389 Phil. 658
MENDOZA, J.:
WHEREFORE, by way of clarification, the court holds that the transfer of title to the plaintiff under the Contract to Sell dated December 14, 1988 covers the entire Lot 834 consisting of 4,075 square meters (including the expropriated portion); that this change of owner over the entire property is necessarily junior or subject to the superior rights of the REPUBLIC over the expropriated portion (the metes and bounds of which are clearly defined in Section 1 `6' of B.P. Blg. 340); that the Contract to Sell dated December 14, 1988 executed by the parties is a valid document that authorizes the plaintiff to step into the shoes of the defendants in relation to the property covered by TCT No. 16213; and that the transfer shall be free from all liens and encumbrances except for the expropriated portion of 1,380 square meters.[16]The decision in the action for specific performance in Civil Case No. 6974-P having become final, an order of execution[17] was issued by the Pasay City RTC, and as a result of which, a deed of absolute sale[18] was executed by the Branch Clerk of Court on March 8, 1994 in favor of Guerrero upon payment by him of the sum of P8,808,000.00 on January 11, 1994 and the further sum of P1,608,900.00 on February 1, 1994 as full payment for the balance of the purchase price under the contract to sell of December 14, 1988. The entire amount was withdrawn and duly received by the De la Ramas.[19]
WHEREFORE, respondent-intervenor Alfredo Guerrero is hereby declared as the rightful person entitled to receive the just compensation of the 920-square meter portion of the property described in TCT No. 16213 of the Register of Deeds of Pasay City and ordering the Philippine National Bank to release and deliver to Uniland Realty and Development Corporation, the assignee of Guerrero, the amount of P20,000,000.00 representing the deposit made by the plaintiff through the Department of Public Works and Highways in the Philippine National Bank, Escolta Branch with the check solely payable to said Uniland Realty and Development Corporation, as assignee of Alfredo Guerrero.[21]This decision was subsequently affirmed by the Court of Appeals.[22] Hence, this petition.
As already stated, the De la Ramas and Guerrero entered into a contract to sell with respect to Lot 834. This lot has an area of 4,075 square meters. This contract was executed on December 14, 1988, after B.P. Blg. 340 was passed authorizing the expropriation of a portion of the land, consisting of 1,380 square meters, of the De la Ramas. The only issue in this case is who, between the De la Ramas and Guerrero, is/are entitled to receive payment of just compensation for the taking of 920 square meters of the land in question?
I. THE COURT OF APPEALS WRONGLY INTERPRETED B.P. NO. 340 BY HOLDING THAT BATAS PAMBANSA BLG. 340 MERELY AUTHORIZED THE EXPROPRIATION OF THE LANDS OF THE DEFENDANTS, INCLUDING THAT PORTION BELONGING TO THE HEREIN PETITIONERS DE LA RAMAS COVERED BY TCT NO. 16213. II. THE COURT OF APPEALS WRONGLY INTERPRETED THE CONTRACT TO SELL BY HOLDING THAT THE PETITIONERS DE LA RAMAS HAD CONVEYED TO THE RESPONDENT GUERRERO THE WHOLE PROPERTY COVERED BY TCT NO. 16213, INCLUDING THE EXPROPRIATED AREA. III. THE HONORABLE COURT OF APPEALS WRONGLY DECLARED THAT THE PETITIONERS DE LA RAMAS COULD STILL SELL IN 1988 THEIR PROPERTY AS TITLE THERETO HAD NOT YET PASSED TO THE GOVERNMENT IN 1983. IV. THE COURT OF APPEALS GRAVELY ERRED IN WRONGLY INTERPRETING THE CONTRACT TO SELL, BY HOLDING THAT PETITIONERS DE LA RAMAS HAD CONVEYED TO THE RESPONDENT GUERRERO THE RIGHT TO RECEIVE THE JUST COMPENSATION FOR THE EXPROPRIATED AREA. V. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE RIGHT TO RECEIVE THE JUST COMPENSATION FOR THE EXPROPRIATED AREA BECAME VESTED UPON THE RESPONDENT GUERRERO THROUGH SUBROGATION. VI. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE RESPONDENT GUERRERO HAD PAID TO PETITIONERS RAMAS THE FULL PURCHASE PRICE OF P11,800,00.00 STIPULATED IN THE CONTRACT TO SELL OF 14 DECEMBER 1988.[23]
