Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is indisputably a paramount component of due process and fair play.1âwphi1 It is likewise demanded by the due process clause of the Constitution. The parties to a litigation should be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court

In Yao v. Court of Appeals,32 the Court emphasized that '"[t]he parties to a litigation should be informed of how .it was decided, with an explanation of the factual and legal reasons that Jed to the conclusions of the court,"33 viz.:

Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is indisputably a paramount component of due process and fair play.1âwphi1 It is likewise demanded by the due process clause of the Constitution. The parties to a litigation should be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court. The court cannot simply say that judgment is rendered in favor of X and against Y and just leave it at that without any justification whatsoever for its action. The losi.ng party is entitled to know why he lost, so he may appeal to the higher court, if permitted, should he believe that the decision should be reversed. A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached and is precisely prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal. x x x34

 January 19, 2018
G.R. No. 206841

ARMANDO GO, Petitioner
vs.
EAST OCEANIC LEASING and FINANCE CORPORATION, Respondent

The essence of due process is simply to be heard, or as applied to administrative proceedings, an opportunity to explain one’s side, or an opportunity to seek a reconsideration of the action or ruling complained of.1

The observance of fairness in the conduct of any investigation is at the very heart of procedural due process. The essence of due process is to be heard, and, as applied to administrative proceedings, this means a fair and reasonable opportunity to explain one’s side, or an opportunity to seek a reconsideration of the action or ruling complained of.15 Administrative due process cannot be fully equated with due process in its strict judicial sense, for in the former a formal or trial-type hearing is not always necessary,16 and technical rules of procedure are not strictly applied. Ledesma v. Court of Appeals17 elaborates on the well-established meaning of due process in administrative proceedings in this wise:

x x x Due process, as a constitutional precept, does not always and in all situations require a trial-type proceeding. Due process is satisfied when a person is notified of the charge against him and given an opportunity to explain or defend himself. In administrative proceedings, the filing of charges and giving reasonable opportunity for the person so charged to answer the accusations against him constitute the minimum requirements of due process. The essence of due process is simply to be heard, or as applied to administrative proceedings, an opportunity to explain one’s side, or an opportunity to seek a reconsideration of the action or ruling complained of.18

The petitioner actively participated in the entire course of the investigation and hearings conducted by PAGCOR. He received the letter from Ela apprising him of his being administratively charged for several offenses, and directing him to submit an explanation in writing. He was later on properly summoned to appear before the CIU, which conducted its proceedings in his own residence upon his request. During the administrative inquiry, the CIU served him a copy of the memorandum of charges, which detailed the accusations against him and specified the acts and omissions constituting his alleged offenses. He was also given the opportunity to appear before the Adjudication Committee to answer clarificatory questions. Lastly, he was informed through a memorandum of the decision of the Board of Directors dismissing him from the service.

xxx

The petitioner was not denied due process of law, for he was afforded the fair and reasonable opportunity to explain his side. That, to us, was sufficient to meet the requirements of due process.29 In Casimiro v. Tandog,30 the Court pronounced:

The essence of procedural due process is embodied in the basic requirement of notice and a real opportunity to be heard. In administrative proceedings, such as in the case at bar, procedural due process simply means the opportunity to explain one’s side or the opportunity to seek a reconsideration of the action or ruling complained of. "To be heard" does not mean only verbal arguments in court; one may be heard also thru pleadings. Where opportunity to be heard, either through oral arguments or pleadings, is accorded, there is no denial of procedural due process.

In administrative proceedings, procedural due process has been recognized to include the following:

 (1) the right to actual or constructive notice of the institution of proceedings which may affect a respondent’s legal rights; 
(2) a real opportunity to be heard personally or with the assistance of counsel, to present witnesses and evidence in one’s favor, and to defend one’s rights; 

(3) a tribunal vested with competent jurisdiction and so constituted as to afford a person charged administratively a reasonable guarantee of honesty as well as impartiality; and
 (4) a finding by said tribunal which is supported by substantial evidence submitted for consideration during the hearing or contained in the records or made known to the parties affected.

EN BANC

G.R. No. 187854               November 12, 2013

RAY PETER O. VIVO, Petitioner,
vs.
PHILIPPINE AMUSEMENT AND GAME CORPORATION (PAGCOR), Respondent.

due process on student expulsion from school

In Ateneo de Manila University v. Capulong,48 the Court held that Guzman v. National University,49 not Ang Tibay, is the authority on the procedural rights of students in disciplinary cases. In Guzman, we laid down the minimum standards in the imposition of disciplinary sanctions in academic institutions, as follows:

It bears stressing that due process in disciplinary cases involving students does not entail proceedings and hearings similar to those prescribed for actions and proceedings in courts of justice. The proceedings in student discipline cases may be summary; and crossexamination is not, contrary to petitioners’ view, an essential part thereof. There are withal minimum standards which must be met to satisfy the demands of procedural due process; and these are, that (1) the students must be informed in writing of the nature and cause of any accusation against them; (2) they shall have the right to answer the charges against them, with the assistance of counsel, if desired; (3) they shall be informed of the evidence against them; (4) they shall have the right to adduce evidence in their own behalf; and (5) the evidence must be duly considered by the investigating committee or official designated by the school authorities to hear and decide the case.50

These standards render the petitioners’ arguments totally without merit.

In De La Salle University, Inc. v. Court of Appeals,51 where we affirmed the petitioning university’s right to exclude students from the rolls of their respective schools52 for their involvement in a fraternity mauling incident, we rejected the argument that there is a denial of due process when students are not allowed to cross-examine the witnesses against them in school disciplinary proceedings. We reject the same argument in this case.

