BARANGAY MATICTIC, Municipality of Norzagaray, Province of Bulacan, petitioner,

vs.
HONORABLE J. M. ELBINIAS as District Judge, CFI of Bulacan, Branch V and SPOUSES
JOSE SERAPIO and GREGORIA PACIDA et al., respondents.
Danilo G. Evangelista for petitioner.
Nicomedes M. Mojado for respondent spouses Jose Serapio and Gregoria Pacida.
Jesus E. Mendoza for respondent Jose S. Merced.

ALAMPAY, J.:
Subject of the petition is the Order dated May 12, 1978 of the then Court of First Instance of
Bulacan, Branch V, dismissing without prejudice, Civil Case No. SM-234, entitled "Municipality of
Norzagaray vs. Jose Serapio, et al." Civil Case No. SM-234 is an expropriation proceeding filed by
the Municipality of Norzagaray which the public respondent judge dismissed on the ground that at
the time the original complaint was filed, the plaintiff municipality had not yet obtained the requisite
authority from the Department Head or Office of the President, as required in Section 2245 of the
Revised Administrative Code. Respondent Judge held that
... since the filing of the amended complaint to cure this fatal defect, by submitting the
requisite authority from the Office of the President as required by Section 2245 of the
Revised Administrative Code, did not vest jurisdiction with this Court which it never
had acquired even from the very filing of the original complaint ... orders this case
dismissed without prejudice. (Rollo, p. 19).
For municipalities, the municipal council shall exercise the right of eminent domain with the approval
of the President [Sec. 2245 (h), Revised Administrative Code].
The factual and procedural antecedents which led to the filing of this petition are as follows:
1. On December 7, 1968, petitioner (then called Barrio Matictic) filed with the then Court of First
Instance of Bulacan, Branch V, an action for injunction, docketed as Civil Case No. SM-210,
entitled Barrio Matictic vs. Zosimo Serapio, et al., praying therein that the defendants (who are the
private respondents in the instant case) be enjoined from placing obstructions and closing the barrio
road and to allow plaintiff to remove the obstructions and repair the barrio road (the Poblacion Tomana-Canyakan barrio road) so as "to enable the people and motorized vehicles the free use
thereof and convenient passage through it. ";
2. On January 28, 1969, Barrio Matictic filed a motion to dismiss the case on the ground that an
expropriation proceeding, not an injunction, is the better remedy and on the same date, the Court,
Judge Ambrosio M. Geraldez then presiding, issued the corresponding order dismissing the case;
3. However, and also on January 28, 1969, a complaint for Eminent Domain was filed by the
Municipality of Norzagaray with the same court, docketed as Civil No. SM-234, CFI, Branch 1,
Bulacan, and entitled "Municipality of Norzagaray vs. Jose Serapio, et al." Said case involves the
same property of the aforestated defendants that was the subject of Civil Case No. SM-210
hereinabove referred to;

4. The defendants in Civil Case No. SM-234, Jose Serapio and Gregoria Pacida, on February 5,
1979, filed a Motion to Dismiss alleging that the Court of First Instance of Bulacan has no jurisdiction
over the subject of the action; that the complaint states no cause of action; and that plaintiff
(municipality of Norzagaray has no capacity to sue;)
5. On February 11, 1969, upon motion of plaintiff, the Court issued an order allowing plaintiff to take
possession of the property subject of the expropriation proceedings upon deposit of the sum of
P2,682.00;
6. On February 14, 1969, defendants Felicitas Serapio-Merced and Eustaquio Merced filed through
counsel a Motion to Dismiss the expropriation case on several grounds. Their principal contention is
that the plaintiff municipality, in the absence of an approval from the Office of the President, may not
properly file the subject expropriation case;
7. On March 14, 1969, plaintiff filed an amended complaint alleging therein that it had obtained
authority from the Office of the President to institute expropriation proceedings. Private respondents,
Jose Serapio and Gregoria Pacida, in turn, filed an Amended Motion to Dismiss, dated March 19,
1969, reiterating therein plaintiff's lack of cause of action and that a subsequent authorization, even if
obtained, would not cure the jurisdictional defect attaching to the plaintiff's complaint when the
subject case was initially filed;
8. On August 18 and 19, 1969, the Court issued orders requiring plaintiff municipality to submit plans
of the land to be expropriated, duly approved by the Bureau of Lands;
9. On January 22, 1970, for failure of the plaintiff to comply with the orders of August 18 and 19,
1969, the Court issued an order dismissing said Civil Case No. SM-234 for failure of plaintiff to take
the necessary steps to prosecute its case;
10. Said order of dismissal, however, upon appeal by the municipality, was reversed by the Court of
Appeals in its decision dated January 5, 1973. The Court of First Instance of Bulacan was ordered to
proceed with the expropriation case pursuant to Sec. 3, Rule 67 of the Rules of Court;
11. The case went back to the court a quo, with Judge J.M. Elbinias presiding (now Associate
Justice of the Court of Appeals). But at this point of time the municipal mayor of Norzagaray
displayed reluctance to prosecute the said case for eminent domain. In fact, he requested the
Municipal Council to withdraw the expropriation proceedings. The Municipal Council, however,
refused to accede to the wishes of the mayor; Rollo pp. 98-99)
12. It appears then that a motion to dismiss dated April 3, 1978 was once more filed by the
defendants (private respondents herein) who reiterated their challenge to the jurisdiction of the said
trial court based on their argument that the initial lack of jurisdiction of a court cannot be cured by the
filing of an amended complaint;
13. Petitioner herein, Barangay Matictic, chagrined and confronted by the attitude of its mayor, and
on its averment that the result of the expropriation case will greatly affect the social and e conomic
development of the area in and around Barangay Matictic, filed on January 26, 1978 a Motion for
Intervention in Civil Case No. SM-234. Respondent Judge issued an order taking notice of the
Motion for Intervention and denied the motion to dismiss filed by the defendants until the motion for
intervention shall have been considered by the trial court;
14. On May 12, 1978, respondent Judge, without taking any further action on petitioner's motion for
intervention, issued an order dismissing, but without prejudice, the expropriation case Civil Case

No. SM-234, on the singular reason that at the time the expropriation case was initially filed there
was no showing of any prior Presidential approval-a requisite that should have been first complied
with, pursuant to Section 2245 of the Revised Administrative Code. A motion for reconsideration of
this decision was filed by plaintiff municipality. It insisted that presidential approval was, after all,
secured and that this fact was alleged in the plaintiff's amended complaint. Said motion for
reconsideration was, however, denied in the order of the court below, dated January 15, 1978. This

order closed the case for the plaintiff municipality of Norzagaray inasmuch as it no longer appealed
said order of dismissal.
Petitioner, Barangay Matictic, in this certiorari and mandamus case before us, simply complains that
in "... these orders, dated May 12, 1978 and June 15, 1978 (Annexes CC and DD) no resolution or
ruling was made by respondent Judge with respect to its motion for intervention which was
mentioned in the order dated January 26, 1978 (Annex AA) leaving petitioner (Barangay) no
personality to take part in the case (Rollo, p. 9). Consequently, it filed the instant petition for certiorari
and mandamus to compel respondent Judge to allow and admit its complaint in intervention.
This petition was given due course, under the resolution of this Court, dated January 15, 1979
(Rollo, p. 153) and on February 2, 1979, a temporary restraining order was issued enjoining
respondents from exacting, charging and collecting toll fees for the use of the feeder road, subject of
the expropriation proceedings until further orders from this Court (Rollo, p. 158).
The petition of Barangay Matictic is manifestly untenable.
Regarding the annulment and setting aside of the May 12, 1978 and June 15, 1979 orders of the
public respondent, dismissing the expropriation proceedings, the proper party to appeal the same or
seek a review of such dismissal, would be the Municipality of Norzagara y. Petitioner Barrio Matictic,
which is a different political entity, and although a part and parcel of the aforesaid municipality, has
no legal personality to question the aforestated orders because by itself, it may not continue the
expropriation case. It must be considered that the subject orders of the court a quo were not
appealed by the Municipality of Norzagaray. The dismissal of the expropriation case, insofar as said
municipality is concerned, became final. The expropriation case ceased to exist an d there is
consequently no more proceeding wherein Barangay Matictic may possibly intervene.
An intervention has been regarded as merely "collateral or accessory or ancillary to the principal
action and not an independent proceeding; an interlocutory proce eding dependent on and subsidiary
to, the case between the original parties." (Francisco, Rules of Court, Vol. I, p. 721). With the final
dismissal of the original action, the complaint in intervention can no longer be acted upon. In the
case of Clareza vs. Rosales, 2 SCRA 455, 457-458, it was stated that:
That right of the intervenor should merely be in aid of the right of the original party,
like the plaintiffs in this case. As this right of the plaintiffs had ceased to exist, there is
nothing to aid or fight for. So the right of intervention has ceased to exist.
Consequently, it will be illogical and of no useful purpose to grant or even consider further herein
petitioner's prayer for the issuance of a writ of mandamus to compel the lower court to allow a nd
admit the petitioner's complaint in intervention. The dismissal of the expropriation case has no less
the inherent effect of also dismissing the motion for intervention which is but the unavoidable
consequence.
We are constrained to reject petitioner's averment that public respondent Judge "acted with grave
and manifest abuse of discretion." Firstly, nothing is lost to the petitioner. If at all petitioner can
rightfully establish that it is allowed by law to institute a separate and independent action of its own,

then there would be no necessity for it to intervene in the case initiated by the Municipality of
Norzagaray which is now apparently no longer interested in continuing the expropriation
proceedings. The dismissal of the expropriation case was without prejudice. The municipality of
Norzagaray, Bulacan can revive its action. There is no need for the proposed intervention of Barrio
Matictic. What it may do is to urge the municipality to file its case anew. If the Barangay has obtained
authority for itself to pursue the action of eminent domain, then the more reason there is to refuse its
intervention.
Approximately, if the rights of the party seeking to intervene not be prejudiced by any
judgment in the case at bar and that it may be fully protected in a separate
proceeding in then the exercise of judicial discretion in court , denying a motion for
intervention is deemed correctly made. (See Pflieder vs. de Britanica, L -19077,

October 20,1964, cited in 51 SCRA 368).

Considering the foregoing discussion indicating the lack of merit of the petition for certiorari, it will
follow that the writ of mandamus prayed for by petitioner cannot be granted for lack of legal basis.
WHEREFORE, the instant petition is hereby DENIED for lack of merit. The temporary res training
order earlier issued in this case by the Court, dated February 2, 1979, is hereby lifted and dissolved.
No costs.
SO ORDERED.