In 1988, the petitioners Ramas could no longer agree to sell to another person the expropriated property itself. For one thing, the property was already expropriated and petitioners Ramas for not objecting in effect conveyed the same to the Government. Secondly, the physical and juridical possession of the property was already in the Government. Thirdly, the equitable and beneficial title over the property was already vested in the Government, and therefore the property itself was already outside the commerce of man. As a matter of fact, the property was already part of a Government infrastructure.[24]On the other hand, Alfredo Guerrero argues that the title to the expropriated portion of Lot 834 did not immediately pass to the government upon the enactment of B.P. Blg. 340 in 1983, as payment of just compensation was yet to be made before ownership of the land was transferred to the government. As a result, petitioners still owned the entire Lot 834 at the time they agreed to sell it to Guerrero. Therefore, since Guerrero obtained ownership of Lot 834, including the 920 square meters expropriated by the government, he has the right to receive the just compensation over the said property.
The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, 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 filing of the complaint". . . .It is only upon the completion of these two stages that expropriation is said to have been completed. Moreover, it is only upon payment of just compensation that title over the property passes to the government.[28] Therefore, until the action for expropriation has been completed and terminated, ownership over the property being expropriated remains with the registered owner. Consequently, the latter can exercise all rights pertaining to an owner, including the right to dispose of his property, subject to the power of the State ultimately to acquire it through expropriation.
The second phase of the eminent domain action is concerned with the determination by the court of "the just compensation for the property sought to be taken." This is done by the court with the assistance of not more than three (3) commissioners. . . .
The land, as described above in the Contract to Sell, includes the land expropriated under B.P. Blg. 340, to wit:CONTRACT TO SELL
KNOW ALL MEN BY THESE PRESENTS:
This CONTRACT is made and executed by and between:
MILAGROS DE LA RAMA and INOCENTES DE LA RAMA, of legal age, both single, Filipinos Citizen and with residence and postal address at 2838 F.B. Harrison St., Pasay City, Metro Manila, hereinafter referred to as the SELLERS.- and -
ALFREDO S. GUERRERO, of legal age, Filipino, married to SUSANA C. PASCUAL and with residence and postal address at No. 17 Mangyan, La Vista, Quezon City, hereinafter referred to as the BUYER.W I T N E S S E T H :
WHEREAS, the SELLERS are the registered owners of a parcel of land consisting of 4,075 square meters together with all the improvements thereon situated at 2838 F.B. Harrison St., Pasay City, covered by Transfer Certificate of Title No. 16213 of the Registry of Deeds of Pasay City and more particularly described as follows:A PARCEL OF LAND (Lot 834 of the Cadastral Survey of Pasay, L.R.C. Cad. Rec. No.), situated in the City of Pasay. Bounded on the N., along line 1-2 by Lot 835; and along line 2-3 by Lot 836, on the NE., and SE., along lines 3-4-5 by Lot 833, all of Pasay Cadastre; and on the SW., along lines 5-6-1 by Calle F.B. Harrison. Beginning at a point marked "1" on plan, being N. 3 deg. 50'E., 100.44 m. from B.L.L.M. 5, Pasay Cadastre; thence N. 84 deg. 19'E., 73.79 m. to point 2; thence N. 84 deg. 19'E., 14.47 m. to point 3; thence S. 93 deg. 11'E., 45.69 m. to point 4; thence S. 33 deg. 10'W., 87.39 m. to point 5; thence N. 10 deg. 46'W., 11.82 m. to point 6; thence N. 10 deg. 46'W., 35.70 m. to point of beginning; containing an area of FOUR THOUSAND AND SEVENTY FIVE (4,075) SQUARE METERS. All points referred to are indicated on the plan and marked on the ground by Old Points; bearing true date of the cadastral survey, Oct., 1928 to Nov., 1930.WHEREAS, the SELLERS offer to sell and the BUYER agrees to buy the above-described real property;