We are likewise not moved by the petitioners’ argument that they were not given the opportunity to examine the neophytes’ written statements and the security officer’s incident report.53 These documents are admissible in school disciplinary proceedings, and may amount to substantial evidence to support a decision in these proceedings. In Ateneo de Manila University v. Capulong,54 where the private respondents were students dismissed from their law school after participating in hazing activities, we held:

Respondent students may not use the argument that since they were not accorded the opportunity to see and examine the written statements which became the basis of petitioners’ February 14, 1991 order, they were denied procedural due process. Granting that they were denied such opportunity, the same may not be said to detract from the observance of due process, for disciplinary cases involving students need not necessarily include the right to cross examination. [Emphasis ours.]55

Since disciplinary proceedings may be summary, the insistence that a "formal inquiry" on the accusation against Kim should have been conducted lacks legal basis. It has no factual basis as well. While the petitioners state that Mr. and Mrs. Go were "never given an opportunity to assist Kim,"56 the records show that the respondents gave them two (2) notices, dated December 19, 2001 and January 8, 2002, for conferences on January 8, 2002 and January 15, 2002.57 The notices clearly state: "Dear Mr./Mrs. Go, We would like to seek your help in correcting Kim’s problem on: Discipline & Conduct Offense: Membership in Fraternity."58 Thus, the respondents had given them ample opportunity to assist their son in his disciplinary case.

The records also show that, without any explanation, both parents failed to attend the January 8, 2002 conference while Mr. Go did not bother to go to the January 15, 2002 conference. "Where a party was afforded an opportunity to participate in the proceedings but failed to do so, he cannot [thereafter] complain of deprivation of due process."59

Through the notices, the respondents duly informed the petitioners in writing that Kim had a disciplinary charge for fraternity membership. At the earlier November 23, 2001 Parents-Teachers Conference, Mr. Rosarda also informed Mrs. Go that the charge stemmed from the fraternity neophytes’ positive identification of Kim as a member; thus the petitioners fully knew of the nature of the evidence that stood against Kim.

The petitioners nevertheless argue that the respondents defectively observed the written notice rule because they had requested, and received, Kim’s written explanation at a time when the respondents had not yet issued the written notice of the accusation against him. The records indicate that while Kim’s denial and the first notice were both dated December 19, 2001, Kim had not yet received the notice at the time he made the requested written explanation.

We see no merit in this argument as the petitioners apparently hew to an erroneous view of administrative due process. Jurisprudence has clarified that administrative due process cannot be fully equated with due process in the strict judicial sense.60 The very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation.61 Thus, we are hard pressed to believe that Kim’s denial of his fraternity membership before formal notice was given worked against his interest in the disciplinary case. What matters for due process purpose is notice of what is to be explained, not the form in which the notice is given.

The raison d’etre of the written notice rule is to inform the student of the disciplinary charge against him and to enable him to suitably prepare a defense. The records show that as early as November 23, 2001, it was already made plain to the petitioners that the subject matter of the case against Kim was his alleged fraternity membership. Thus, by the time Mr. Rosarda spoke to Kim and asked for his written explanation in December 2001, Kim has had enough time to prepare his response to this plain charge. We also note that the information in the notice the respondents subsequently sent is no different from the information that they had earlier conveyed, albeit orally, to the petitioners: the simple unadorned statement that Kim stood accused of fraternity membership. Given these circumstances, we are not convinced that Kim’s right to explain his side as exercised in his written denial had been violated or diminished. The essence of due process, it bears repeating, is simply the opportunity to be heard.62

And Kim had been heard. His written explanation was received, indeed even solicited, by the respondents.1âwphi1 Thus, he cannot claim that he was denied the right to adduce evidence in his behalf. In fact, the petitioners were given further opportunity to produce additional evidence with the January 8, 2002 conference that they did not attend. We are also satisfied that the respondents had considered all the pieces of evidence and found these to be substantial. We note especially that the petitioners never imputed any motive on Kim’s co-students that would justify the claim that they uttered falsehood against him.

In Licup v. San Carlos University,63 the Court held that when a student commits a serious breach of discipline or fails to maintain the required academic standard, he forfeits his contractual right, and the court should not review the discretion of university authorities.64 In San Sebastian College v. Court of Appeals, et al.,65 we held that only when there is marked arbitrariness should the court interfere with the academic judgment of the school faculty and the proper authorities.66 In this case, we find that the respondents observed due process in Kim’s disciplinary case, consistent with our pronouncements in Guzman. No reason exists why the above principles in these cited cases cannot apply to this case. The respondents’ decision that Kim had violated a disciplinary rule and should be sanctioned must be respected.

SECOND DIVISION

G.R. No. 169391               October 10, 2012

GO, and Minor EMERSON CHESTER KIM B. GO, Petitioners,
vs.
COLEGIO DE SAN JUAN DE LETRAN, REV. FR. EDWIN LAO, REV. FR. JOSE RHOMMEL HERNANDEZ, ALBERT ROSARDA and MA. TERESA SURATOS, Respondents.

Jurisprudence has expounded on the guarantee of due process, requiring the employer to furnish the employee with two written notices before termination of employment can be effected: a first written notice that informs the employee of the particular acts or omissions for which his or her dismissal is sought, and a second written notice which informs the employee of the employer's decision to dismiss him. In considering whether the charge in the first notice is sufficient to warrant dismissal under the second notice, the employer must afford the employee ample opportunity to be heard.

