Municipality of Parañaque vs. V.M. Realty Corporation

A local government unit may exercise the power of eminent domain only when authorized by a valid ordinance enacted by its legislative council, not merely by a resolution; however, the principle of res judicata does not permanently bar the State or its authorized agents from subsequently exercising eminent domain over the same property once all statutory and constitutional requisites are properly complied with.

The case involves the Municipality of Parañaque's attempt to expropriate private property for a socialized housing project intended to benefit the underprivileged and homeless. The dispute arose from the procedural mechanism used to authorize the expropriation and the effect of a prior dismissed expropriation case involving the same property.

• Filed with the RTC of Makati, Branch 134, on September 20, 1993 (Complaint for expropriation)
• RTC issued Order dated January 10, 1994 giving due course to the complaint
• RTC issued Order dated February 4, 1994 authorizing immediate possession upon deposit of 15% of fair market value
• Private respondent filed Answer with affirmative defenses and counterclaim (treated as motion to dismiss)
• RTC issued Resolution dated August 9, 1994 nullifying the February 4 Order and dismissing the case
• Petitioner’s motions for reconsideration and transfer of venue denied by RTC on December 2, 1994
• Appealed to the CA (CA GR CV No. 48048)
• CA Decision dated July 22, 1996 affirmed RTC dismissal in toto
• Motion for Reconsideration denied by CA on January 8, 1997
• Elevated to the SC via Petition for Review on Certiorari

• Petitioner Municipality of Parañaque filed a Complaint for expropriation on September 20, 1993 against respondent V.M. Realty Corporation
• The expropriation covered two parcels of land (Lots 2-A-2 and 2-B-1 of Subdivision Plan Psd-17917) with combined area of about 10,000 square meters, located at Wakas, San Dionisio, Parañaque, covered by TCT No. 48700
• The complaint was filed pursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993, allegedly for the purpose of providing socialized housing for the underprivileged
• Prior thereto, petitioner had passed Resolution No. 577, Series of 1991 offering to enter into a negotiated sale with private respondent, which was not accepted
• A prior expropriation case (Civil Case No. 17939) involving the same parcels of land was filed by petitioner on September 29, 1987 against Limpan Investment Corporation (predecessor-in-interest of V.M. Realty), dismissed with prejudice on May 18, 1988, with the order becoming final and unappealed
• V.M. Realty Corporation acquired the property from Limpan Investment Corporation via a Deed of Assignment Exchange executed on June 13, 1990

• A resolution approved by the municipal council has the same force and effect as an ordinance and constitutes substantial compliance with Section 19 of RA 7160
• The terms "resolution" and "ordinance" are synonymous for the purpose of authorizing the local chief executive to initiate expropriation proceedings
• Article 36, Rule VI of the Implementing Rules and Regulations of the Local Government Code explicitly allows expropriation through a resolution
• The principle of res judicata should not apply when public interest is primarily involved, as technicalities should not bar the government's socialized housing project
• Alternatively, an ordinance was passed on October 11, 1994 (after filing the complaint) which ratified the prior acts of the mayor

• The complaint failed to state a cause of action because it was filed pursuant to a resolution, not an ordinance as expressly required by Section 19 of RA 7160
• The cause of action is barred by res judicata due to the prior final judgment in Civil Case No. 17939 involving the same property and parties (successors-in-interest)
• A resolution is merely a declaration of sentiment or opinion, distinct from an ordinance which has the force and effect of law
• The Implementing Rules cannot prevail over the clear language of the statute requiring an ordinance

• Procedural Issues: Whether the complaint states a cause of action given the absence of an ordinance authorizing the expropriation at the time of filing.
• Substantive Issues:
  • Whether a Sangguniang Bayan resolution, as opposed to an ordinance, constitutes sufficient authority for a local government unit to exercise the power of eminent domain under Section 19 of RA 7160.
  • Whether the principle of res judicata bars the subsequent expropriation suit filed by the Municipality over the same property.

• Procedural: The complaint does not state a cause of action. The absence of an ordinance authorizing the expropriation is evident from the face of the complaint, which explicitly states it was filed pursuant to a resolution. Since the cause of action must be determined based on the allegations in the complaint itself, and the complaint admits it is based only on a resolution, the trial court correctly dismissed the case for lack of cause of action. The subsequent passage of an ordinance in October 1994 cannot cure this defect as it was not pleaded or proven before the SC, and the complaint was filed in September 1993.

• Substantive:

  • Resolution vs. Ordinance: No. A resolution is not sufficient. Section 19 of RA 7160 explicitly requires that the local chief executive act "pursuant to an ordinance" to exercise eminent domain. An ordinance is a local law of general and permanent character, enacted with three readings, while a resolution is merely a temporary expression of sentiment or opinion. The change from "resolution" (under BP 337) to "ordinance" (under RA 7160) was deliberate and requires strict construction given that eminent domain involves derogation of private property rights. The Implementing Rules requiring only a resolution cannot prevail over the clear statutory language.
  • Res Judicata: While res judicata applies to specific issues decided in prior cases (e.g., lack of prior offer), it does not permanently bar the State or its authorized agents from subsequently exercising eminent domain over the same property. Eminent domain is an inherent, plenary power of the State that cannot be defeated by prior procedural failures. The State or LGU may refile expropriation proceedings over the same property once all legal requirements (including the ordinance requirement) are properly complied with.

