G.R. No. 79732 November 8, 1993
REPUBLIC OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS, HENRICO UVERO, ET AL., respondents.

FACTS

The Republic of the Philippines sought to expropriate portions of land owned by private respondents for the widening and concreting of the Nabua-Bato-Agos Section of the Philippine-Japan Highway Loan (PJHL) road. While the Republic’s right to expropriate was not disputed, the private respondents demanded that just compensation be based on fair market value, not on the basis set by Presidential Decree No. 76, as amended, which fixed payment on the lower of the assessor’s valuation or the owner’s declared valuation. The Regional Trial Court ruled in favor of the private respondents. The Court of Appeals affirmed this decision. The Republic filed the instant petition, conceding that in Export Processing Zone Authority (“EPZA”) vs. Dulay, the Supreme Court had declared Presidential Decree No. 76 and related decrees, including Presidential Decree No. 1533, unconstitutional for encroaching on the judicial function of determining just compensation. The Solicitor General pleaded for the Court to address specific concerns, leading to the petition being given due course.

ISSUE

1. What is the effect of the judicial declaration that PD 1533 is unconstitutional and void? Up to when does it apply retroactively? What is its effect on a pending appealed case where the constitutionality of PD 1533 was not assailed before the court a quo?
2. Whether or not the decision in EPZA vs. Dulay declaring PD 1533 unconstitutional and void should be applied in this case.

RULING

The Supreme Court dismissed the petition. It held that the appellate court committed no error. The Court explained the two views on the effect of declaring a statute unconstitutional: the orthodox view (that it is a total nullity as if it never existed) and the modern view (that the decision affects only the parties to the case). While recognizing that a declaration of invalidity may not always obliterate all prior effects of a void act, especially in exceptional cases involving equitable considerations or fait accompli, the present case did not fall under such exceptions. The expropriation cases here were still pending appeal when the EPZA ruling was rendered and invoked by the parties. Therefore, the controversy on just compensation remained unresolved, and the declaration of unconstitutionality applied. The Court limited its discussion to the first two issues, as the third issue regarding the preliminary basis for the 10% deposit under Rule 67 was provisional and not questioned by the private respondents.