Equator failed to comply with the procedural due process

In order to validly dismiss an employee, it is fundamental that the employer observe both substantive and procedural due process – the termination of employment must be based on a just or authorized cause and the dismissal can only be effected, after due notice and hearing.¹⁸

This Court finds that Equator complied with the substantive requirements of due process when Jonathan committed the two offenses.

Article 282(A) of the Labor Code provides that an employee may be dismissed on the ground of serious misconduct or willful disobedience of the lawful orders of his employer or representative in connection with his work. Misconduct is improper or wrongful conduct; it is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment. The misconduct, to be serious within the meaning of the Labor Code, must be of such grave and aggravated character and not merely trivial or unimportant. It is also important that the misconduct be in connection with the employee's work to constitute just cause for his separation.¹⁹

By losing two firearms and issuing an unlicensed firearm, Jonathan committed serious misconduct. He did not merely violate a company policy; he violated the law itself (Presidential Decree No. 1866 or Codifying the Laws on Illegal/Unlawful Possession, Manufacture, Dealing in, Acquisition or Disposition, of Firearms, Ammunition or Explosives or Instruments Used in the Manufacture of Firearms, Ammunition or Explosives, and Imposing Stiffer Penalties for Certain Violations Thereof and for Relevant Purposes),²⁰ and placed Equator and its employees at risk of being made legally liable. Thus, Equator had a valid reason that warranted Jonathan’s dismissal from employment as Assistant Operation Manager.

The Court, however, finds that Equator failed to observe the proper procedure in terminating Jonathan’s services. Section 2, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code provides that:

Section 2. Standard of due process: requirements of notice. – In all cases of termination of employment, the following standards of due process shall be substantially observed.

I. For termination of employment based on just causes as defined in Article 282 of the Labor Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him; and

(c) A written notice [of] termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.²¹

Jurisprudence has expounded on the guarantee of due process, requiring the employer to furnish the employee with two written notices before termination of employment can be effected: a first written notice that informs the employee of the particular acts or omissions for which his or her dismissal is sought, and a second written notice which informs the employee of the employer's decision to dismiss him. In considering whether the charge in the first notice is sufficient to warrant dismissal under the second notice, the employer must afford the employee ample opportunity to be heard.

A review of the records shows that Jonathan was not furnished with any written notice that informed him of the acts he committed justifying his dismissal from employment. The notice of suspension given to Jonathan only pertained to the first offense, i.e., the loss of Equator’s firearms under Jonathan’s watch.1âwphi1 With respect to his second offense (i.e., the issuance of an unlicensed firearm to Equator’s security guard – that became the basis for his dismissal), Jonathan was never given any notice that allowed him to air his side and to avail of the guaranteed opportunity to be heard. That Equator brought the second offense before the LA does not serve as notice because by then, Jonathan had already been dismissed.

In order to validly dismiss an employee, the observance of both substantive and procedural due process by the employer is a condition sine qua non. Procedural due process requires that the employee be given a notice of the charge against him, an ample opportunity to be heard, and a notice of termination.²²

Since Jonathan had been dismissed in violation of his right to procedural due process but for a just cause, Equator should pay him nominal damages of ₱30,000.00, in accordance with Agabon v. NLRC.²³ The decision of the NLRC, although final, was brought to CA on a petition for certiorari and was eventually nullified for grave abuse of discretion. When the CA ruled on the case, this Court had abandoned the ruling in Serrano v. NLRC²⁴ in favor of the Agabon ruling.

SECOND DIVISION

G.R. No. 173189               February 13, 2013

JONATHAN I. SANG-AN, Petitioner,
vs.
EQUATOR KNIGHTS DETECTIVE AND SECURITY AGENCY, INC., Respondents.

Due process considerations require that judgments must conform to and be supported by the pleadings and evidence presented in court

It is settled that courts cannot grant a relief not prayed for in the pleadings or in excess of what is being sought by the party. They cannot also grant a relief without first ascertaining the evidence presented in support thereof. Due process considerations require that judgments must conform to and be supported by the pleadings and evidence presented in court. In Development Bank of the Philippines v. Teston,³⁶ this Court expounded that:

Due process considerations justify this requirement. It is improper to enter an order which exceeds the scope of relief sought by the pleadings, absent notice which affords the opposing party an opportunity to be heard with respect to the proposed relief. The fundamental purpose of the requirement that allegations of a complaint must provide the measure of recovery is to prevent surprise to the defendant.

Notably, the Rules is even more strict in safeguarding the right to due process of a defendant who was declared in default than of a defendant who participated in trial. For instance, amendment to conform to the evidence presented during trial is allowed the parties under the Rules.³⁷ But the same is not feasible when the defendant is declared in default because Section 3(d), Rule 9 of the Rules of Court comes into play and limits the relief that may be granted by the courts to what has been prayed for in the Complaint. It provides:

(d) Extent of relief to be awarded. – A judgment rendered against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages.

The raison d’être in limiting the extent of relief that may be granted is that it cannot be presumed that the defendant would not file an Answer and allow himself to be declared in default had he known that the plaintiff will be accorded a relief greater than or different in kind from that sought in the Complaint.³⁸ No doubt, the reason behind Section 3(d), Rule 9 of the Rules of Court is to safeguard defendant’s right to due process against unforeseen and arbitrarily issued judgment. This, to the mind of this Court, is akin to the very essence of due process. It embodies "the sporting idea of fair play"³⁹ and forbids the grant of relief on matters where the defendant was not given the opportunity to be heard thereon.