SALVADOR BIGLANG-AWA, REMEDIOS BIGLANG-AWA, petitioners,

vs. HON. JUDGE MARCIANO I. BACALLA in his capacity as
Presiding Judge of Branch 216 Regional Trial Court of Quezon
City, REPUBLIC OF THE PHILIPPINES (DEPARTMENT OF
PUBLIC WORKS AND HIGHWAYS),respondents.
DECISION
GONZAGA-REYES, J.:
Before us is a petition for certiorari under Rule 65 of the Rules of Court,
with a prayer for the issuance of a writ of preliminary injunction, seeking to
annul and set aside the Orders of the respondent Court dated August 5, 1998,
ordering the issuance of Writs of Possession of the properties of herein
petitioners, and the Order dated August 12, 1998, issuing the corresponding
Writs of Possession, as well as the Order dated July 7, 1999, denying the

petitioners Motion for Reconsideration of the August 5, 1998 Orders. The

petition further prays for the dismissal of Civil Cases Nos. Q-97-31368 and Q97-31369 for being premature due to failure to comply with the substantive
requirements of Executive Order No. 1035 (1985).
[1]

The antecedent facts are as follows:

Petitioners Remedios Biglang-awa and Salvador Biglang-awa are the
registered owners of certain parcels of land situated in Talipapa, Novaliches,
Quezon City. The parcel of land owned by petitioner Remedios Biglang-awa
is covered by T.C.T. No. RT-101389 (362966) with an area of 769 sq. m.,
while that owned by Salvador Biglang-awa is covered by T.C.T. No. RT101390 (19352) with an area of 2,151 sq. m. The government needed to
expropriate 558 sq. m. of the aforesaid property of petitioner Remedios
Biglang-awa, and 881 sq. m. of that belonging to petitioner Salvador Biglang-

awa for the construction of the Mindanao Avenue Extension, Stages II-B and
II-C..
On August 29, 1996, the petitioner Remedios Biglang-awa received a
Notice from the respondent Republic, through the Department of Public Works
and Highways (DPWH) Project Manager Patrick G. Gatan, requiring her to
submit the documents necessary to determine the just compensation for her
property.
[2]

On October 15, 1996, Final Notices, signed by Project Director Cresencio

M. Rocamora,
were
given
by the DPWH
the petitioners
to submit
within five
On August 5,
1998,
the respondent
courttoissued
separate Orders
granting
(5) days the pertinent documents, otherwise, expropriation proceedings would
[3]

final notices, the respondent Republic, through the DPWH, filed with the
[4]

expropriation against the petitioners, docketed as Civil Case Nos. Q-99-31368

and Q-97-31369.
On July 10, 1997, the petitioners received summons from the respondent
court, and were ordered to file their respective Answers to the Complaints for
expropriation. The petitioners filed their Answers on August 11, 1997.
Subsequently, the respondent Republic, through the DPWH, deposited
with the Land Bank of the Philippines the amounts of P3,964,500.00 and
P2,511,000.00 for the properties of Salvador and Remedios Biglang-awa,
respectively, based on the appraisal report of the Quezon City Appraisal
Committee.
On April 24, 1998, respondent Republic filed separate Motions for the
Issuance of Writs of Possession of the properties of the petitioners with the

be filed against their properties. As the petitioners failed to comply with these
respondent
Trial court
Courtissued
of Quezon
separate
cases for
respondent Regional
court. The
Orders City
giving
the petitioners,
through counsel Atty. Jose Felix Lucero, ten (10) days within which to submit
their Opposition to the said motions. The petitioners failed to file their
Opposition to the Motion.
[5]

the motions for the issuance of writs of possession. Accordingly, the writs of
possession were issued by the respondent court on August 12, 1998.
[6]

On September 11, 1998, petitioner Remedios Biglang-awa received a

Notice to Vacate her property. A similar Notice was likewise received by
petitioner Salvador Biglang-awa at about the same time.
On January 25, 1999, the petitioners filed a joint Manifestation with the
respondent court to the effect that they were retaining the law firm of Gumpal
and Valenzuela, in lieu of Atty. Jose Felix Lucero whose services they had
already terminated due to the latters inaction and abandonment of their
cases.
On May 10, 1999, the petitioners, through their new counsel, moved for a
reconsideration of the respondent courts Orders dated August 5, 1998, and a

recall of the writs of possession issued on August 12, 1998, mainly on the
ground that the respondent Republic failed to comply with the provisions of
E.O. 1035 (1985), relating to the conduct of feasibility studies, information
campaign, detailed engineering/surveys, and negotiation prior to the
acquisition of, or entry into, the property being expropriated.
On July 7, 1999, the respondent court issued an Order denying the
petitioners Motion for Reconsideration, a copy of which was received by the
petitioners on July 26, 1999.
Extension
despite
formal request by the latter, and therefore without
Hence,Project,
this Petition
for Certiorari.
The sole issue in this case is whether or not the respondent court gravely
abused its discretion, amounting to lack or excess of its jurisdiction, when it
issued the questioned orders.
We rule in the negative.
The petitioners contend that due process of law in relation to expropriation
proceedings mandates that there be compliance with the provisions of
Executive Order No. 1035, particularly Sections 2, 3, 4 and 6, claimed to
constitute the substantive requirements of the expropriation law, prior, and as
a condition precedent, to Section 2 of Rule 67 of the 1997 Revised Rules of
Civil Procedure. Hence, a writ of possession pursuant to the above provision
of Rule 67 will issue only upon showing that the said provisions of E.O. 1035

have already been complied with. As the writs of possession in the instant
case were issued by the respondent court without the respondent Republic,
through the DPWH, having furnished the petitioners any feasibility study and
approved parcellary survey in connection with the Mindanao Avenue
[7]

[8]

showing prior compliance with E.O. 1035, the petitioners contend that such
issuance of the writs of possession by the respondent court was made with
grave abuse of discretion amounting to lack or excess of jurisdiction.
We do not agree.
The provisions of law adverted to by petitioners are as follows:
Title A. Activities Preparatory To Acquisition Of Property
Sec. 2. Feasibility Studies. Feasibility studies shall be undertaken for all
major projects, and such studies shall, in addition to the usual technical,
economic and operational aspects, include the social, political, cultural and
environmental impact of the project.
Sec. 3. Information Campaign. Every agency, office and instrumentality of the
government proposing to implement a development project which requires the
acquisition of private real property or rights thereon shall first make
consultations with the local government officials, including the regional
development councils having jurisdiction over the area where the project will

be undertaken to elicit their support and assistance for the smooth

implementation of the project. The implementing agency/instrumentality
concerned with the assistance of the local government officials and
representatives of the Office of Media Affairs shall conduct an extensive public
information campaign among the local inhabitants that will be affected by the
project to acquaint them with the objectives and benefits to be derived from
the project and thus avoid any resistance to or objection against the
acquisition of the property for the project.
Sec. 4. Detailed Engineering/Surveys. The implementing government agency/
instrumentality concerned shall, well in advance of the scheduled construction
of the project, undertake detailed engineering, including parcellary surveys to
indicate the location and size of the sites and to determine ownership of the
land to be acquired, including the status of such landownership.
xxx xxx

xxx

Title B. Procedure For Acquisition Of Property

Sec. 6.
Acquisition Through Negotiated Sale. As an initial step, the
government implementing agency/instrumentality concerned shall negotiate
with the owner of the land that is needed for the project for the purchase of
said land, including improvements thereon. In the determination of the
purchase price to be paid, the Ministry of Finance and the
Provincial/City/Municipal Assessors shall extend full assistance and
coordinate with the personnel of the government implementing agency
concerned in the valuation of lands and improvements thereon taking into
consideration the current and fair market value declared by the owner or
administrator of the land, or such current market value as determined by the
assessor, whichever is lower, prior to the negotiation. [Executive Order No.
1035 (1985)]
Nothing in the foregoing provisions supports the contention of the
petitioners. A careful perusal of the provisions cited do not yield the
conclusion that the conduct of feasibility studies, information campaign and
detailed engineering/surveys are conditions precedent to the issuance of a
writ of possession against the property being expropriated. Although
compliance with these activities should indeed be made prior to the decision
to expropriate private property, the requirements for issuance of a writ of
possession once the expropriation case is filed, are expressly and specifically
Jesus
Quitain
:
governed
by Section
2 of Rule 67 of the 1997 Rules of Civil Procedure, to wit:
Sec.2. Entry of the plaintiff upon depositing value with authorized
government depositary.-- Upon the filing of the complaint or at anytime
thereafter, and after due notice to the defendant, the plaintiff shall have the
right to take or enter upon the possession of the real property involved if he
deposits with the authorized government depositary an amount equivalent to

the assessed value of the property for the purposes of taxation to be held by
such bank subject to the orders of the court xxx xxx .
xxx xxx

xxx

If such deposit is made the court shall order the sheriff or other proper officer
to forthwith place the plaintiff in possession of the property involved and
promptly submit a report thereof to the court with service of copies to the
parties.
As clearly enunciated in Robern Development Corporation vs. Judge
[9]

Expropriation proceedings are governed by revised Rule 67 of the 1997

Rules of Civil Procedure which took effect on July 1, 1997. Previous
doctrines inconsistent with this Rule are deemed reversed or modified.
Specifically, (1) an answer, not a motion to dismiss, is the responsive pleading
to a complaint in eminent domain; (2) the trial court may issue a writ of
possession once the plaintiff deposits an amount equivalent to the
assessed value of the property, pursuant to Section 2 of said Rule,
without need of a hearing to determine the provisional sum to be
deposited; and (3) a final order of expropriation may not be issued prior to a
full hearing and resolution of the objections and defenses of the property
owner.(Emphasis Ours)
Thus, pursuant to Section 2 of Rule 67 of the 1997 Revised Rules of Civil
Procedure and the Robern Development Corporation case, the only requisites
for authorizing immediate entry in expropriation proceedings are: (1) the filing
of a complaint for expropriation sufficient in form and substance; and (2) the
making of a deposit equivalent to the assessed value of the property subject
to expropriation. Upon compliance with the requirements the issuance of the
writ of possession becomes ministerial.
[10]

The antecedents and the rationale for the rule are explained thus:
There is no prohibition against a procedure whereby immediate possession
of the land involved in expropriation proceedings may be taken, provided
always that due provision is made to secure the prompt adjudication and
payment of just compensation to the owners. However, the requirements for
authorizing immediate entry in expropriation proceedings have changed.
To start with, in Manila Railroad Company v. Paredes, [Manila Railroad
Company v. Paredes, 31 Phil 118, 135, March 31 & December 17, 1915] the
Court held that the railway corporation had the right to enter and possess the
land involved in condemnation proceedings under Section 1, Act No. 1592,
immediately upon the filing of a deposit fixed by order of the court.
The Rules of Court of 1964 sanctioned this procedure as follows:

Sec. 2.
Entry of plaintiff upon depositing value with National or
Provincial Treasurer. Upon the filing of the complaint or at any time thereafter
the plaintiff shall have the right to take or enter upon the possession of the
real or personal property involved if he deposits with the National or Provincial
Treasurer its value, as provisionally and promptly ascertained and fixed by the

court having jurisdiction of the proceedings, to be held by such treasurer

subject to the orders and final disposition of the court. . . .
(emphasis ours.)
Subsequently, former President Ferdinand E. Marcos signed into law
Presidential Decree No. 42 and its companion decrees, which removed the
court's discretion in determining the amount of the provisional value of the
land to be expropriated and fixed the provisional deposit at its assessed value
for taxation purposes. Hearing was not required; only notice to the owner of
the property sought to be condemned.
On the issue of the immediate possession, PD 42 (Authorizing The Plaintiff In
Eminent Domain Proceedings To Take Possession Of The Property Involved
Upon Depositing The Assessed Value, For Purposes of Taxation) provided:
WHEREAS, the existing procedure for the exercise of the right of eminent
domain is not expeditious enough to enable the plaintiff to take or enter upon
the possession of the real property involved as soon as possible, when
needed for public purposes;
xxx xxx

xxx

. . . [T]hat, upon filing in the proper court of the complaint in eminent domain
proceedings or at anytime thereafter, and after due notice to the defendant,
plaintiff shall have the right to take or enter upon the possession of the real
property involved if he deposits with the Philippine National Bank, . . . an
amount equivalent to the assessed value of the property for purposes of
taxation, to be held by said bank subject to the orders and final disposition of
the court.
The provisions of Rule 67 of the Rules of Court and of any other existing law
contrary to or inconsistent herewith are hereby repealed.
Paragraph 3 of PD No. 1224 (Defining The Policy On The Expropriation Of
Private Property for Socialized Housing Upon Payment Of Just
Compensation) also authorized immediate takeover of the property in this
manner:
3. Upon the filing of the petition for expropriation and the deposit of the
amount of just compensation as provided for herein, the Government, or its
authorized agency or entity, shall immediately have possession, control and
disposition of the real property and the improvements thereon even pending

resolution of the issues that may be raised whether before the Court of First
Instance or the higher courts.
Where the "taking" was for "socialized housing," Section 3, PD 1259
(Amending Paragraphs 1, 2, And 3 Of PD No. 1224 Further Defining The
Policy On The Expropriation Of Private Property For Socialized Housing Upon
Payment Of Just Compensation), amending the above-quoted paragraph,
provided:
Upon the filing of the petition for expropriation and the deposit of the amount
of the just compensation provided for in Section 2 hereof, the Government, or
its authorized agency or entity, shall immediately have possession, control
and disposition of the real property and the improvements thereon even
pending resolution of the issues that may be raised whether before the Court
of First Instance, Court of Agrarian Relations or the higher courts.
Similarly, Section 1, PD No. 1313 (Further Amending Paragraph 3 Of
Presidential Decree No. 1224 As Amended By Presidential Decree No. 1259,
Defining The Policy On The Expropriation Of Private Property For Socialized
Housing Upon Payment Of Just Compensation), amending paragraph 3 of PD
1224, decreed:
Upon the filing of the petition for expropriation and the deposit in the Philippine
National Bank at its main office or any of its branches of the amount
equivalent to ten percent (10%) of the just compensation provided for in
Section 2 of Presidential Decree No. 1259, the government, or its authorized
agency or entity, shall immediately have possession, control and disposition of
the real property and the improvements thereon with the power of demolition,
if necessary, even pending resolution of the issues that may be raised
whether before the Court of First Instance, Court of Agrarian Relations, or the
higher Courts.
In this connection, we also quote Section 7 of PD No. 1517 (Proclaiming
Urban Land Reform In The Philippines And Providing For The Implementing
Machinery Thereof), which reads:
xxx xxx

xxx

Upon the filing of the petition for expropriation and the deposit in the
Philippine National Bank at its main office or any of its branches of the
amount equivalent to ten per cent (10%) of the declared assessment
value in 1975, the Government, or its authorized agency or entity shall
immediately have possession, control and disposition of the real

property and the improvements thereon with the power of demolition, if

necessary, even pending resolution of the issues that may be raised
whether before the Court of First Instance, Court of Agrarian
Relations, or the higher Courts.
Finally, PD 1533 (Establishing A Uniform Basis For Determining Just
Compensation And The Amount Of Deposit For Immediate Possession Of
The Property Involved In Eminent Domain Proceedings) mandated the deposit
of only ten percent (10%) of the assessed value of the private property being
sought to be expropriated, after fixing the just compensation for it at a value
not exceeding that declared by the owner or determined by the assessor,
whichever is lower. Section 2 thereof reads:
Sec. 2.
Upon the filing of the petition for expropriation and the
deposit in the Philippine National Bank at its main office or any of its
branches of an amount equivalent to ten per cent (10%) of the amount
of compensation provided in Section 1 hereof, the government or its
authorized instrumentality agency or entity shall be entitled to
immediate possession, control and disposition of the real property and
the improvements thereon, including the power of demolition if
necessary, notwithstanding the pendency of the issues before the
courts.
Accordingly, in San Diego v. Valdellon [80 Phil 305, 310, November 22, 1977],
Municipality of Daet v. Court of Appeals [93 SCRA 503, 525, October 18,
1979], and Haguisan v. Emilia [131 SCRA 517, 522-524, August 31, 1984],
the Court reversed itself and ruled that Section 2, Rule 67 of the 1964 Rules,
was repealed by Presidential Decree No. 42. The judicial duty of ascertaining
and fixing the provisional value of the property was done away with, because
the hearing on the matter had not been "expeditious enough to enable the
plaintiff to take possession of the property involved as soon as possible, when
needed for public purpose."
In Daet, the Court clarified that the provisional value of the land did not
necessarily represent the true and correct one but only tentatively served as
the basis for immediate occupancy by the condemnor. The just compensation
for the property continued to be based on its current and fair market value, not
on its assessed value which constituted only a percentage of its current fair
market value.
However, these rulings were abandoned in Export Processing Zone Authority
v. Dulay [149 SCRA 305, 311 & 316, April 29, 1987], because "[t]he method

of ascertaining just compensation under the aforecited decrees constitute[d]

impermissible encroachment on judicial prerogatives. It tend[ed] to render this
Court inutile in a matter which under the Constitution [was] reserved to it for
final determination." The Court added:

We return to older and more sound precedents. This Court has the duty to
formulate guiding and controlling constitutional principles, precepts, doctrines,
or rules. (See Salonga v. Cruz Pano, supra).
The determination of "just compensation" in eminent domain cases is a
judicial function. The executive department or the legislature may make the
initial determinations but when a party claims a violation of the guarantee in
the Bill of Rights that private property may not be taken for public use without
just compensation, no statute, decree, or executive order can mandate that its
own determination shall prevail over the court's findings. Much less can the
courts be precluded from looking into the "just-ness" of the decreed
compensation.
xxx xxx

xxx

More precisely, Panes v. Visayas State College of Agriculture [264 SCRA

708, 719, November 27, 1996.] ruled that the judicial determination of just
compensation included the determination of the provisional deposit. In that
case, the Court invalidated the Writ of Possession because of lack of hearing
on the provisional deposit, as required under then Section 2 of Rule 67, pre1997 Rules. In the light of the declared unconstitutionality of PD Nos. 76, 1533
and 42, insofar as they sanctioned executive determination of just
compensation, any right to immediate possession of the property must be
firmly grounded on valid compliance with Section 2 of Rule 67, pre-1997
Rules; that is, the value of the subject property, as provisionally and promptly
ascertained and fixed by the court that has jurisdiction over the proceedings,
must be deposited with the national or the provincial treasurer.
However, the 1997 Rules of Civil Procedure revised Section 2 of Rule 67 and
clearly reverted to the San Diego, Daet and Haguisan rulings. Section 2 now
reads:
Sec. 2.
Entry of plaintiff upon depositing value with government
depositary. Upon the filing of the complaint or at any time thereafter and after
due notice to the defendant, the plaintiff shall have the right to take or enter
upon the possession of the real property involved if he deposits with the
authorized government depositary an amount equivalent to the assessed

value of the property for purposes of taxation to be held by such bank subject
to the orders of the court. . . . .
xxx xxx

xxx

After such deposit is made the court shall order the sheriff or other proper
officer to forthwith place the plaintiff in possession of the property involved
and promptly submit a report thereof to the court with service of copies to
the parties. [Emphasis ours.]

In the present case, although the Complaint for expropriation was filed on
June 6, 1997, the Motion for the Issuance of the Writ of Possession was filed
on July 28, 1997; thus, the issuance of the Writ is covered by the 1997 Rules.
As earlier stated, procedural rules are given immediate effect and are
applicable to actions pending and undetermined at the time they are passed;
new court rules apply to proceedings that take place after the date of their
effectivity. Therefore, Section 2, Rule 67 of the 1997 Rules of Civil Procedure,
is the prevailing and governing law in this case.
indemnity
for damages
shouldthe
thetrial
proceedings
fail ofofconsummation.
The
With the revision
of the Rules,
court's issuance
the Writ of
Possession becomes ministerial, once the provisional compensation
Constitution.
Moreover,
the is
owners
of theThus,
expropriated
lands are
entitled
to
mentioned in the
1997 Rule
deposited.
in the instant
case
the trial
court did not commit grave abuse of discretion when it granted the NPC's
Motion for the issuance of the Writ, despite the absence of hearing on the
amount of the provisional deposit.
The Court nonetheless hastens to add that PD 1533 is not being revived.
Under Section 2, Rule 67 of the 1997 Rules, the provisional deposit should be
in an amount equivalent to the full assessed value of the property to be
condemned, not merely ten percent of it. Therefore, the provisional deposit of
NPC is insufficient. Since it seeks to expropriate portions, not the whole, of
four parcels of land owned by Robern, the provisional deposit should be
computed on the basis of the Tax Declarations of the property: xxx
Hence, the issuance of writs of possession by the respondent court in
Biglang-awa
the respondent
Republic
was latter,
intended
not only
inform herfiled
favor of thebyrespondent
Republic
after the
through
theto DPWH,
complaints for expropriation and deposited the amounts of P3,964,500.00 and
P2,511,000.00 equivalent to the assessed value of the properties of the
petitioners is proper and not without basis.
Contrary to the claim of the petitioners, the issuance of a writ of
possession pursuant to Rule 67 of the 1997 Revised Rules of Civil Procedure

proceedings would be initiated against them.