NOW, THEREFORE, for and in consideration of the amount of ELEVEN MILLION EIGHT HUNDRED THOUSAND PESOS (P11,800.000.00) the parties hereby agree to enter unto the Contract subject to such terms and conditions as follows:
1. Upon execution of this Contract, the BUYER shall pay the SELLERS the sum of TWO MILLION TWO HUNDRED THOUSAND PESOS (P2,200,000.00) it being understood and agreed that this payment shall be for the purpose of liquidating in full the mortgage indebtedness and affecting the redemption of the property subject of the sale as annotated at the back of the title;
2. The balance of EIGHT MILLION EIGHT HUNDRED THOUSAND PESOS (P8,800,000.00) shall be paid by the BUYER upon release of the title by Phil. Veterans Bank and execution of the Deed of Absolute Sale;
3. The amount of P800,000.00 shall be paid by the BUYER upon payment of Capital Gains Tax and documentary sales stamp by the SELLERS and their vacation of the premises.
4. All existing improvements shall be assigned to the BUYER;
5. The SELLERS shall settle all realty taxes up to the end of 1988, water and electric bills;
6. The SELLERS shall pay three percent (3%) of the total consideration as broker's commission to be computed in the purchase price of P11,000,000.00;
7. It is hereby agreed and covenanted and stipulated by and between the parties hereto that the SELLERS shall execute and deliver to the BUYER a formal Absolute Deed of Sale free from all liens and encumbrances;
8. That the SELLERS shall vacate the premises and or deliver the physical possession of the property within thirty (30) days from the date of sale, that is upon complete payment by the BUYER of the agreed purchase price and execution of Deed of Sale;
9. That the execution of all legal documents in connection with this sale transaction shall be done thru SELLERS legal counsel;
10. The BUYER shall assume payment of transfer and registration expenses.
IN WITNESS WHEREOF, the parties have hereunto set their hands this 14th day of December 1988 at Manila, Metro Manila.[31]
6. A parcel of land (a portion of Lot No. 834 of the Cadastral Survey of Pasay, Cadastral Case No. 23, G.L.R.O. Cadastral Record No. 1368), situated in the City of Pasay, bounded on the southeast, along lines 1-2-3 by Lot No. 833, Pasay Cadastre; and on the southwest, along lines 3-4-5 by Calle F.B. Harrison; and on the north, points 5-17-17-1 by the remaining portion of Lot 834; beginning at point marked "1" on plan, being S. 32 deg. 17' 44"E., 267.187 meters from BLLM No. 5, Pasay Cadastre; thence S.9 deg. 11'E., 11.579 m. to point "2"; thence S.82 deg. 10'W., 87.390 m. to point "3"; thence N. 10 deg. 45' 58"W., 11.82 m. to point "4"; thence N. 10 deg. 46 W., 15,568.4 m. to point "5"; thence S.15 deg. 37' 27"E., 3.287 m. to point "6"; thence S.34 deg.. 32'27"E., 3.287 m. to point "7"; thence S. 53 deg. 26'50"E., 3.287 m. to point "8"; thence S. 72 deg. 22'51"E., 3.287 m. to point "9"; thence N. 88 deg. 40'32"E., 3.287 m. to point "10"; thence N. 72 deg. 00'53"E., 6.480 m. to point "11"; thence N. 84 deg. 55' 05"E., 10.375 m. to point "12"; thence N. 85 deg. 38'14"E., 10.375 m. to point "13"; thence N. 86 deg. 21' 10"E., 10.375 m. to point "14"; thence N. 87 deg. 04' 18"E., 10.375 m. to point "15"; thence N. 87 deg. 97' 06"E., 10.375 m. to point "16"; thence N. 88 deg. 30'11"E., 10.375 m. to point "17"; thence N. 89 deg. 12'56"E., 9.422 m. to the point of beginning, containing an area of one thousand three hundred eighty square meters (1,380.00 Sq.M.), more or less.[32]As the trial court in the case for specific performance ruled, the contract to sell covered the entire Lot 834, including the expropriated area, which was then owned by the De la Ramas.