SECOND DIVISION

G.R. No. 173559               January 7, 2013

LETICIA DIONA, represented by her Attorney-in-Fact, MARCELINA DIONA, Petitioner,
vs.
ROMEO A. BALANGUE, SONNY A. BALANGUE, REYNALDO A. BALANGUE, and ESTEBAN A. BALANGUE, JR., Respondents.

the embodiment of the sporting idea of fair play; exceptions to due process

The due process clauses in the American and Philippine Constitutions are not only worded in exactly identical language and terminology, but more importantly, they are alike in what their respective Supreme Courts have expounded as the spirit with which the provisions are informed and impressed, the elasticity in their interpretation, their dynamic and resilient character which make them capable of meeting every modern problem, and their having been designed from earliest time to the present to meet the exigencies of an undefined and expanding future. The requirements of due process are interpreted in both the United States and the Philippines as not denying to the law the capacity for progress and improvement. Toward this effect and in order to avoid the confines of a legal straitjacket, the courts instead prefer to have the meaning of the due process clause "gradually ascertained by the process of inclusion and exclusion in the course of the decisions of cases as they arise" (Twining vs. New Jersey, 211 U.S. 78). Capsulized, it refers to "the embodiment of the sporting idea of fair play" (Ermita-Malate Hotel and Motel Owner's Association vs. City Mayor of Manila, 20 SCRA 849 [1967]). It relates to certain immutable principles of justice which inhere in the very idea of free government (Holden vs. Hardy, 169 U.S. 366).

Due process is comprised of two components — substantive due process which requires the intrinsic validity of the law in interfering with the rights of the person to his life, liberty, or property, and procedural due process which consists of the two basic rights of notice and hearing, as well as the guarantee of being heard by an impartial and competent tribunal (Cruz, Constitutional Law, 1993 Ed., pp. 102-106).

True to the mandate of the due process clause, the basic rights of notice and hearing pervade not only in criminal and civil proceedings, but in administrative proceedings as well. Non-observance of these rights will invalidate the proceedings. Individuals are entitled to be notified of any pending case affecting their interests, and upon notice, they may claim the right to appear therein and present their side and to refute the position of the opposing parties (Cruz, Phil. Administrative Law, 1996 ed., p. 64).

In a preliminary investigation which is an administrative investigatory proceeding, Section 3, Rule 112 of the Rules of Court guarantees the respondent's basic due process rights, granting him the right to be furnished a copy of the complaint, the affidavits, and other supporting documents, and the right to submit counter-affidavits and other supporting documents within ten days from receipt thereof. Moreover, the respondent shall have the right to examine all other evidence submitted by the complainant.

These twin rights may, however, be considered dispensable in certain instances, such as:

1. In proceeding where there is an urgent need for immediate action, like the summary abatement of a nuisance per se (Article 704, Civil Code), the preventive suspension of a public servant facing administrative charges (Section 63, Local Government Code, B.P. Blg. 337), the padlocking of filthy restaurants or theaters showing obscene movies or like establishments which are immediate threats to public health and decency, and the cancellation of a passport of a person sought for criminal prosecution;

2. Where there is tentativeness of administrative action, that is, where the respondent is not precluded from enjoying the right to notice and hearing at a later time without prejudice to the person affected, such as the summary distraint and levy of the property of a delinquent taxpayer, and the replacement of a temporary appointee; and

3. Where the twin rights have previously been offered but the right to exercise them had not been claimed.

EN BANC

G.R. No. 139465           January 18, 2000

SECRETARY OF JUSTICE, petitioner,
vs.
HON. RALPH C. LANTION, Presiding Judge, Regional Trial Court of Manila, Branch 25, and MARK B. JIMENEZ, respondents.

possible questions for the quiz tomorrow july 10

1. what are the two stages in expropriation proceeding?
2. what are the requisites of judicial inquiry?
3. Meaning of due process
4. meaning of equal protection

A paramount principle of the law of extradition provides that a State may not surrender any individual for any offense not included in a treaty of extradition. This principle arises from the reality of extradition as a derogation of sovereignty. Extradition is an intrusion into the territorial integrity of the host State and a delimitation of the sovereign power of the State within its own territory. 1 The act of extraditing amounts to a "delivery by the State of a person accused or convicted of a crime, to another State within whose territorial jurisdiction, actual or constructive, it was committed and which asks for his surrender with a view to execute justice

A paramount principle of the law of extradition provides that a State may not surrender any individual for any offense not included in a treaty of extradition. This principle arises from the reality of extradition as a derogation of sovereignty. Extradition is an intrusion into the territorial integrity of the host State and a delimitation of the sovereign power of the State within its own territory. 1 The act of extraditing amounts to a "delivery by the State of a person accused or convicted of a crime, to another State within whose territorial jurisdiction, actual or constructive, it was committed and which asks for his surrender with a view to execute justice." 2 As it is an act of "surrender" of an individual found in a sovereign State to another State which demands his surrender 3 , an act of extradition, even with a treaty rendered executory upon ratification by appropriate authorities, does not imposed an obligation to extradite on the requested State until the latter has made its own determination of the validity of the requesting State's demand, in accordance with the requested State's own interests.

The principles of international law recognize no right of extradition apart from that arising from treaty. 4 Pursuant to these principles, States enter into treaties of extradition principally for the purpose of bringing fugitives of justice within the ambit of their laws, under conventions recognizing the right of nations to mutually agree to surrender individuals within their jurisdiction and control, and for the purpose of enforcing their respective municipal laws. Since punishment of fugitive criminals is dependent mainly on the willingness of host State to apprehend them and revert them to the State where their offenses were committed, 5 jurisdiction over such fugitives and subsequent enforcement of penal laws can be effectively accomplished only by agreement between States through treaties of extradition.