These notices were ignored by

alone is neither capricious nor oppressive, as the said rule affords owners
safeguards against unlawful deprivation of their property in expropriation
proceedings, one of which is the deposit requirement which constitutes
advance payment in the event expropriation proceeds, and stands as
[11]

deposit likewise sufficiently satisfies the compensation requirement of the

[12]

legal interest on the compensation eventually adjudged from the date the
condemnor takes possession of the land until the full compensation is paid to
them or deposited in court.
[13]

It is the ruling of this Court that there is no grave abuse of discretion

amounting to lack or excess of jurisdiction on the part of the respondent court
in issuing
the orders
and
the writs of possession
herein

questioned. Accordingly, the prayer for the dismissal of Civil Cases Nos. Q97-31368 and Q-97-31369 on the ground of prematurity for failure to comply
with E.O. 1035 is denied.
As regards Section 6 (Acquisition through Negotiated Sale) of E.O. 1035,
records show that there had been an attempt on the part of the Republic to
negotiate with the petitioners through the Notices sent by the former through
the DPWH. The Notice dated August 29, 1996 sent to petitioner Remedios
[14]

formally of the planned expropriation, but also to require her to submit several
documents needed for the determination of the just compensation for her
property. The petitioner failed to submit the required documents. The
respondent Republic sent both petitioners Remedios and Salvador Biglangawa Final Notices dated October 15, 1996 stating that failure to submit the
required documents significantly delay[ed] the completion of the xxx project,
and that the petitioners were given five (5) days to cooperate by way of
submitting the documents being requested, otherwise expropriation
[15]

the petitioners. Consequently, the respondent Republic, through the DPWH,

filed expropriation cases against the petitioners, conformably with Section 7 of
E.O. 1035, to wit:
Sec. 7. Expropriation. If the parties fail to agree in negotiation of the sale of
the land the
as provided
in the
preceding
section, thePetitioners
governmentrely
implementing
client,
rule is not
without
an exception.
on the case
agency/instrumentality
concerned
shall
have
authority
to
immediately
of Aceyork Aguilar vs. Court of Appeals wherein the court relaxed theinstitute
rule to
expropriation proceedings through the Office of the Solicitor General or the
Government Corporate Counsel, as the case may be. The just compensation
to be paid for the property acquired through expropriation shall be in

talk to them or even answer their letter.

No reason was given for the

accordance with the provisions of P.D. No. 1533. Courts shall give priority to
the adjudication of cases on expropriation and shall immediately issue the
necessary writ of possession upon deposit by the government implementing
agency/instrumentality concerned of an amount equivalent to ten per cent
(10%) of the amount of just compensation provided under P.D. No. 1533;
Provided, That the period within which said writ of possession shall be issued
shall in no case extend beyond five (5) days from the date such deposit was
made.
Thus, the filing of the expropriation cases against the petitioners was not
in violation of Section 6 of E.O. 1035, and was, on the contrary, in accordance
with the provisions of the said special law.
The petitioners also claim that they are not bound by the gross and
inexcusable abandonment of their cases by their former lawyer, Atty. Jose
Felix Lucero, resulting to the non-filing of their Opposition to the respondents
Motion for the Issuance of Writs of Possession.
Although the general rule is that the negligence of counsel binds the
[16]

[17]

prevent miscarriage of justice. We find no such prejudice to petitioners

caused by the failure of their counsel.
When petitioner Remedios received a Notice to Vacate her property on
September 11, 1998, the petitioners immediately tried to get in touch with their
former counsel, Atty. Jose Felix Lucero, but to no avail as the latter refused to
[18]

behavior of the counsel. The petitioners wasted no time in hiring the services
of a new counsel, the law firm of Gumpal and Valenzuela. Considering that
once the deposit under Section 2 of Rule 67 of the 1997 Revised Rules on
Civil Procedure has been made, the expropriator becomes entitled to a writ of
possession as a matter of right, and the issuance of the writ becomes
ministerial on the part of the trial court, no opposition on the part of the
petitioners on the grounds now pleaded could have prevented such
issuance. Therefore, the petitioners were not prejudiced by the lost
opportunity to file their opposition to the respondents Motions for the Issuance
of Writs of Possession.
WHEREFORE, the instant petition is DISMISSED for lack of merit.
SO ORDERED.

THE CITY OF ILOILO, Represented by HON. JERRY P. TREAS, City

Mayor, petitioner, vs. HON. JUDGE EMILIO LEGASPI, Presiding
Judge, RTC, Iloilo City, Branch 22, and HEIRS OF MANUELA
YUSAY, Represented by SYLVIA YUSAY DEL ROSARIO and
ENRIQUE YUSAY, JR., respondents.
DECISION
CHICO-NAZARIO,

J.:

Via a Petition for Certiorari and Prohibition with Prayer for Issuance of a
Writ of Preliminary Injunction and Temporary Restraining Order, the City of
Iloilo, represented by Mayor Jerry P. Treas, seeks the nullification and/or
modification of the Order dated 05 June 2002 of Honorable Emilio Legaspi,
Presiding Judge, Regional Trial Court, Branch 22, Iloilo City, denying its
Motion for Reconsideration of the courts Order dated 15 April 2002, holding in
abeyance the resolution of the Motion for Issuance of Writ of Possession until
after it shall have rested its case.
The factual antecedents are the following:
On 07 March 2001, the Sangguniang Panlungsod of the City of Iloilo
enacted Regulation Ordinance No. 2001-037 granting authority to its City
Mayor to institute expropriation proceedings on Lot No. 935, registered in the

name of Manuela Yusay, located at Barangay Sto. Nio Norte, Arevalo, Iloilo
City. The regulation ordinance was approved by then City Mayor Mansueto A.
Malabor.[1]
On 14 March 2001, Mayor Malabor wrote the heirs of Manuela Yusay,
through Mrs. Sylvia Yusay del Rosario, Administratrix of the estate of Manuela
Yusay, making a formal offer to purchase their property known as Cadastral
Lot No. 935 with an area of 85,320 square meters covered by Transfer
Certificate of Title (TCT) No. T-67506 of the Registry of Deeds of Iloilo City for
P250 per square meter for the purpose of converting the same as an on-site
relocation for the poor and landless residents of the city in line with the citys
housing development program.[2]
In a letter dated 26 June 2001, Mayor Malabor informed Administrators
Sylvia Y. del Rosario and Enrique Yusay, Jr. that their counter-proposal to the
Citys proposal to purchase Lot No. 935 was not acceptable to the City
Government, particularly to the City Council, which insisted that an

expropriation case be filed per SP Resolution No. 01-445. With their apparent
refusal to sell the property, the City terminated further proceedings on the
matter.[3]
Petitioner City of Iloilo, represented by Mayor Jerry P. Treas, filed an
Amended Complaint[4] for Eminent Domain against private respondents Heirs
of Manuela Yusay, represented by Sylvia Yusay del Rosario and Enrique
Yusay, Jr.[5] The subject of the same is Lot No. 935 of the Cadastral Survey of
Arevalo covered by TCT No. T-67506.
Private respondents filed an Answer,[6] dated 25 September 2001, to which
petitioner filed a Reply,[7] dated 19 October 2001.
On 23 October 2001, private respondents filed a Motion to Set Case for
Preliminary Hearing on the Special and Affirmative Defenses they have raised
in the Answer.[8] Petitioner opposed[9] the motion to which private respondents
filed a Reply.[10]
In an Order dated 04 February 2002, public respondent Hon. Emilio B.
Legaspi, Presiding Judge, Regional Trial Court of Iloilo City, Branch 22, found
the motion to be in order and meritorious, and the grounds of the opposition to
be untenable; thus, he set the case for Preliminary Hearing on the Special and
Affirmative Defenses.[11]
Petitioner moved for the reconsideration[12] of the order which private
respondents opposed.[13]
On 01 April 2002, public respondent set the case for Pre-Trial after Atty.
Amelita K. del Rosario-Benedicto, counsel for private respondents, manifested
she was withdrawing the Motion for Preliminary Hearing on the Special and
Affirmative Defenses. Petitioner did not interpose any objection.[14]
On 11 April 2002, petitioner filed a Motion for Issuance of Writ of
Possession alleging that since it has deposited with the Court the amount of

P2,809,696.50 representing fifteen percent (15%) of the fair market value of

the property sought to be expropriated based on its current tax declaration, it
may immediately take possession of the property in accordance with Section
19, Republic Act No. 7160.[15]
On 15 April 2002, public respondent issued an Order with the following
disposition:
WHEREFORE, in view of the foregoing, Atty. Benedicto is given ten (10) days from
today within which to file an Opposition to the pending Motion For Issuance of Writ
of Possession, furnishing copy of the same to plaintiffs counsel who has the same
period to file a Reply.

Parties agreed that the Court will resolve the Motion For Issuance of Writ of
Possession after the plaintiffs shall have rested their case after the trial on the
merits.[16]
Private respondents filed their Opposition to the Motion for Issuance of
Writ of Possession[17] to which petitioner filed a Reply.[18]
On 09 May 2002, petitioner filed a Motion for Reconsideration praying that
the lower court reconsider its order of 15 April 2002, and to consider its Motion
for Issuance of Writ of Possession submitted for resolution after the filing of its
Reply to private respondents Opposition to the motion. Citing the case
of Robern Development Corp. v. Judge Jesus V. Quitain, et al .,[19] it maintains
there is no need for a hearing before the Honorable Court can grant [its]
Motion for Issuance of Writ of Possession.[20]
Private respondents filed an Opposition to the Motion for Reconsideration
with Rejoinder to Reply to Opposition. They vehemently opposed the motion
arguing that counsels of the parties had agreed that the lower court will
resolve the Motion for Issuance of Writ of Possession after petitioner shall
have rested its case after trial on the merits. They added that in view of the
defects as to form and substance of the amended complaint, the issuance of a
writ of possession ceases to be a ministerial duty on the court; hence, there is
a need for a court hearing.[21]
On 05 June 2002, the assailed order was issued, the dispositive portion of
which reads:
WHEREFORE, in view of the foregoing, the Motion for Reconsideration is DENIED
and resolution of the Motion for Writ of Possession is hereby held in abeyance until
further orders from this Court.[22]
Hence, this petition.
The petition raises the following alleged errors of the lower court:
A.
THAT THE LOWER COURT COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN

DENYING THE MOTION FOR RECONSIDERATION DATED MAY 9, 2002 AS

CONTAINED IN ITS ORDER OF JUNE 5, 2002, AND IN HOLDING THAT
PETITIONERS MOTION FOR ISSUANCE OF WRIT OF POSSESSION BE
RESOLVED AFTER HEREIN PETITIONER HAS CONVINCED THE TRIAL
COURT THAT IT HAS A MERITORIOUS CASE OF EMINENT DOMAIN,
DESPITE THE PROVISIONS OF SECTION 2, RULE 67 OF THE 1997 RULES OF
CIVIL PROCEDURE AND DESPITE THE RULING OF THE SUPREME COURT

IN THE CASE OF ROBERN DEVELOPMENT CORPORATION VS. JUDGE

JESUS V. QUITAIN, ET AL.
B.
THAT THE LOWER COURT COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
ISSUING THE ORDER OF JUNE 5, 2002 WHICH IN EFFECT UPHELD THE
CONTENTION OF PRIVATE RESPONDENTS THAT THE AMENDED
COMPLAINT FOR EXPROPRIATION FILED BY HEREIN PETITIONER IS NOT
SUFFICIENT IN FORM AND SUBSTANCE, HENCE THE LATTER IS NOT
ENTITLED TO AN IMMEDIATE ISSUANCE OF A WRIT OF POSSESSION.[23]
As to its Amended Complaint, petitioner maintains that the same is
sufficient in form and substance since it has complied with Section 19 of Rep.
Act No. 7160 (1991 Local Government Code) and Section 1, Rule 67 of the
1997 Rules of Civil Procedure. It explains that since public respondent has
ordered the parties to proceed with the Pre-Trial Conference and trial of the
case, it can be concluded that the Amended Complaint is sufficient in form
and substance.
In compliance with Section 19 of the 1991 Local Government Code,
petitioner says it deposited the amount of P2,809,696.50 with the Regional
Trial Court of Iloilo, which is equivalent to fifteen percent (15%) of the fair
market value of the property sought to be expropriated based on its current
tax declaration. It further argues that in the cases of Robern Development
Corporation v. Judge Jesus Quitain, et al.,[24] and Salvador Biglang-Awa v.
Hon. Judge Marciano I. Bacalla, et al.,[25] the duty to issue a Writ of
Possession becomes a ministerial duty upon the trial court without necessity
of a hearing once the provisional deposit under Section 2 of Rule 67[26] has
been complied with.
In their Comment, private respondents maintain that there was nothing for
the lower court to reconsider because the order dated 15 April 2002 which
was dictated in open court, and which petitioner sought to be reconsidered,
was already final (on 30 April 2002) when the latter filed its Motion for
Reconsideration on 09 May 2002. Second, they insist that petitioner is
estopped to change its position with respect to the immediate issuance of the
writ of possession. The agreement entered into is binding and is the law
between the parties and should be accorded respect since it was approved by
public respondent. Third, they claim there is waiver on the part of petitioner to
ask for the immediate possession of Lot No. 935 since it took the latter eight

(8) months and twelve (12) days from the filing of the Amended Complaint,
and nine (9) months and thirteen (13) days from the filing of the Original
Complaint before it filed the Motion for Issuance of Writ of

Possession. Moreover, they assert that there is a need for a court hearing
before a writ of possession can be issued, because the amended complaint is
being assailed before the lower court for not being sufficient in form and
substance. Finally, they aver that the issuance of the writ of possession
ceases to be ministerial when the complaint for expropriation fails to allege
compliance with the mandatory requirements for the exercise of the power of
eminent domain for purposes of socialized housing as interpreted in the cases
of Filstream International Incorporated v. Court of Appeals, et al.[27]
In its Reply, petitioner avers that the order of 15 April 2002 became final
only after fifteen (15) days from the time the same was received by it on 26
April 2002, and not fifteen (15) days from the time the order was made in open
court on 15 April 2002.
Petitioner argues that there is nothing in the rules which prohibits it from
reversing its position with respect to the issuance of the writ of possession in
light of Section 2, Rule 67 of the 1997 Rules of Civil Procedure which allows
taking immediate possession of property sought to be expropriated upon
compliance with said section. Further, it adds that its stand to seek immediate
possession of the property is supported by the Robern and Biglangawa cases.
It insists that there is no waiver or estoppel on its part. There is no
provision of law which sets a time limit within which to file a motion for the
issuance of a writ of possession. It reiterated that the sufficiency of the form
and substance of the Amended Complaint can be determined and resolved by
the lower court through an examination of the allegations contained therein
and if the same complies with the requisites set forth in Section 19 of Rep. Act
No. 7160 and Section 1 of Rule 67.[28] Thus, there is no necessity of a trial
before the lower court can resolve the Motion for Issuance of a Writ of
Possession.
Finally, it argues that the Filstream[29] cases are not applicable. It adds
that the provisions of Rep. Act No. 7279 which private respondents allege as
not to have been complied with are not conditions precedent for the exercise
of the power of eminent domain.
We first rule on the issue of whether the Order dated 15 April 2002, which
was dictated in open court, was already final when petitioner filed a Motion for
Reconsideration on 09 May 2002. Petitioner maintains that the motion for
reconsideration was filed before the order became final fifteen (15) days from
the time it received a copy thereof in writing, and not from the time the same
was dictated in open court as claimed by private respondents.

Time-honored and of constant observance is the principle that no

judgment, or order, whether final or interlocutory, has juridical existence until
and unless it is set in writing, signed, and promulgated, i.e., delivered by the
Judge to the Clerk of Court for filing, release to the parties and
implementation, and that indeed, even after promulgation, it does not bind the
parties until and unless notice thereof is duly served on them by any of the
modes prescribed by law. This is so even if the order or judgment has in fact
been orally pronounced in the presence of the parties, or a draft thereof drawn
up and signed and/or a copy thereof somehow read or acquired by any
party.[30]
In the case at bar, the Motion for Reconsideration filed by petitioner was
filed before the 15 April 2002 order became final. The order dictated in open
court had no juridical existence before it is set in writing, signed, promulgated
and served on the parties. Since the order orally pronounced in court had no
juridical existence yet, the period within which to file a motion for
reconsideration cannot be reckoned therefrom, but from the time the same
was received in writing. Petitioner had fifteen (15) days from its receipt of the
written order on 26 April 2002 within which to file a motion for
reconsideration. Thus, when it filed the motion for reconsideration on 09 May
2002, the said motion was timely filed.
Petitioner has the irrefutable right to exercise its power of eminent
domain. It being a local government unit, the basis for its exercise is granted
under Section 19 of Rep. Act No. 7160, to wit:
Sec. 19. Eminent Domain. - A local government unit may, through its chief executive
and acting pursuant to an ordinance, exercise the power of eminent domain for public
use, or purpose, or welfare for the benefit of the poor and the landless, upon payment
of just compensation, pursuant to the provisions of the Constitution and pertinent
laws: Provided, however, That the power of eminent domain may not be exercised
unless a valid and definite offer has been previously made to the owner, and such
offer was not accepted: Provided, further, That the local government unit may
immediately take possession of the property upon the filing of the expropriation
proceedings and upon making a deposit with the proper court of at least fifteen
percent (15%) of the fair market value of the property based on the current tax
declaration of the property to be expropriated: Provided, finally, That the amount to
be paid for the expropriated property shall be determined by the proper court, based
on the fair market value at the time of the taking of the property.
The requisites for authorizing immediate entry are as follows: (1) the filing
of a complaint for expropriation sufficient in form and substance; and (2) the
deposit of the amount equivalent to fifteen percent (15%) of the fair market

value of the property to be expropriated based on its current tax

declaration.[31] Upon compliance with these requirements, the issuance of a

writ of possession becomes ministerial.[32]

In the case at bar, petitioner avers that the Amended Complaint it filed
complies with both requisites, thus entitling it to a writ of possession as a
matter of right and the issuance thereof becoming ministerial on the part of the
lower court even without any hearing. On the other hand, private respondents
allege that the Amended Complaint is not sufficient in form and substance
since it failed to allege compliance with the mandatory requirements for the
exercise of the power of eminent domain for purposes of socialized housing.
Section 1 of Rule 67 of the Revised Rules of Civil Procedure reads:
Section 1. The complaint. The right of eminent domain shall be exercised by the
filing of a verified complaint which shall state with certainty the right and purpose of
expropriation, describe the real or personal property sought to be expropriated, and
join as defendants all persons owning or claiming to own, or occupying, any part
hereof or interest therein, showing, so far as practicable, the separate interest of each
defendant. If the title to any property sought to be expropriated appears to be in the
Republic of the Philippines, although occupied by private individuals, or if the title is
otherwise obscure or doubtful so that the plaintiff cannot with accuracy or certainty
specify who are the real owners, averment to that effect shall be made in the
complaint.
The Court finds the Amended Complaint sufficient in form and substance,
and the amount of P2,809,696.50 deposited with the Regional Trial Court of
Iloilo is equivalent to fifteen percent (15%)[33] of the fair market value of the
property sought to be expropriated per current tax declaration.
On the averment of private respondents that the Amended Complaint
failed to allege compliance with the mandatory requirements[34] for the
exercise of the power of eminent domain for purposes of socialized housing
as interpreted in the Filstream cases, it appears that the Amended Complaint
did contain allegations showing compliance therewith.[35] However, whether
there is, indeed, compliance with these requirements, the Court deems it not
proper to resolve the issue at this time. Hearing must be held to establish
compliance.
In City of Manila v. Serrano,[36] this Court ruled that hearing is still to be
held to determine whether or not petitioner indeed complied with the
requirements provided in Rep. Act No. 7279. x x x The determination of this
question must await the hearing on the complaint for expropriation, particularly
the hearing for the condemnation of the properties sought to be expropriated.

