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EN BANC

G.R. No. L-15946 February 28, 1964

PROVINCE OF BULACAN, Plaintiff-Appellant, vs. B. E. SAN DIEGO, INC., ET AL., Defendants-Appellees.

Provincial Fiscal of Bulacan for plaintiff-appellant.
Julian L. Sison and Constancio P. Gutierrez for defendants-appellees.

DIZON, J.:chanrobles virtual law library

Appeal by the Province of Bulacan from an order of the Court of First Instance of the same province in Civil Case No. 1153 dismissing its amended complaint, on the ground that the same stated no cause of action.chanroblesvirtualawlibrarychanrobles virtual law library

On September 3, 1954, the Provincial Board of Bulacan passed Resolution No. 787 authorizing the acquisition of the property of B. E. San Diego, Inc., known as Hacienda Esguerra, situated in the municipalities of Meycauayan, Obando and Polo, with an aggregate area of about 64 hectares, for the purpose of subdividing and reselling the land to the tenants thereof and to the landless residents of said municipalities, as authorized by Republic Acts Nos. 267 and 498. Accordingly, on August 26, 1955, the Provincial Fiscal of Bulacan, on behalf of said province, filed with the lower court the corresponding complaint for the expropriation of the land aforementioned, against its owner, B. E. San Diego, Inc., and the Rehabilitation Finance Corporation (now Development Bank of the Philippines), who held a mortgage on said land.chanroblesvirtualawlibrarychanrobles virtual law library

By Order of the court dated December 3, 1955, Lots 5, 6, 7, 10-C and 11 involved in the case, with a total area of about 38 hectares, were excluded from the complaint upon petition of, and a showing by, the Central Cooperative Exchange, Inc., a government agency, that it had purchased said lots from B. E. San Diego, Inc. prior to the commencement of the action. As a result, an amended complaint was filed for the expropriation of the remaining portion of the estate with a total area of about 26 hectares.chanroblesvirtualawlibrarychanrobles virtual law library

Defendant B. E. San Diego, Inc. filed a motion to dismiss the amended complaint alleging that plaintiff had no cause of action, the property sought to be expropriated not being a landed estate, thus being beyond the purview of Republic Acts Nos. 267 and 498; that the purpose to which plaintiff intended to devote it was not public nature and that it had theretofore sold several portions thereof which were already occupied by the vendees.chanroblesvirtualawlibrarychanrobles virtual law library

On June 17, 1959, the Court issued the appealed order.chanroblesvirtualawlibrarychanrobles virtual law library

The issue to be resolved is whether or not the land sought to be expropriated situated in three different municipalities of the province of Bulacan, with a total area about 26 hectares, several portions of which have already been sold to private parties, falls within the purview Republic Acts Nos. 267 and 498 which authorize citizen municipalities, and provinces to purchase and/or expropriate homesites and landed estates within their respect jurisdictions and to resell them at cost to their respective residents, etc. This issue is not new for in a similar case instituted by the Province of Rizal against the same appellee herein, B. E. San Diego, Inc. (G.R. No. L-10802, January 23, 1959) we resolved it against the content of appellant, saying, among other things, the following:

The property involved in this case is a land of about sixty-six (66) hectares, situated in the municipalities of Caloocan Malabon, Rizal. It is part of the Hacienda Esguerra, originally belonged to one Isabel Esguerra, from whom it purchased by the Archbishop of Manila. The latter leased of it to some of the intervenors herein, who, in turn, subleased smaller portions to the alleged occupants thereof - numbering, according to the complaint in intervention, about seven hundred - whom the intervenors claim to represent. "It would appear that, owing to difficulties encountered in dealing with the tenants, many of whom were, either in default, or in arrears the payment of rental the Archbishop of Manila had, upon liberation of the Philippines from the Japanese forces, adopted policy of disposing of the land involved in this case. Neither its occupants, nor the aforementioned intervenors, however seemed inclined to acquire the lots respectively held by, or leased to, them, at the price demanded by the owner or lessor. In fact, the record does not show affirmatively that any definite offer to buy had ever been made by said occupants and/or intervenors. Hence, on June 19, 1952, the Archbishop of Manila sold the land, for the sum of P880,000, to defendant herein, Bartolome Diego, Incorporated, which thereupon dealt directly, not with lessees, but with the actual occupants, thus abolishing the then prevailing sub-tenancy system. Moreover, after surveying and subdividing the land, defendant offered about 50 subdivided hectares thereof after deducting the portions allotted for parks, playgrounds, and other public places - for sale, on installments, in small lots, at prices ranging mostly from P7.00 to P8.00 per square meter. Thus, from September 1952, to July 1955, about two hundred (200) contracts to sell such lots were made.chanroblesvirtualawlibrarychanrobles virtual law library