Desiring to make more effective cooperation between Australia and the Government of the Philippines in the suppression of crime, 6 the two countries entered into a Treaty of Extradition on the 7th of March 1988. The said treaty was ratified in accordance with the provisions of Section 21, Article VII of the 1987 Constitution in a Resolution adopted by the Senate on September 10, 1990 and became effective thirty (30) days after both States notified each other in writing that the respective requirements for the entry into force of the Treaty have been complied with. 7

The Treaty adopts a "non-list, double criminality approach" which provides for broader coverage of extraditable offenses between the two countries and (which) embraces crimes punishable by imprisonment for at least one (1) year. Additionally, the Treaty allows extradition for crimes committed prior to the treaty's date of effectivity, provided that these crimes were in the statute books of the requesting State at the time of their commission.

The Court reminds the government and its agencies that it is their obligation to initiate eminent domain proceedings whenever they intend to take private property for any public purpose.

On a final note, there are several cases which reached this Court in which Transco and even other government agencies constructed transmission lines, tunnels and other infrastructures before it decided to expropriate the private properties upon which they built the same. The Court reminds the government and its agencies that it is their obligation to initiate eminent domain proceedings whenever they intend to take private property for any public purpose. Before the expropriating power enters a private property, it must first file an action for eminent domain43and deposit with the authorized government depositary an amount equivalent to the assessed value of the property.44

Transco should first file an expropriation case before it proceeds to construct transmission lines or any other infrastructure on any private property. The practice of construct first, expropriate later must be put to a stop.

Meaning of "taking"; just compensation; power of eminent domain; delayed payment, interest and damages

Republic v. Vda. De Castellvi15 provides an enlightening discourse on the requisites of taking.

First, The expropriator must enter a private property;

 Second, the entrance into private property must be for more than a momentary period;

 Third, the entry into the property should be under warrant or color of legal authority; 

Fourth, the property must be devoted to a public use or otherwise informally appropriated or injuriously affected; and 

Fifth, the utilization of the property for public use must be in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property.16

The Court rules that there is taking of the property for purposes of eminent domain in 1983.

The first and fourth requisites are present in this case. Transco took possession of Oroville's property in order to construct transmission lines to be used in generating electricity for the benefit of the public.

The second requisite is likewise present as there can be no question that the construction of transmission lines meant an indefinite stay in the property of Oroville. Further, Trans Co's exercise of eminent domain is pursuant to its authority granted under Section 8 of Republic Act (R.A.) No. 9136 or the Electric Power Industry Reform Act of 2001.17

Finally, Oroville has been deprived of the beneficial enjoyment of its property. In several rulings, notably National Power Corporation v. Spouses Zabala,18 Republic v. Spouses Libunao,19 and National Power Corporation v. Tuazon20 this Court has already declared that "since the high-tension electric current passing through the transmission lines will perpetually deprive the property owners of the nonnal use of their land, it is only just and proper to require Napocor to recompense them for the full market value of their property."

Just compensation reckoned from the
date of actual taking

The next question to be resolved is whether just compensation should be reckoned from 1983 when the taking took place.

Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. The measure is not the taker's gain, but the owner's loss. The word "just" is used to intensify the meaning of the word "compensation" and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full, and ample.21

In addition, Section 4, Rule 67 of the Rules of Court provides:

Section 4. Order of expropriation. - If the objections to and the defenses against the right of the plaintiff to expropriate the property are overruled, or when no party appears to defend as required by this Rule, the court may issue an order of expropriation declaring that the plaintiff has a lawful right to take the property sought to be expropriated, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the taking of the property or the filing of the complaint, whichever came first. xxxx[Emphasis supplied]

The case of Secretary of the Department of Public Works and Highways v. Spouses Tecson (Tecson)22 provides a discussion of cases wherein the Court conformed to the abovementioned rule and held that payment of just compensation should be reckoned from the date of taking when such preceded the filing of the complaint for expropriation, to wit:

In Forfom Development Corporation [Forlorn] v. Philippine National Railways [PNR], PNR entered the property of Forfom in January 1973 for public use, that is, for railroad tracks, facilities and appurtenances for use of the Carmona Commuter Service without initiating expropriation proceedings. In 1990, Forlorn filed a complaint for recovery of possession of real property and/ or damages against PNR. In Eusebio v. Luis, respondent's parcel of land was taken in 1980 by the City of Pasig and used as a municipal road now known as A Sandoval Avenue in Pasig City without the appropriate expropriation proceedings. In 1994, respondent demanded payment of the value of the property, but they could not agree on its valuation prompting respondent to file a complaint for reconveyance and/ or damages against the city government and the mayor. In Manila International Airport Authority v. Rodriguez, in the early 1970s, petitioner implemented expansion programs for its runway necessitating the acquisition and occupation of some of the properties surrounding its premises. AB to respondent's property, no expropriation proceedings were initiated. In 1997, respondent demanded the payment of the value of the property, but the demand remained unheeded prompting him to institute a case for accion reivindicatoria with damages against petitioner. In Republic v. Sarabia, sometime in 1956, the Air Transportation Office (ATO) took possession and control of a portion of a lot situated in Aldan, registered in the name of respondent, without initiating expropriation proceedings. Several structures were erected thereon including the control tower, the Kalibo crash fire rescue station, the Kalibo airport terminal and the headquarters of the PNP Aviation Security Group. In 1995, several stores and restaurants were constructed on the remaining portion of the lot. In 1997, respondent filed a complaint for recovery of possession with damages against the storeowners where ATO intervened claiming that the storeowners were its lessees.