From the foregoing, it is clear that an evidentiary hearing must be conducted if

compliance with the requirements for socialized housing has been
made. This hearing, however, is not a hearing to determine if a writ of
possession is to be issued, but whether there was compliance with the
requirements for socialized housing.
For a writ of possession to issue, only two requirements are required: the

sufficiency in form and substance of the complaint and the required

provisional deposit. In fact, no hearing is required for the issuance of a writ of
possession. The sufficiency in form and substance of the complaint for
expropriation can be determined by the mere examination of the allegations of
the complaint. In this case, the sufficiency of the Amended Complaint was
further confirmed by public respondent when he set the case for pre-trial and
hearing.
We likewise find private respondents claim that petitioner cannot change
its position regarding the immediate issuance of the writ of possession on the
ground of estoppel, to be untenable.
First, estoppel may be successfully invoked only if the party fails to raise
the question in the early stages of the proceedings.[37] In the case before us,
petitioner, through its counsel, undeniably committed a mistake when it
agreed that the resolution of its Motion for Issuance of Writ of Possession be
made by public respondent after a hearing is conducted and after it has
adduced its evidence. To remedy this, petitioner immediately filed a Motion
for Reconsideration. The filing thereof was precisely for the purpose of
rectifying the error it committed. With the timely filing of the motion for
reconsideration, petitioner cannot be held in estoppel because it right away
asked the court to nullify the agreement it entered into. The filing of the
motion for reconsideration which was done at the earliest possible time clearly
negates the presence of estoppel.
Second, under the facts of the case, estoppel should not apply because
petitioner is simply following the procedure laid down by the rules and
jurisprudence. Under Section 19[38] of Rep. Act No. 7160 (law governing
exercise of eminent domain by local government units [LGU]) and Section
2[39] of Rule 67 of the Revised Rules of Civil Procedure (law governing
exercise of eminent domain by entities other than LGUs), and in the cases
of Robern Development Corporation v. Quitain, et al., and Biglang-awa v.
Bacalla, et al., a prior hearing is not required before a writ of possession can
be issued. As above discussed, a complaint, sufficient in form and substance,
and the required deposit, are the only requirements before a writ of
possession can be issued. Thus, petitioner should not be prevented from

changing and correcting its position when the same is in accord with the rules
and jurisprudence.
Private respondents argue that petitioner waived its right to ask for the
immediate possession of Lot No. 935 since it took the latter eight (8) months
and twelve (12) days from the filing of the Amended Complaint, and nine (9)
months and thirteen (13) days from the filing of the Original Complaint, before
it filed the Motion for Issuance of Writ of Possession.
Petitioner did not waive its right. Section 19 of Rep. Act No. 7160 does
not put a time limit as to when a local government may immediately take
possession of the real property. Said section provides that the local
government unit may take immediate possession of the property upon the

filing of the expropriation proceedings and upon making a deposit of at least

fifteen percent (15%) of the fair market value of the property based on its
current tax declaration. As long as the expropriation proceedings have been
commenced and the deposit has been made, the local government unit
cannot be barred from praying for the issuance of a writ of possession.
WHEREFORE, the instant petition is GRANTED. The assailed orders of
respondent judge in Civil Case No. 01-26801 dated 05 June 2002 and 15 April
2002 are set aside. Respondent Judge is directed to issue the writ of
possession prayed for and to continue hearing the case. No costs.
SO ORDERED.

REPUBLIC
OF
PHILIPPINES,
Represented by Executive Secretary
Eduardo R. Ermita, the DEPARTMENT
OF
AND
COMMUNICATIONS (DOTC), and the
MANILA
AIRPORT

AUTHORITY
(MIAA),
O,

THE
G.R. No. 166429
TRANSPORTATION
Present:
INTERNATIONAL
DAVIDE, JR., C.J.,

PUN
Petitioners,

PANGANIBAN,

QUISUMBING,
YNARES-SANTIAGO,
SANDOVAL-GUTIERREZ,
CARPIO,
A-MARTINEZ,

-versusAUSTRI

CORONA,
CARPIO-MORALES,
CALLEJO, SR.,
HON.
GINGOYON,
In
Presiding
NAZARIO, and

AZCUNA,

HENRICK

his

capacity

Judge
of
the
Court,
Branch 117, Pasay City and
PHILIPPINE INTERNATIONAL AIR
TERMINALS CO., INC.,

F.

TINGA,

Regional
GARCIA, JJ.

as
CHICO-

Trial

Respondents.

Promulgated:
December 19, 2005
x---------------------------------------------------------------------- x

TINGA, J.:

DECISION

The Ninoy Aquino International Airport Passenger Terminal III

(NAIA 3) was conceived, designed and constructed to serve as the
countrys show window to the world. Regrettably, it has spawned
controversies. Regrettably too, despite the apparent completion of
the terminal complex way back it has not yet been operated. This
has caused immeasurable economic damage to the country, not to
mention its deplorable discredit in the international community.
In the first case that reached this Court, Agan v.
PIATCO,[1] the contracts which the Government had with the
contractor were voided for being contrary to law and public policy.
The second case now before the Court involves the matter of just

compensation due the contractor for the terminal complex it

built. We decide the case on the basis of fairness, the same norm
that pervades both the Courts 2004 Resolution in the first case and
the latest expropriation law.
The present controversy has its roots with the promulgation of
the Courts decision in Agan v. PIATCO,[2] promulgated in 2003
(2003 Decision). This decision nullified the Concession Agreement
for the Build-Operate-and-Transfer Arrangement of the Ninoy
Aquino International Airport Passenger Terminal III entered into
between the Philippine Government (Government) and the
Philippine International Air Terminals Co., Inc. (PIATCO), as well as
the amendments and supplements thereto. The agreement had
authorized PIATCO to build a new international airport terminal
(NAIA 3), as well as a franchise to operate and maintain the said

terminal during the concession period of 25 years. The contracts

were nullified, among others, that Paircargo Consortium,
predecessor of PIATCO, did not possess the requisite financial
capacity when it was awarded the NAIA 3 contract and that the
agreement was contrary to public policy.[3]
At the time of the promulgation of the 2003 Decision, the
NAIA 3 facilities had already been built by PIATCO and were
nearing completion.[4] However, the ponencia was silent as to the
legal status of the NAIA 3 facilities following the nullification of the
contracts, as well as whatever rights of PIATCO for reimbursement
for its expenses in the construction of the facilities. Still, in his
Separate Opinion, Justice Panganiban, joined by Justice Callejo,
declared as follows:
Should government pay at all for reasonable expenses
incurred in the construction of the Terminal? Indeed it should,
otherwise it will be unjustly enriching itself at the expense of
Piatco and, in particular, its funders, contractors and investors
both local and foreign. After all, there is no question that the State
needs and will make use of Terminal III, it being part and parcel of the

critical infrastructure
government. [5]

PIATCO

and

transportation-related

programs

of

and several respondents-intervenors filed their

respective motions for the reconsideration of the 2003 Decision.

These motions were denied by the Court in its Resolution dated 21
January 2004 (2004 Resolution).[6] However, the Court this time
squarely addressed the issue of the rights of PIATCO to refund,
compensation or reimbursement for its expenses in the
construction of the NAIA 3 facilities. The holding of the Court on
this crucial point follows:

This Court, however, is not unmindful of the reality that

the structures comprising the NAIA IPT III facility are almost
complete and that funds have been spent by PIATCO in their
construction. For the government to take over the said facility,
it has to compensate respondent PIATCO as builder of the said
structures. The compensation must be just and in accordance
with law and equity for the government can not unjustly enrich
itself at the expense of PIATCO and its investors.[7]

After the promulgation of the rulings in Agan, the NAIA 3

facilities have remained in the possession of PIATCO, despite the
avowed intent of the Government to put the airport terminal into
immediate operation. The Government and PIATCO conducted
several rounds of negotiation regarding the NAIA 3 facilities. [8] It
also appears that arbitral proceedings were commenced before the
International Chamber of Commerce International Court of
Arbitration and the International Centre for the Settlement of
Investment Disputes,[9] although the Government has raised
jurisdictional questions before those two bodies.[10]
Then,

on 21 December

2004,

the Government[11] filed

a Complaint for expropriation with the Pasay City Regional Trial

Court (RTC), together with an Application for Special Raffle seeking
the immediate holding of a special raffle. The Government sought
upon the filing of the complaint the issuance of a writ of possession
authorizing it to take immediate possession and control over the
NAIA 3 facilities.

The Government also declared that it had deposited the amount

of P3,002,125,000.00[12] (3 Billion)[13] in Cash with the Land Bank of
thePhilippines, representing the NAIA 3 terminals assessed value
for taxation purposes.[14]
The case[15] was raffled to Branch 117 of the Pasay City RTC,
presided by respondent judge Hon. Henrick F. Gingoyon (Hon.
Gingoyon). On the same day that the Complaint was filed, the RTC
issued an Order[16] directing the issuance of a writ of possession to
the Government, authorizing it to take or enter upon the
possession of the NAIA 3 facilities. Citing the case of City of Manila
v. Serrano,[17] the RTC noted that it had the ministerial duty to issue
the writ of possession

upon

the filing of a complaint

for

expropriation sufficient in form and substance, and upon deposit

made by the government of the amount equivalent to the assessed
value of the property subject to expropriation. The RTC found these
requisites present, particularly noting that [t]he case record shows
that [the Government has] deposited the assessed value of the
[NAIA 3 facilities] in the Land Bank of the Philippines, an
authorized depositary, as shown by the certification attached to
their complaint. Also on the same day, the RTC issued a Writ of
Possession. According to PIATCO, the Government was able to take
possession over the NAIA 3 facilities immediately after the Writ of
Possession was issued.[18]
However,
on 4 January 2005, the RTC issued
another Order designed
to supplement
its 21 December

2004 Order and

the Writ

of

Possession.

In

the

January

2005 Order, now assailed in the present petition, the RTC noted

that its earlier issuance of its writ of possession was pursuant to

Section 2, Rule 67 of the 1997 Rules of Civil Procedure. However, it
was observed that Republic Act No. 8974 (Rep. Act No. 8974),
otherwise known as An Act to Facilitate the Acquisition of Right-ofWay, Site or Location for National Government Infrastructure
Projects and For Other Purposes and its Implementing Rules and
Regulations (Implementing Rules) had amended Rule 67 in many
respects.
There are at least two crucial differences between the
respective procedures under Rep. Act No. 8974 and Rule 67. Under
the statute, the Government is required to make immediate
payment to the property owner upon the filing of the complaint to
be entitled to a writ of possession, whereas in Rule 67, the
Government is required only to make an initial deposit with an
authorized government depositary. Moreover, Rule 67 prescribes
that the initial deposit be equivalent to the assessed value of the
property for purposes of taxation, unlike Rep. Act No. 8974 which
provides, as the relevant standard for initial compensation, the
market value of the property as stated in the tax declaration or the
current relevant zonal valuation of the Bureau of Internal Revenue
(BIR), whichever is higher, and the value of the improvements
and/or structures using the replacement cost method.
Accordingly, on the basis of Sections 4 and 7 of Rep. Act No.
8974 and Section 10 of the Implementing Rules, the RTC made key
qualifications to its earlier issuances. First, it directed the Land
Bank of the Philippines, Baclaran Branch (LBP-Baclaran), to
immediately release the amount of US$62,343,175.77 to PIATCO,
an amount which the RTC characterized as that which the