That for and in consideration of the sum of ELEVEN MILLION PESOS (P11,000,000), Philippine Currency, paid by the VENDEE, the VENDORS, by these presents hereby SELL, TRANSFER, CONVEY and ASSIGN, unto the herein VENDEE, his heirs, successors-in-interest and assigns, by way of absolute sale, a parcel of land located in 2838 F.B. Harrison Street, Pasay City, formerly covered by Transfer Certificate of Title No. 16213 of the land records of Pasay City, presently covered by the new Transfer Certificate of Title No. 132995, together with all improvements thereon, free from all liens and encumbrances whatsoever except over a portion equal to one thousand three hundred eighty (1,380) square meters expropriated by the Republic of the Philippines under and by virtue of Batas Pambansa Blg. 340 which took effect on February 17, 1983, the technical description of which is found therein, and which Lot 834 in its entirety is more particularly described as follows:The underscored phrase does not say that the expropriated portion of the lot was excluded from the sale. Rather, it states that the entire property, consisting of 4,075 square meters, was being sold free from all liens and encumbrances except the lien in favor of the government over the portion being expropriated by it. Stated in another way, Guerrero was buying the entire property free from all claims of third persons except those of the government.A PARCEL OF LAND (Lot 834 of the Cadastral Survey of Pasay, L.R.C. Cad. Rec No. ), situated in the City of Pasay. Bounded on the N. along line 1-2 by Lot 835, and along line 2-3 by Lot 836; on the NE., and SE., along lines 3-4-5 by Lot 833; all of Pasay Cadastre; and on the SW., along lines 5-6-1 by Calle F.B. Harrison. Beginning at a point marked "1" on plan, being N. 3 deg. 50'E., 100.44 from B.I.I.M. 5; Pasay Cadastre; thence N. 84 deg. 19'E., 73.79 m. to point 2; thence N. 84 deg. 19'E., 14.47 m. to point 3; thence S. 9 deg. 11'E., 45.69 m. to point 4; thence S.53 deg. 10'W., 87.39 m. to point 5; thence N. 10 deg. 46'W., 11.82 m. to point 6; thence N. 10 deg. 46'W., 35. 70 m. to point of beginning; containing an area of FOUR THOUSAND AND SEVENTY FIVE (4,075) SQUARE METERS. All points referred to are indicated on the plan and are marked on the ground by Old Points; bearing true date of the Cadastral Survey, Oct. 1928 to Nov. 1, 1930.[33]
The recognized rule, indeed, is that title to the property expropriated shall pass from the owner to the expropriator only upon full payment of the just compensation. Jurisprudence on this settled principle is consistent both here and in other democratic jurisdictions. Thus:The amount paid by Guerrero
. . . although the right to expropriate and use land taken for a canal is complete at the time of entry, title to the property taken remains in the owner until payment is actually made. (Emphasis supplied).
In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to property does not pass to the condemnor until just compensation had actually been made. In fact, the decisions appear to be uniformly to this effect. As early as 1838, in Rubottom v. McLure, it was held that "actual payment to the owner of the condemned property was a condition precedent to the investment of the title to the property in the State" albeit "not to the appropriation of it to public use." In Rexford v. Knight, the Court of Appeals of New York said that the construction upon the statutes was that the fee did not vest in the State until the payment of the compensation although the authority to enter upon and appropriate the land was complete prior to the payment. Kennedy further said that "both on principle and authority the rule is . . . that the right to enter on and use the property is complete, as soon as the property is actually appropriated under the authority of law for a public use, but that the title does not pass from the owner without his consent, until just compensation has been made to him."