The Court in the above-mentioned cases was confronted with common factual circumstances where the government took control and possession of the subject properties for public use without initiating expropriation proceedings and without payment of just compensation, while the landowners failed for a long period of time to question such government act and later instituted actions for recovery of possession with damages. The Court thus determined the landowners' right to the payment of just compensation and, more importantly, the amount of just compensation. The Court has uniformly ruled that just compensation is the value of the property at the time of taking that is controlling for purposes of compensation. In Forlorn, the payment of just compensation was reckoned from the time of taking in 1973; in Eusebio, the Court fixed the just compensation by determining the value of the property at the time of taking in 1980; in MIAA, the value of the lot at the time of taking in 1972 served as basis for the award of compensation to the owner; and in Republic, the Court was convinced that the taking occurred in 1956 and was thus the basis in fixing just compensation.23 [Citations omitted and emphases supplied]

As further pointed out in Republic v. Lara, et al.,24 thus:

x x x "The value of the property should be fixed as of the date when it was taken and not the date of the filing of the proceedings." For where property is taken ahead of the filing of the condemnation proceedings, the value thereof may be enhanced by the public purpose for which it is taken; the entry by the plaintiff upon the property may have depreciated its value thereby; or, there may have been a natural increase in the value of the property from the time it is taken to the time the complaint is filed, due to general economic conditions. The owner of private property should be compensated only for what he actually loses; it is not intended that his compensation shall extend beyond his loss or injury. And what he loses is only the actual value of his property at the time it is taken x x x.25

Indeed, the State is only obliged to make good the loss sustained by the landowner, with due consideration of the circumstances availing at the time the property was taken. The concept of just compensation does not imply fairness to the property owner alone. Compensation must also be just to the public, which ultimately bears the cost of expropriation.26

The sequence of events in all of these cited cases as well as in Tecson is similar to that obtaining in the case at bench, that is, the government took possession of private properties without initiating expropriation proceedings and later on, the property owners demanded either the return of their properties or the payment of just compensation. Thus, pursuant to the Rules of Court and in accordance with prevailing jurisprudence, the Court rules that just compensation must be ascertained as of the year 1983 when Transco commenced construction of the transmission lines. Just compensation is therefore fixed at ₱78.65 per square meter, which is the fair market value of the property at the time of taking. As will be discussed later on, the imposition of interest would adequately compensate the property owner for the delay in the payment of just compensation considering that more often than not, the amount of interest to be paid is higher than the increase in the property's market value.
x x x

Amount of interest to be paid

The owner's loss, of course, is not only his property but also its income-generating potential.34 Thus, when property is taken, full compensation of its value must immediately be paid to achieve a fair exchange for the property and the potential income lost.35 Thus, the rationale for imposing the interest is to compensate the landowners for the income they would have made had they been properly compensated for their properties at the time of the taking.36

The Court, in Republic v. Court of Appeals,37 further enunciated on the necessity of the payment of interest to compensate for delay in the payment of just compensation, viz:

The constitutional limitation of "just compensation" is considered to be the sum equivalent to the market value of the property, broadly described to be the price fixed by the seller in open market in the usual and ordinary course of legal action and competition or the fair value of the property as between one who receives, and one who desires to sell, if fixed at the time of the actual taking by the government. Thus, if property is taken for public use before compensation is deposited with the court having jurisdiction over the case, the final compensation must include interest [s] on its just value to be computed from the time the property is taken to the time when compensation is actually paid or deposited with the court. In fine, between the taking of the property and the actual payment, legal interest [s] accrue in order to place the owner in a position as good as (but not better than) the position he was in before the taking occurred.38 [Emphasis supplied]

Tecson also clarified the amount of interest due the landowners, to wit:

x x x In other words, the just compensation due to the landowners amounts to an effective forbearance on the part of the State - a proper subject of interest computed from the time the property was taken until the full amount of just compensation is paid - in order to eradicate the issue of the constant variability of the value of the currency over time.

x x xx

It is important to note, however, that interest shall be compounded at the time judicial demand is made pursuant to Article 2212 of the Civil Code of the Philippines, and sustained in Eastern Shipping Lines v. Court of Appeals, then later on in Nacar v. Gallery Frames, save for the reduction of interest rate to 6% for loans or forbearance of money.39 x x x

In the case at bench, Transco made a provisional deposit of ₱7,647,200.00 on January 21, 2011. Consequently, from 1983 to January 21, 2011, Oroville is entitled to twelve percent (12%) interest per annum which is the prevailing rate during such period pursuant to Central Bank Circular No. 905,40 effective from December 22, 1982 to June 30, 2013.

Oroville is also awarded additional compensation by way of exemplary damages and attorney's fees. In Republic v. CA,41 the Court held that the failure of the government to initiate an expropriation proceeding to the prejudice of the landowner may be corrected with the awarding of exemplary damages, attorney's fees and costs of litigation. Thus:

x x x However, we find it proper to award temperate and exemplary damages in light of NIA's misuse of its power of eminent domain. Any arm of the State that exercises the delegated power of eminent domain must wield that power with circumspection and utmost regard for procedural requirements. A government instrumentality that fails to observe the constitutional guarantees of just compensation and due process abuses the authority delegated to it, and is liable to the property owner for damages.42 x x x

Hence, considering that Oroville was deprived of beneficial ownership over their property without the benefit of a timely expropriation proceeding, and to serve as a deterrent to the State from failing to institute such proceedings, a grant of exemplary damages in the amount of One Million Pesos (₱1,000,000.00) is fair and reasonable. Moreover, an award for attorney's fees in the amount of Two Hundred Thousand Pesos (₱200,000.00) in favor of Oroville is in order.