Government specifically made available for the purpose of this

expropriation; and such amount to be deducted from the amount
of just compensation due PIATCO as eventually determined by the
RTC. Second, the Government was directed to submit to the RTC a
Certificate of Availability of Funds signed by authorized officials to
cover the payment of just compensation. Third, the Government
was directed to maintain, preserve and safeguard the NAIA 3
facilities or perform such as acts or activities in preparation for
their direct operation of the airport terminal, pending expropriation
proceedings and full payment of just compensation. However, the
Government was prohibited from performing acts of ownership like
awarding concessions or leasing any part of [NAIA 3] to other
parties.[19]
The very next day after the issuance of the assailed 4 January
2005 Order,
the Government
filed an Urgent
Motion
for
Reconsideration, which was set for hearing on 10 January 2005. On
7 January 2005, the RTC issued another Order, the second now
assailed

before

this

Court,

which

appointed

three

(3)

Commissioners to ascertain the amount of just compensation for

the NAIA 3 Complex. That same day, the Government filed aMotion
for Inhibition of Hon. Gingoyon.
The
RTC
heard
the Urgent
Motion
for
Reconsideration and Motion for Inhibition on 10 January 2005. On
the same day, it denied these motions in an Omnibus Order dated
10 January 2005. This is the third Order now assailed before this
Court. Nonetheless, while the Omnibus Order affirmed the earlier
dispositions in the 4 January 2005 Order, it excepted from
affirmance the superfluous part of the Order prohibiting the

plaintiffs from awarding concessions or leasing any part of [NAIA 3]

to other parties.[20]

Thus, the present Petition for Certiorari and Prohibition under

Rule 65 was filed on 13 January 2005. The petition prayed for the
nullification of the RTC orders dated 4 January 2005, 7 January
2005, and 10 January 2005, and for the inhibition of Hon.
Gingoyon from taking further action on the expropriation case. A
concurrent prayer for the issuance of a temporary restraining order
and preliminary injunction was granted
a Resolution dated 14 January 2005.[21]

by

this

Court in

The Government, in imputing grave abuse of discretion to the

acts of Hon. Gingoyon, raises five general arguments, to wit:
(i) that Rule 67, not Rep. Act No. 8974, governs the present
expropriation proceedings;
(ii) that Hon. Gingoyon erred when he ordered the immediate
release of the amount of US$62.3 Million to PIATCO considering
that the assessed value as alleged in the complaint was only P3
Billion;
(iii) that the RTC could not have prohibited the Government
from enjoining the performance of acts of ownership;

(iv) that the appointment of the three commissioners was

erroneous; and

(v) that Hon. Gingoyon should be compelled to inhibit himself

from the expropriation case.[22]
Before we delve into the merits of the issues raised by the
Government, it is essential to consider the crucial holding of the

Court in its 2004 Resolution in Agan, which we repeat below:

This Court, however, is not unmindful of the reality that the
structures comprising the NAIA IPT III facility are almost complete
and that funds have been spent by PIATCO in their construction. For
the government to take over the said facility, it has to
compensate respondent PIATCO as builder of the said structures.
The compensation must be just and in accordance with law and
equity for the government can not unjustly enrich itself at the
expense of PIATCO and its investors.[23]

This pronouncement contains the fundamental premises

which permeate this decision of the Court. Indeed, Agan, final and
executory as it is, stands as governing law in this case, and any
disposition of the present petition must conform to the conditions
laid down by the Court in its 2004 Resolution.

The 2004 Resolution Which Is

Law of This Case Generally
Permits Expropriation
The pronouncement in the 2004 Resolution is especially
significant to this case in two aspects, namely: (i) that PIATCO
must receive payment of just compensation determined in
accordance with law and equity; and (ii) that the government is

barred from taking over NAIA 3 until such just compensation is

paid. The parties cannot be allowed to evade the directives laid
down by this Court through any mode of judicial action, such as the
complaint for eminent domain.
It cannot be denied though that the Court in the 2004
Resolution prescribed mandatory guidelines which the Government
must observe before it could acquire the NAIA 3 facilities. Thus, the
actions of respondent judge under review, as well as the arguments
of the parties must, to merit affirmation, pass the threshold test of

whether such propositions are in accord with the 2004 Resolution.

The Government does not contest the efficacy of this
pronouncement in the 2004 Resolution,[24] thus its application

to the case at bar is not a matter of controversy. Of course,

questions such as what is the standard of just compensation and
which particular laws and equitable principles are applicable,
remain in dispute and shall be resolved forthwith.
The Government has chosen to resort to expropriation, a
remedy available under the law, which has the added benefit of an
integrated process for the determination of just compensation and
the payment thereof to PIATCO. We appreciate that the case at
bar is a highly unusual case, whereby the Government seeks to
expropriate a building complex constructed on land which the State
already owns.[25] There is an inherent illogic in the resort to eminent
domain on property already owned by the State. At first blush,
since the State already owns the property on which NAIA 3 stands,
the proper remedy should be akin to an action for ejectment.
However, the reason for the resort by the Government to
expropriation proceedings is understandable in this case. The 2004
Resolution,
in
requiring
the
payment
of
just
compensation prior to the takeover by the Government of

NAIA 3, effectively precluded it from acquiring possession or

ownership of the NAIA 3 through the unilateral exercise of its rights
as the owner of the ground on which the facilities stood. Thus, as
things stood after the 2004 Resolution, the right of the Government

to take over the NAIA 3 terminal was preconditioned by lawful order

on the payment of just compensation to PIATCO as builder of the
structures.
The determination of just compensation could very well be
agreed upon by the parties without judicial intervention, and it
appears that steps towards that direction had been engaged in. Still,
ultimately, the Government resorted to its inherent power of
eminent domain through expropriation proceedings. Is eminent
domain appropriate in the first place, with due regard not only to
the law on expropriation but also to the Courts 2004 Resolution
in Agan?
The right of eminent domain extends to personal and real
property, and the NAIA 3 structures, adhered as they are to the soil,
are considered as real property.[26] The public purpose for the
expropriation is also beyond dispute. It should also be noted that
Section 1 of Rule 67 (on Expropriation) recognizes the possibility
that the property sought to be expropriated may be titled in the
name of the

Republic of the Philippines, although occupied by private

individuals, and in such case an averment to that effect should be
made in the complaint. The instant expropriation complaint did aver
that the NAIA 3 complex stands on a parcel of land owned by the
Bases Conversion Development Authority, another agency of [the
Republic of the Philippines].[27]
Admittedly, eminent domain is not the sole judicial recourse by
which the Government may have acquired the NAIA 3 facilities while
satisfying the requisites in the 2004 Resolution. Eminent domain
though may be the most effective, as well as the speediest means by
which such goals may be accomplished. Not only does it enable
immediate possession after satisfaction of the requisites under the

law, it also has a built-in procedure through which just

compensation may be ascertained. Thus, there should be no
question as to the propriety of eminent domain proceedings in this
case.
Still, in applying the laws and rules on expropriation in the
case at bar, we are impelled to apply or construe these rules in
accordance with the Courts prescriptions in the 2004 Resolution to
achieve the end effect that the Government may validly take over the
NAIA 3 facilities. Insofar as this case is concerned, the 2004
Resolution is effective not only as a legal precedent, but as the
source of rights and prescriptions that must be guaranteed, if not
enforced, in the resolution of this petition. Otherwise, the integrity
and efficacy of the rulings of this Court will be severely diminished.

It is from these premises that we resolve the first question,

whether Rule 67 of the Rules of Court or Rep. Act No. 8974 governs
the expropriation proceedings in this case.
Application of Rule 67 Violates
the 2004 Agan Resolution

The Government insists that Rule 67 of the Rules of Court

governs the expropriation proceedings in this case to the exclusion
of all other laws. On the other hand, PIATCO claims that it is Rep.
Act No. 8974 which does apply. Earlier, we had adverted to the
basic differences between the statute and the procedural rule.
Further elaboration is in order.
Rule 67 outlines the procedure under which eminent domain
may be exercised by the Government. Yet by no means does it serve
at present as the solitary guideline through which the State may
expropriate private property. For example, Section 19 of the Local
Government Code governs as to the exercise by local government

units of the power of eminent domain through an enabling

ordinance. And then there is Rep. Act No. 8974, which covers
expropriation proceedings intended for national government
infrastructure projects.
Rep. Act No. 8974, which provides for a procedure eminently
more favorable to the property owner than Rule 67, inescapably
applies in instances when the national government expropriates
property for national government infrastructure projects. [28] Thus,
if expropriation is engaged in by the national government for
purposes other than national infrastructure projects, the assessed

value standard and the deposit mode prescribed in Rule 67

continues to apply.
Under both Rule 67 and Rep. Act No. 8974, the Government
commences expropriation proceedings through the filing of a
complaint. Unlike in the case of local governments which
necessitate an authorizing ordinance before expropriation may be
accomplished, there is no need under Rule 67 or Rep. Act No. 8974
for legislative authorization before the Government may proceed
with a particular exercise of eminent domain. The most crucial
difference between Rule 67 and Rep. Act No. 8974 concerns the
particular essential step the Government has to undertake to be
entitled to a writ of possession.

The first paragraph of Section 2 of Rule 67 provides:

SEC. 2. Entry of plaintiff upon depositing value with authorized
government depository. Upon the filing of the complaint or at any
time thereafter and after due notice to the defendant, the plaintiff
shall have the right to take or enter upon the possession of the real
property involved if he deposits with the authorized government
depositary an amount equivalent to the assessed value of the

property for purposes of taxation to be held by such bank subject

to the orders of the court. Such deposit shall be in money, unless
in lieu thereof the court authorizes the deposit of a certificate of
deposit
of
a
government
bank
of
the
Republic
the Philippines payable on demand to the authorized government
depositary.

of

In contrast, Section 4 of Rep. Act No. 8974 relevantly states:

SEC. 4. Guidelines for Expropriation Proceedings. Whenever it

is necessary to acquire real property for the right-of-way, site or
location for any national government infrastructure project through
expropriation, the appropriate proceedings before the proper court
under the following guidelines:
a) Upon the filing of the complaint, and after due notice to the
defendant, the implementing agency shall immediately pay the
owner of the property the amount equivalent to the sum of (1)
one hundred percent (100%) of the value of the property based
on the current relevant zonal valuation of the Bureau of Internal
Revenue (BIR); and (2) the value of the improvements and/or
structures as determined under Section 7 hereof;
...
c) In case the completion of a government infrastructure project
is of utmost urgency and importance, and there is no existing
valuation of the area concerned, the implementing agency shall
immediately pay the owner of the property its proffered value
taking into consideration the standards prescribed in Section 5
hereof.
Upon completion with the guidelines abovementioned, the court
shall immediately issue to the implementing agency an order to take
possession of the property and start the implementation of the
project.
Before the court can issue a Writ of Possession, the
implementing agency shall present to the court a certificate of
availability of funds from the proper official concerned.
...