• Distinction Between Ordinance and Resolution — An ordinance is a local law of general and permanent character enacted with three readings, while a resolution is a temporary declaration of sentiment or opinion not requiring three readings. The SC applied this distinction to hold that RA 7160 deliberately changed the requirement from "resolution" (under BP 337) to "ordinance," and this change must be given effect as the power of eminent domain involves derogation of fundamental private rights requiring strict construction.
• Requisites for LGU Exercise of Eminent Domain — Under Section 19 of RA 7160, the following must concur: (1) an ordinance enacted by the local legislative council authorizing the local chief executive to exercise eminent domain over particular private property; (2) exercise for public use, purpose, welfare, or benefit of the poor and landless; (3) payment of just compensation; and (4) a valid and definite offer previously made to the owner but not accepted.
• Res Judicata in Eminent Domain Cases — Res judicata applies to specific issues actually litigated and decided in prior expropriation cases (e.g., validity of prior offer), but it does not permanently extinguish the State's inherent power to expropriate. The State or its agent may file subsequent expropriation proceedings over the same property once all legal deficiencies are cured.
• Hierarchy of Laws — Administrative rules and regulations implementing a statute cannot amend, alter, or contradict the clear letter of the law. The Implementing Rules requiring only a resolution cannot prevail over Section 19 of RA 7160 explicitly requiring an ordinance.
• Inferior Domain — The power of eminent domain delegated to LGUs is not "eminent" but "inferior" domain because it is delegated and must conform to the limits imposed by Congress. LGUs cannot defy the will of the national legislature or modify the limitations imposed by law.

• "A local government unit (LGU), like the Municipality of Parañaque, cannot authorize an expropriation of private property through a mere resolution of its lawmaking body. The Local Government Code expressly and clearly requires an ordinance or a local law for the purpose."
• "A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely a declaration of the sentiment or opinion of a lawmaking body on a specific matter."
• "No species of property is held by individuals with greater tenacity, and is guarded by the Constitution and laws more sedulously, than the right to the freehold of inhabitants. When the legislature interferes with that right and, for greater public purposes, appropriates the land of an individual without his consent, the plain meaning of the law should not be enlarged by doubtful interpretation."
• "The very nature of eminent domain, as an inherent power of the State, dictates that the right to exercise the power be absolute and unfettered even by a prior judgment or res judicata."
• "Strictly speaking, the power of eminent domain delegated to an LGU is in reality not eminent but 'inferior' domain, since it must conform to the limits imposed by the delegation, and thus partakes only of a share in eminent domain."

• Camarines Sur vs. Court of Appeals — Cited by petitioner to argue that a resolution suffices; distinguished by the SC because the applicable law then was BP 337 (old Local Government Code), which required only a resolution, whereas RA 7160 requires an ordinance.
• Moday vs. Court of Appeals — Cited for the principle that the power of eminent domain is lodged in the legislative branch and may be delegated to LGUs subject to Congressional control and restraints.
• Republic vs. De Knecht — Cited to support the ruling that the power of eminent domain is not diminished by prior final judgments becoming the law of the case; the State may still subsequently exercise the right once legal requirements are complied with.
• National Power Corporation vs. Court of Appeals — Cited for the principle that a final judgment dismissing an expropriation suit on a specific ground (e.g., no prior offer) precludes relitigation of that specific issue but does not bar subsequent compliance and refiling.
• Magtajas vs. Pryce Properties Corp., Inc. — Cited for the principle that the national legislature is still the principal of LGUs, which cannot defy its will or modify or violate it.

• Section 19, RA 7160 (Local Government Code of 1991) — Requires that an LGU exercise eminent domain "through its chief executive and acting pursuant to an ordinance" for public use or welfare, upon payment of just compensation, and only after a valid and definite offer has been made and refused.
• Section 9, Article III of the Constitution — Mandates payment of just compensation when private property is taken for public use.
• Section 2, Article X of the Constitution — Guarantees local autonomy, but interpreted by the SC as not allowing LGUs to exceed or violate the limitations imposed by Congress in delegating the power of eminent domain.
• Section 9 of BP 337 (Old Local Government Code) — Contrastingly allowed exercise of eminent domain "pursuant to a resolution," showing the deliberate change in legislative language in RA 7160.
• Article 36, Rule VI and Article 32, Rule VI of the Implementing Rules and Regulations of RA 7160 — Article 36 mentions "resolution" but Article 32 mentions "ordinance"; the SC held that the statute (Section 19) prevails over the implementing rules and the discrepancy indicates oversight in the IRR.