To recapitulate, Transco is liable to pay Oroville ₱78.65 per square meter representing the fair market value of the property at the time of taking in 1983 and 12% interest per annum on the total fair market value, computed from 1983 to January 21, 2011, the date when Transco made a provisional deposit in favor of Oroville. Considering that the actual date of taking cannot be determined from the records of the case, the date of taking is pegged on January 1, 1983. Oroville is also awarded exemplary damages in the amount of ₱1,000,000.00 and attorney's fees in the amount of ₱200,000.00.

On a final note, there are several cases which reached this Court in which Transco and even other government agencies constructed transmission lines, tunnels and other infrastructures before it decided to expropriate the private properties upon which they built the same. The Court reminds the government and its agencies that it is their obligation to initiate eminent domain proceedings whenever they intend to take private property for any public purpose. Before the expropriating power enters a private property, it must first file an action for eminent domain43and deposit with the authorized government depositary an amount equivalent to the assessed value of the property.44

EN BANC

August 1, 2017

G.R. No. 223366

NATIONAL TRANSMISSION CORPORATION, Petitioner,
vs.
OROVILLE DEVELOPMENT CORPORATION, Respondent

The doctrine of operative fact recognizes the existence of the law or executive act prior to the determination of its unconstitutionality as an operative fact that produced consequences that cannot always be erased, ignored or disregarded. In short, it nullifies the void law or executive act but sustains its effects. It provides an exception to the general rule that a void or unconstitutional law produces no effect.

Yet, the Court has conceded in Araullo v. Aquino III that:

x x x the generality of the rule makes us ponder whether rigidly applying the rule may at times be impracticable or wasteful. Should we not recognize the need to except from the rigid application of the rule the instances in which the void law or executive act produced an almost irreversible result?
The need is answered by the doctrine of operative fact. The doctrine, definitely not a novel one, has been exhaustively explained in De Agbayani v. Philippine National Bank:

The decision now on appeal reflects the orthodox view that an unconstitutional act, for that matter an executive order or a municipal ordinance likewise suffering from that infirmity, cannot be the source of any legal rights or duties. Nor can it justify any official act taken under it. Its repugnancy to the fundamental law once judicially declared results in its being to all intents and purposes a mere scrap of paper. As the new Civil Code puts it: 'When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern.' Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws of the Constitution. It is understandable why it should be so, the Constitution being supreme and paramount. Any legislative or executive act contrary to its terms cannot survive.
Such a view has support in logic and possesses the merit of simplicity. It may not however be sufficiently realistic. It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that precisely because the judiciary is the governmental organ which has the final say on whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: 'The actual existence of a statute, prior to such a determination [of unconstitutionality], is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects, with respect to particular relations, individual and corporate, and particular conduct, private and official.'

The doctrine of operative fact recognizes the existence of the law or executive act prior to the determination of its unconstitutionality as an operative fact that produced consequences that cannot always be erased, ignored or disregarded. In short, it nullifies the void law or executive act but sustains its effects. It provides an exception to the general rule that a void or unconstitutional law produces no effect. But its use must be subjected to great scrutiny and circumspection, and it cannot be invoked to validate an unconstitutional law or executive act, but is resorted to only as a matter of equity and fair play. It applies only to cases where extraordinary circumstances exist, and only when the extraordinary circumstances have met the stringent conditions that will permit its application.

Conformably with the foregoing pronouncements in Araullo v. Aquino III, the effect of our declaration through this decision of the unconstitutionality of Section 284 of the LGC and its related laws as far as they limited the source of the just share of the LGUs to the NIRTs is prospective. It cannot be otherwise. (Bold underscoring is part of the original)

EN BANC

[ G.R. No. 199802, April 10, 2019 ]

CONGRESSMAN HERMILANDO I. MANDANAS; MAYOR EFREN B. DIONA; MAYOR ANTONINO AURELIO; KAGAWAD MARIO ILAGAN; BARANGAY CHAIR PERLITO MANALO; BARANGAY CHAIR MEDEL MEDRANO; BARANGAY KAGAWAD CRIS RAMOS; BARANGAY KAGAWAD ELISA D. BALBAGO, AND ATTY. JOSE MALVAR VILLEGAS, PETITIONERS, V. EXECUTIVE SECRETARY PAQUITO OCHOA; SECRETARY CESAR PURISIMA, DEPARTMENT OF FINANCE; SECRETARY FLORENCIO H. ABAD, DEPARTMENT OF BUDGET AND MANAGEMENT; COMMISSIONER KIM JACINTO-HENARES, BUREAU OF INTERNAL REVENUE; AND NATIONAL TREASURER ROBERTO TAN, BUREAU OF THE TREASURY, RESPONDENTS.

The use of property bears a social function, and all economic agents shall contribute to the common good

Section 19, Article XII of the 1987 Constitution provides: "The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed."

The State grants electricity distribution utilities, through legislative franchises, a regulated monopoly within their respective franchise areas. Competitors are legally barred within the franchise areas of distribution utilities. Facing no competition, distribution utilities can easily dictate the price of electricity that they charge consumers. To protect the consuming public from exorbitant or unconscionable charges by distribution utilities, the State regulates the acquisition cost of electricity that distribution utilities can pass on to consumers.

As part of its regulation of this monopoly, the State requires distribution utilities to subject to competitive public bidding their purchases of electricity from power generating companies. Competitive public bidding is essential since the power cost purchased by distribution utilities is entirely passed on to consumers, along with other operating expenses of distribution utilities. Competitive public bidding is the most efficient, transparent, and effective guarantee that there will be no price gouging by distribution utilities.