In making such misleading allegations, petitioners withheld the information that on January 25, 1994, Branch 114 of the Pasay City Regional Trial Court had issued an order which explained very clearly why the sum of P7,417,000.00 deposited by Guerrero constitute full payment of the agreed price, viz:The De la Ramas question this ruling of the lower court. They say:The plaintiff [Alfredo Guerrero] is therefore entitled to collect from the defendants [Milagros and Inocentes de la Rama] the sum of P800,000.00 in damages and attorney's fees, and interest at the legal rate. The earlier computation of the court's Branch Sheriff Edilberto Santiago is wrong. The legal rate of interest for damages, and even for loans where interest was not stipulated, is 6% per annum (Art. 2209, Civil Code). The rate of 12% per annum was established by the Monetary Board when, under the power vested in it by P.D. 116 to amend Act No. 2655 (more commonly known as the Anti Usury Law), it amended Section 1 by increasing the rate of legal interest for loans, renewals and forbearance thereof, as well as for judgments, from 6% per annum to 12% per annum. Inasmuch as the Monetary Board may not repeal or amend the Civil Code, in the face of the apparent conflict between Art. 2209 and Act No. 2655 as amended, it is this court's persuasion that the ruling of the Monetary Board applies only to banks, financing companies, pawnshops and intermediaries performing quasi-banking functions, all of which are under the control and supervision of the Central Bank and of the Monetary Board.
Plaintiff's motion is meritorious. The decision dated September 18, 1991 rendered in this case has long become final and executory. Paragraph 4 of the dispositive portion of said decision reads as follows:
4. Ordering defendants Milagros dela Rama and Inocentes dela Rama to execute the corresponding deed of sale conveying the subject property, free from all liens and encumbrances in favor of the plaintiff upon payment of the latter of his balance of P8,800,000.00:
. . . .
6. Ordering both defendants, jointly and severally, to pay the plaintiff the following:
a. the sum of P500,000.00 by way of moral damages; b. the sum of P200,000.00 by way of exemplary damages; c. the sum of P100,000.00 by way of attorney's fees; d. legal interest of the amount of P2,200,000.00 from August 2, 1989 until the deed of absolute sale is executed in favor of the plaintiff;
The interest rate on the P2,200,000.00 paid to the defendants by the plaintiff at the inception of the transactions should be only 6% per annum from August 2, 1989, and as of January 2, 1994 this amounts to the sum of P583,000.00 and P11,000.00 every month thereafter until the deed of absolute sale over the property subject matter of this case is executed. The amounts payable by the defendants to the plaintiff therefore stands at a total of P1,383,000.00. Offsetting this amount from the balance of P8,800,000.00, the plaintiff must still pay to the defendants the sum of P7,417,000.00. The plaintiff has already deposited with the Clerk of Court of this court the sum of P5,808,100.00 as of January 11, 1994; he should add to this the sum of P1,608,900.00.[36]
That Petitioners do not agree with the explanation of the lower Court, which held that the Petitioners are liable to pay legal interest on the initial payment of P2,200.000 that petitioners received under the Contract To Sell as part of the purchase price. Why should Petitioners pay legal interest on a sum of money that was payable to them and which they received as initial payment of the purchase price? This ruling is absurd and preposterous. It is a legal monstrosity.[37]Petitioners can no longer question a judgment which has already become final and executory. The order of the Regional Trial Court on the payment of legal interest was issued on September 18, 1991 in the case for specific performance against the De la Ramas (Civil Case No. 6974-P). Hence, they are already barred from questioning it now in this proceeding.