure (appointment of commissioners, reception of evidence, judicial discretion) is required by the Constitution to ensure just compensation is "fair and full equivalent for the loss sustained"
• The decrees result in arbitrary and confiscatory valuations when applied to properties whose assessed values predate current market conditions

• Procedural Issues: Whether the SC may validly exercise certiorari jurisdiction over the trial court's interlocutory orders appointing commissioners and denying the motion for reconsideration.
• Substantive Issues:
  • Whether P.D. No. 1533 repealed Sections 5-8 of Rule 67 regarding the appointment of commissioners to determine just compensation.
  • Whether the method of determining just compensation under P.D. No. 1533 (lower of owner-declared or assessor-determined value) is constitutional.
  • Whether the determination of just compensation is a judicial function that cannot be restricted by statute or executive decree.

• Procedural: The petition is dismissed. The trial court's orders were issued in the exercise of its jurisdiction and did not constitute grave abuse of discretion. The SC has authority to review constitutional questions even in interlocutory orders when the issue involves the validity of a statute affecting fundamental judicial power.
• Substantive:
  • P.D. No. 1533 did not validly repeal Rule 67, Sections 5-8; the procedural safeguards in Rule 67 remain applicable to ensure just compensation is properly determined.
  • The method of determining just compensation under P.D. No. 1533 is unconstitutional and void as it violates the separation of powers and the due process clause by usurping the judicial function of valuation.
  • Determination of just compensation is a judicial function. No statute, decree, or executive order can mandate that its own determination shall prevail over the court's findings or preclude courts from looking into the "just-ness" of the decreed compensation.

• Judicial Power over Just Compensation — The determination of just compensation in eminent domain is inherently judicial. While the executive or legislature may make initial determinations, when a party claims violation of the constitutional guarantee of just compensation, the courts have final authority to determine the amount based on fair market value at the time of taking, considering all relevant factors.
• Just Compensation Defined — "The equivalent for the value of the property at the time of its taking. Anything beyond that is more and anything short of that is less, than just compensation. It means a fair and full equivalent for the loss sustained."
• Factors for Valuation — In estimating market value, all capabilities of the property and all uses to which it may be applied or for which it is adapted must be considered, not merely its current condition or use. All facts as to condition, surroundings, improvements, and capabilities may be shown and considered.
• Tax Declarations as Guides, Not Absolute Measures — Tax declarations and assessor's valuations may serve as guides but cannot be absolute substitutes for just compensation, especially when outdated, based on general classifications (e.g., "cogonal"), or prepared by minor bureaucrats without individual property inspection.
• Overruling Prior Decisions — The SC may abandon prior rulings (National Housing Authority v. Reyes) when they prove unsound or unjust, particularly when they undermine constitutional rights to due process and just compensation, and may return to older, sounder precedents.

• "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."
• "Even a grade school pupil could substitute for the judge insofar as the determination of constitutional just compensation is concerned."
• "It is violative of due process to deny to the owner the opportunity to prove that the valuation in the tax documents is unfair or wrong. And it is repulsive to basic concepts of justice and fairness to allow the haphazard work of a minor bureaucrat or clerk to absolutely prevail over the judgment of a court promulgated only after expert commissioners have actually viewed the property, after evidence and arguments pro and con have been presented, and after all factors and considerations essential to a fair and just determination have been judiciously evaluated."
• "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."

• Municipality of Daet v. Court of Appeals — Established that just compensation means equivalent value at time of taking; fair and full equivalent for loss sustained.
• J.M. Tuason & Co., Inc. v. Land Tenure Administration — Reiterated definition of just compensation as value at time of taking; measure is indemnity for loss, not gain to expropriating entity.
• Garcia v. Court of Appeals — Held that all capabilities and potential uses of property must be considered in valuation, not merely current condition or use by owner.
• Republic v. Santos — Affirmed that courts are not bound by commissioners' reports and may substitute their own estimate based on the record.
• National Housing Authority v. Reyes — Prior case upholding P.D. No. 464; explicitly overruled in this case as it proved unsound and unjust.
• Capitol Subdivision, Inc. v. Province of Negros Occidental — Cited by trial court for rule that owner is entitled to fair and full value at time of taking plus consequential damages.
• Lina v. Purisima — Cited by trial court regarding judicial independence and non-abdication of judicial authority.
• Gideon v. Wainwright — US case cited for principle that courts may return to older, sounder precedents when newer decisions prove unjust.

• Sections 5 to 8, Rule 67 of the Revised Rules of Court — Procedure for appointment of commissioners to ascertain just compensation; court not bound by commissioners' report and may render judgment securing just compensation to defendant.
• Presidential Decree No. 76 — First decree attempting to limit just compensation to lower of owner-declared or assessor value.
• Presidential Decree No. 464, Section 92 — Repeated the limitation regarding basis for payment of just compensation.
• Presidential Decree No. 794, Section 92 — Similar limitation, stating compensation shall not exceed lower of declared or assessed value.
• Presidential Decree No. 1533, Section 1 — Challenged provision stating compensation shall not exceed lower value declared by owner or determined by assessor prior to recommendation to acquire.
• Presidential Decree No. 66 — Grants EPZA power to acquire property for export processing zones.
• Proclamation No. 1811 — Reserved land in Lapu-Lapu for Mactan Export Processing Zone.
• Real Property Tax Code — Basis for assessor's valuations; tax declarations prepared for taxation purposes.

• Teehankee, C.J. — Concurred in the result only; no separate opinion provided.