Indeed, the requirement of competitive public bidding for power purchases of distribution utilities has been adopted in the United States, Europe, Latin America, India, and many developing countries.^[1] This requirement is primarily aimed at ensuring a fair, reasonable, and least-cost generation charge to consumers, under a transparent power sale mechanism between the generation companies and the distribution utilities.

Section 6, Article XII of the 1987 Constitution provides: "The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands."

Indisputably, the use of electricity bears a vital social function. The State, in requiring competitive public bidding in the purchase of power by distribution utilities, has exercised its constitutional "duty x x x to intervene when the common good so demands."
x x x
The ERC does not have the statutory authority to postpone the date of effectivity of CSP, and thereby cannot amend the 2015 DOE Circular. As a result, the 90 PSAs submitted to the ERC after the effectivity of CSP on or after 30 June 2015 cannot serve as basis to pass on the power cost to consumers. The ERC must require CSP on all PSA applications submitted on or after 30 June 2015.

xxx
As will be herein discussed, absent the approval of and coordination with the Department of Energy (DOE), the ERC cannot suspend the effectivity of the CSP, which process was originally mandated under DOE Department Circular No. DC2015-06-0008,^[4] entitled "Mandating All Distribution Utilities to Undergo Competitive Selection Process (CSP) in Securing Power Supply Agreements (PSA)" (DOE Circular). However, as will be elaborated upon below, I qualify my concurrence in that: (a) only ERC Resolution No. 01, Series of 2016 - and not the first paragraph of Section 4 of ERC Resolution No. 13, Series of 2015 - should be declared null and void; and (b) pursuant to the doctrine of operative fact, the effects of the PSAs already approved prior to the invalidity of ERC Resolution No. 01, Series of 2016, notwithstanding their CSP non-compliance, should be recognized.

[ G.R. No. 227670, May 03, 2019 ]

ALYANSA PARA SA BAGONG PILIPINAS, INC. (ABP), REPRESENTED BY EVELYN V. JALLORINA AND NOEL VILLONES, PETITIONER, VS. ENERGY REGULATORY COMMISSION, REPRESENTED BY ITS CHAIRMAN, JOSE VICENTE B. SALAZAR, DEPARTMENT OF ENERGY, REPRESENTED BY SECRETARY ALFONSO G. CUSI, MERALCO, CENTRAL LUZON PREMIERE POWER CORPORATION, ST. RAPHAEL POWER GENERATION CORPORATION, PANAY ENERGY DEVELOPMENT CORPORATION, MARIVELES POWER GENERATION CORPORATION, GLOBAL LUZON ENERGY DEVELOPMENT CORPORATION, ATIMONAN ONE ENERGY, INC., REDONDO PENINSULA ENERGY, INC., AND PHILIPPINE COMPETITION COMMISSION, RESPONDENTS.

[r]egistering a piece of land under the Torrens System does not create or vest title because registration is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein

Another argument of ALI is that the Court should have applied the rule that, in case of two certificates of title purporting to include the same land, the earlier date prevails.

The argument also fails.

As discussed in the Decision of the Court, the rule that "in case of two certificates of title purporting to include the same land, the earlier date prevails" is not an absolute and conclusive rule; rather, it is merely a general rule. This was first discussed in Legarda v. Saleeby,^[35] as follows:

The question, who is the owner of land registered in the name of two different persons, has been presented to the courts in other jurisdictions. In some jurisdictions, where the "torrens" system has been adopted, the difficulty has been settled by express statutory provision. In others it has been settled by the courts. Hogg, in his excellent discussion of the "Australian Torrens System," at page 823, says: "The general rule is that in the case of two certificates of title, purporting to include the same land, the earlier in date prevails, whether the land comprised in the latter certificate be wholly, or only in part, comprised in the earlier certificate. xxx In successive registrations, where more than one certificate is issued in respect of a particular estate or interest in land, the person claiming under the prior certificate is entitled to the estate or interest; and that person is deemed to hold under the prior certificate who is the holder of, or whose claim is derived directly or indirectly from the person who was the holder of the earliest certificate issued in respect thereof x x x.^[36]

Justice Leonen asserts that the Decision of the Court went against the doctrine of "Primus Tempora, Fortior Jure," or "First in Time, Stronger in Right." This is because the mother title of the Spouses Yu's predecessor-in-interest was issued more than two (2) decades after those issued to ALI's predecessors-in-interest, yet this did not prevent the Court from upholding the later issued title over the earlier issued one.

The rule on superiority, however, is not absolute. The same case of Legarda v. Saleeby explains the exception to the rule, viz.:

Hogg adds however that, "if it can be clearly ascertained by the ordinary rules of construction relating to written documents, that the inclusion of the land in the certificate of title of prior date is a mistake, the mistake may be rectified by holding the latter of the two certificates of title to be conclusive."^[37]

Accordingly, if the inclusion of the land in the earlier registered title was a result of a mistake, then the latter registered title will prevail. The ratio decidendi of this exception is to prevent a title that was earlier registered, which erroneously contained a parcel of land that should not have been included, from defeating a title that was later registered but is legitimately entitled to the said land. It reinforced the doctrine that "[r]egistering a piece of land under the Torrens System does not create or vest title because registration is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein."^[38]

SPECIAL SECOND DIVISION

[ G.R. No. 173120, April 10, 2019 ]

SPOUSES YU HWA PING AND MARY GAW, PETITIONERS, VS. AYALA LAND, INC., RESPONDENT.

[G.R. No. 173141]

HEIRS OF SPOUSES ANDRES DIAZ AND JOSEFA MIA, PETITIONERS, VS. AYALA LAND, INC., RESPONDENT.