Believing that said lots could be purchased at a lesser price, if first expropriated by the government, the intervenors persuaded the plaintiff to institute the case at bar, on April 21, 1954. Plaintiff's purpose, according to the complaint, as amended, is to sell and distribute the property in question "among Filipino bona fide occupants and tenants, and to Filipino veterans, their widows and their children, pursuant to the conditions set forth in Republic Act No. 267 ..." . In its answer, dated October 14, 1954, defendant alleged that plaintiff has no cause of action said property not being a landed estate, and being beyond the purview of said Republic Act No. 267; that the purpose for which plaintiff seeks to devote it is not a public use; that "defendant is willing to sell" it "to actual occupants first, and/or to any person interested in buying the same at reasonable costs"; that defendant has already sold "more than 200 lots" and has "more than 1000 lots ... available for sale"; and that the only purpose of this action is to "delay the execution" of the judgments rendered- seemingly in ejectment cases against occupants of said land, eighty per centum (80%) of whom are "squatters". On November 10, 1954, defendant moved for the dismissal of the case, upon the ground that plaintiff is not in a position to pay the fair market value of the property in litigation, which, according to the complaint, is P431,856.66, it having failed to deposit this sum, despite an order, dated May 10, 1954, requiring said deposit; that defendant has been, and is, willing to sell the land, at reasonable prices, to actual bona fide tenants; and that said property is not a landed estate. In another motion dated February 11, 1955, defendant reiterated said motion to dismiss alleging that "the complaint states no cause of action"; that the property in litigation is "not intended for any public use and/or public benefit"; and that said property "is not a landed estate".chanroblesvirtualawlibrarychanrobles virtual law library

In due course, thereafter, the lower court rendered the aforementioned decision, granting defendant's motion to dismiss, and dismissing the petition for expropriation. as well as the complaint in intervention, upon the authority of Guido vs. Rural Progress Administration (47 O.G. 1848), Commonwealth vs. Borja (L-1496, Nov. 9, 1949), City of Manila vs. Arellano Law School (47 O.G. 4197), Lee Tay and Lee Chay vs. Choco (L-3297, Dec. 29, 1950), Urban Estates, Inc. vs. Montesa (L-3830, March 15, 1951), Municipality of Caloocan vs. Manotok Realty, Inc. (L-6444, May 14, 1954), Republic vs. Gabriel (L-6161, May 23, 1954), Municipal Government of Caloocan vs. Chuan Huat & Co. (50 O.G. 5509), and Republic vs. Baylosis (51 O.G. 722). Relying upon these cases, the lower court concluded:

... that the 66 hectares sought to be expropriated are not within the purview of Article XIII, Section 4 of that Constitution, especially because the Hacienda Esguerra and other church properties were broken up and sold to defendant and others in reasonable areas; that plaintiff as delegate of the Republic of the Philippines can not claim greater right under Republic Acts Nos. 267 and 498 which is predicated on the constitutional provision just cited under the truism that water cannot rise higher than its source; that some portions of the property has already been sold by defendant to 193 persons whose interests would be greatly prejudiced by the present proceedings while on the other hand some of the principal intervenors are landowners in their own right and, therefore, disqualified under the law to acquire land from plaintiff; that the Constitution protects landowner against indiscriminate and unwarranted expropriation; that to justify expropriation it must be for public purpose and public benefit and that just to enable the tenants of a piece of land of reasonable area to own portion of it, even if their ancestors or predecessors had cleared improved and dwelt on the land for many years, is no valid reason or justification under the law to deprive the owner of the property or his vendees by means of expropriation. (Record on Appeal, pp. 322-323.)

This appeal hinges on whether, as held in the decision appealed from, the above mentioned cases are controlling in the case at bar, or whether the same should be determined, as claimed by appellants herein, in accordance with the view adopted in Rural Progress Administration vs. Clemente Reyes (L-4708, Oct. 8, 1953), in which - by a 6 to 4 vote - this Court sanctioned the expropriation of a land, of about 20,737 square meters, purchased by Reyes from the San Juan de Dios Hospital, before landed estate of the latter, of which its formed part, had been acquired by the government.chanroblesvirtualawlibrarychanrobles virtual law library

Appellants' pretense is untenable, for the rule enunciated in the Reyes case was explicitly abandoned, and the doctrine laid down in the Guido case, was expressly reaffirmed, as "sound and wholesome." in the Baylosis case. The majority opinion therein re-stated the position of the Court in the following language:

... We feel that the decision in that Reyes case was a departure from the doctrine laid down in the leading case of Guido which doctrine has been subsequently affirmed and reiterated in a long line of cases, and we now believe that in abandoning the ruling made in the Reyes case, this Tribunal is merely returning to and re-affirming the sound wholesome doctrine laid down in the Guido case. (Republic vs. Baylosis, et al., 51 O.G. 722, 735.)

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In conclusion we hold that under Section 4, Article XIII of the Constitution, the Government may expropriate only landed estates with extensive areas, specially those embracing the whole or a large part of a town or city; that once a landed estate is broken up and divided into parcels of reasonable areas, either thru voluntary sales by the owner or owners of said landed estate, or thru expropriation, the resulting parcels are no longer subject to further expropriation under section 4, Article XIII of the Constitution; that mere notice of the intention of the Government to expropriate a parcel of land does not bind either the land or the owner so as to prevent subsequent disposition of the property such as mortgaging or even selling it in whole or by subdivision; that tenancy trouble alone whether due to the fault of the tenants or of the landowners does not justify expropriation; that the Constitution protects a landowner against indiscriminate and unwarranted expropriation; that to justify expropriation, it must be for a public purpose and public benefit, and that just to enable the tenants of a piece of land of reasonable area to own portion of it, even if they and their ancestors had cleared the land and cultivated it for their landlord for many years, is no valid reason or justification under the Constitution to deprive the owner or landlord of his property by means of expropriation. (Id., p.739.)

The majority of the Members of this Court still adheres to this view which must be respected by the minority, including the writer hereof, who concurred in the dissenting opinions in the Baylosis case.

IN VIEW OF THE FOREGOING, the order appealed from is affirmed, with costs.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes, Regala and Makalintal, JJ., concur.
Barrera, J., concurs in the result.