Republic v. Salem Investment Corporation
REITERATIONFacts
The Antecedents: Batas Pambansa Blg. 340 authorized the expropriation of certain lands, including a portion of Lot 834 owned by Milagros and Inocentes De la Rama (De la Ramas). On December 14, 1988, the De la Ramas entered into a contract to sell the entire Lot 834 (4,075 sq.m.) to Alfredo Guerrero (Guerrero) for P11,800,000.00, receiving P2,200,000.00 as partial payment. Guerrero filed a complaint for specific performance when the De la Ramas did not proceed with the sale. Procedural History: The Republic of the Philippines filed an expropriation case (Civil Case No. 7327) pursuant to B.P. Blg. 340. Guerrero intervened, claiming entitlement to just compensation. The trial court initially approved payment to the De la Ramas, but later, after Guerrero's intervention and a final decision in the specific performance case, declared Guerrero the rightful recipient of just compensation. The Court of Appeals affirmed this decision. The Petition: The De la Ramas appealed to the Supreme Court, arguing that they could not sell the expropriated portion in 1988 and that Guerrero was not entitled to the just compensation.
Issue(s)
Whether the De la Ramas could validly sell the entire Lot 834, including the portion subject to expropriation, to Guerrero, and whether Guerrero, as the buyer of the entire lot, is entitled to receive the just compensation for the expropriated portion. Whether title to the expropriated property passed to the government upon the enactment of B.P. Blg. 340 or upon payment of just compensation. Whether the amount paid by Guerrero was sufficient, considering the prior specific performance case, and whether allowing the De la Ramas to receive just compensation would result in unjust enrichment.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals, declaring Alfredo Guerrero as the rightful person entitled to receive the just compensation for the expropriated portion of Lot 834. The Court ordered the release of the deposited amount to Guerrero's assignee.
Ratio Decidendi
On the validity of the sale and Guerrero's entitlement to just compensation: The Court held that the De la Ramas could validly sell the entire Lot 834 to Guerrero in 1988. The expropriation process under B.P. Blg. 340 had commenced but was not completed. The first stage, determination of authority and propriety of expropriation, was initiated by the law, and the second stage, determination of just compensation, was ongoing. Crucially, title to the expropriated property does not pass to the government until full payment of just compensation. Therefore, at the time of the contract to sell in 1988, the De la Ramas still owned the entire Lot 834 and could convey all rights, including the right to receive just compensation, to Guerrero. The subsequent execution of the Deed of Absolute Sale in favor of Guerrero, after the finality of the specific performance case, effectively conveyed ownership of the entire property to him, including the expropriated portion. By virtue of subrogation, Guerrero became the rightful owner entitled to receive the just compensation from the Republic. On the transfer of title to the government: The Court reiterated the established principle that title to expropriated property passes from the owner to the expropriator only upon full payment of just compensation. This principle applies to both judicial and legislative expropriation. The enactment of B.P. Blg. 340 merely commenced the expropriation process; it did not immediately transfer ownership. The Court cited Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform and Kennedy v. Indianapolis to support the rule that actual payment is a condition precedent to the investment of title in the State. Therefore, the De la Ramas' contention that title had already passed to the government in 1983 was without merit. On the amount paid by Guerrero and unjust enrichment: The Court found the De la Ramas' contention regarding the amount paid by Guerrero to be without merit. The final and executory decision in the specific performance case had already determined the amount payable, including legal interest on the initial payment. The De la Ramas had also withdrawn and appropriated the entire amount paid by Guerrero, which represented the purchase price for the entire land, including the expropriated portion. To allow them to receive the just compensation for the expropriated portion would result in unjust enrichment.
Main Doctrine
Title to expropriated property passes to the government only upon full payment of just compensation. Until then, the owner retains the right to dispose of the property, subject to the State's ultimate right to acquire it.