As can be gleaned from the above-quoted texts, Rule 67 merely

requires the Government to deposit with an authorized government
depositary the assessed value of the property for expropriation for it

to be entitled to a writ of possession. On the other hand, Rep. Act

No. 8974 requires that the Government make a direct payment to
the property owner before the writ may issue. Moreover, such

payment is based on the zonal valuation of the BIR in the case of

land, the value of the improvements or structures under the
replacement cost method,[29] or if no such valuation is available and
in cases of utmost urgency, the proffered value of the property to be
seized.
It is quite apparent why the Government would prefer to apply
Rule 67 in lieu of Rep. Act No. 8974. Under Rule 67, it would not be
obliged to immediately pay any amount to PIATCO before it can
obtain the writ of possession since all it need do is deposit the
amount equivalent to the assessed value with an authorized
government depositary. Hence, it devotes considerable effort to point
out that Rep. Act No. 8974 does not apply in this case,
notwithstanding the undeniable reality that NAIA 3 is a national
government project. Yet, these efforts fail, especially considering the
controlling effect of the 2004 Resolution in Agan on the adjudication
of this case.
It is the finding of this Court that the staging of expropriation
proceedings in this case with the exclusive use of Rule 67 would
allow for the Government to take over the NAIA 3 facilities in a
fashion that directly rebukes our 2004 Resolution in Agan. This
Court cannot sanction deviation from its own final and executory
orders.
Section 2 of Rule 67 provides that the State shall have the
right to take or enter upon the possession of the real property
involved if [the plaintiff] deposits with the authorized government
depositary an amount equivalent to the assessed value of the
property for purposes of taxation to be held by such bank subject to

the orders of the court.[30] It is thus apparent that under the

provision, all the Government need do to obtain a writ of possession
is to deposit the amount equivalent to the assessed value with an
authorized government depositary.
Would the deposit under Section 2 of Rule 67 satisfy the
requirement laid down in the 2004 Resolution that [f]or the
government to take over the said facility, it has to compensate
respondent PIATCO as builder of the said structures? Evidently
not.
If Section 2 of Rule 67 were to apply, PIATCO would be
enjoined from receiving a single centavo as just compensation before
the Government takes over the NAIA 3 facility by virtue of a writ of
possession. Such an injunction squarely contradicts the letter and
intent of the 2004 Resolution. Hence, the position of the
Government sanctions its own disregard or violation the
prescription laid down by this Court that there must first be just
compensation paid to PIATCO before the Government may take over
the NAIA 3 facilities.
Thus, at the very least, Rule 67 cannot apply in this case
without violating the 2004 Resolution. Even assuming that Rep. Act
No. 8974 does not govern in this case, it does not necessarily follow
that Rule 67 should then apply. After all, adherence to the letter of
Section 2, Rule 67 would in turn violate the Courts requirement in
the 2004 Resolution that there must first be payment of just
compensation to PIATCO before the Government may take over the
property.

It is the plain intent of Rep. Act No. 8974 to supersede the

system of deposit under Rule 67 with the scheme of immediate

payment in cases involving national government infrastructure

projects. The following portion of the Senate deliberations, cited by
PIATCO in its Memorandum, is worth quoting to cogitate on the
purpose behind the plain meaning of the law:
THE CHAIRMAN (SEN. CAYETANO). x x x Because the
Senate believes that, you know, we have to pay the landowners
immediately not by treasury bills but by cash.
Since we are depriving them, you know, upon payment, no, of
possession, we might as well pay them as much, no, hindi lang
50 percent.
xxx
THE CHAIRMAN (REP. VERGARA). Accepted.
xxx
THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really in
favor of the landowners, e.
THE CHAIRMAN (REP. VERGARA). Thats why we need to really
secure the availability of funds.
xxx
THE CHAIRMAN (SEN. CAYETANO). No, no. Its the same. It says
here: iyong first paragraph, diba?
Iyong zonal talagang
magbabayad muna. In other words, you know, there must be a
payment kaagad. (TSN, Bicameral Conference on the Disagreeing
Provisions of House Bill 1422 and Senate Bill 2117, August 29, 2000,
pp. 14-20)
xxx
THE CHAIRMAN (SEN. CAYETANO). Okay, okay, no. Unang-una, it
is not deposit, no. Its payment.
REP. BATERINA. Its payment, ho, payment. (Id., p. 63)[31]

It likewise bears noting that the appropriate standard of just

compensation is a substantive matter. It is well within the province

of the legislature to fix the standard, which it did through the

enactment of Rep. Act No. 8974. Specifically, this prescribes the
new standards in determining the amount of just compensation in
expropriation cases relating to national government infrastructure
projects, as well as the manner of payment thereof. At the same
time, Section 14 of the Implementing Rules recognizes the continued
applicability of Rule 67 on procedural aspects when it provides all
matters regarding defenses and objections to the complaint, issues
on uncertain ownership and conflicting claims, effects of appeal on
the rights of the parties, and such other incidents affecting the
complaint shall be resolved under the provisions on expropriation of
Rule 67 of the Rules of Court.[32]
Given that the 2004 Resolution militates against the
continued use of the norm under Section 2, Rule 67, is it then
possible to apply Rep. Act No. 8974? We find that it is, and
moreover, its application in this case complements rather than
contravenes the prescriptions laid down in the 2004 Resolution.

Rep. Act No. 8974 Fits

to the Situation at Bar
and Complements the

2004 Agan Resolution

Rep. Act No. 8974 is entitled An Act To Facilitate The
Acquisition Of Right-Of-Way, Site Or Location For National
Government Infrastructure Projects And For Other Purposes.
Obviously, the law is intended to cover expropriation proceedings
intended for national government infrastructure projects. Section 2
of Rep. Act No. 8974 explains what are considered as national
government projects.

Sec. 2. National Government Projects. The term national

government projects shall refer to all national government
infrastructure, engineering works and service contracts, including
projects undertaken by government-owned
and controlled
corporations, all projects covered by Republic Act No. 6957, as
amended by Republic Act No. 7718, otherwise known as the BuildOperate-and-Transfer Law, and other related and necessary
activities, such as site acquisition, supply and/or installation of
equipment and materials, implementation, construction, completion,
operation, maintenance, improvement, repair and rehabilitation,
regardless of the source of funding.

As acknowledged in the 2003 Decision, the development of

NAIA
3 was
made
pursuant
to a build-operate-andtransfer arrangement pursuant to Republic Act No. 6957, as
amended,[33] which pertains to infrastructure or development
projects normally financed by the public sector but which are now
wholly or partly implemented by the private sector.[34] Under the
build-operate-and-transfer scheme, it is the project proponent
which undertakes the construction, including the financing, of a
given infrastructure facility.[35] In Tatad v. Garcia,[36] the Court
acknowledged that the operator of the EDSA Light Rail Transit
project under a BOT scheme was the owner of the facilities such as

the rail tracks, rolling stocks like the coaches, rail s tations,
terminals and the power plant.[37]
There can be no doubt that PIATCO has ownership rights over
the facilities which it had financed and constructed. The 2004
Resolution squarely recognized that right when it mandated the
payment of just compensation to PIATCO prior to the takeover by
the Government of NAIA 3. The fact that the Government resorted to
eminent domain proceedings in the first place is a concession on its
part of PIATCOs ownership. Indeed, if no such right is recognized,
then there should be no impediment for the Government to seize
control of NAIA 3 through ordinary ejectment proceedings.

Since the rights of PIATCO over the NAIA 3 facilities are

established, the nature of these facilities should now be determined.
Under Section 415(1) of the Civil Code, these facilities are
ineluctably immovable or real property, as they constitute buildings,
roads and constructions
of all kinds adhered to the
soil.[38] Certainly, the NAIA 3 facilities are of such nature that they
cannot just be packed up and transported by PIATCO like a
traveling circus caravan.
Thus, the property subject of expropriation, the NAIA 3
facilities, are real property owned by PIATCO. This point is critical,
considering the Governments insistence that the NAIA 3 facilities
cannot be deemed as the righ t-of-way, site or location of a

national government infrastructure project, within the coverage of

Rep. Act No. 8974.
There is no doubt that the NAIA 3 is not, under any sensible
contemplation, a right-of-way. Yet we cannot agree with the
Governments insistence that neither could NAIA 3 be a site or
location. The petition quotes the definitions provided in Blacks
Law Dictionary of location as the specific place or position of a
person or thing and site as pertaining to a place or locatio n or a
piece of property set aside for specific use. [39] Yet even Blacks Law
Dictionary provides that [t]he term [site] does not of itself
necessarily mean a place or tract of land fixed by definite
boundaries.[40] One would assume that the Government, to back up
its contention, would be able to point to a clear-cut rule that a site
or location exclusively refers to soil, grass, pebbles and weeds.
There is none.
Indeed, we cannot accept the Governments proposition that

the only properties that may be expropriated under Rep. Act No.
8974 are parcels of land. Rep. Act No. 8974 contemplates within its
coverage such real property constituting land, buildings, roads and
constructions of all kinds adhered to the soil. Section 1 of Rep. Act
No. 8974, which sets the declaration of the laws policy, refers to
real property acquired for national government infrastructure
projects are promptly paid just compensation. [41] Section 4 is quite
explicit in stating that the scope of the law relates to the acquisition
of real property, which under civil law includes buildings, roads
and constructions adhered to the soil.

It is moreover apparent that the law and its implementing

rules commonly provide for a rule for the valuation of improvements
and/or structures thereupon separate from that of the land on
which such are constructed. Section 2 of Rep. Act No. 8974 itself
recognizes that the improvements or structures on the land may
very well be the subject of expropriation proceedings. Section 4(a), in
relation to Section 7 of the law provides for the guidelines for the
valuation of the improvements or structures to be expropriated.
Indeed, nothing in the law would prohibit the application of Section
7, which provides for the valuation method of the improvements and
or structures in the instances wherein it is necessary for the
Government to expropriate only the improvements or structures, as
in this case.
The law classifies the NAIA 3 facilities as real properties just
like the soil to which they are adhered. Any sub-classifications of
real property and divergent treatment based thereupon for purposes
of expropriation must be based on substantial distinctions,
otherwise the equal protection clause of the Constitution is violated.
There may be perhaps a molecular distinction between soil and the
inorganic improvements adhered thereto, yet there are no purposive
distinctions that would justify a variant treatment for purposes of
expropriation. Both the land itself and the improvements thereupon
are susceptible to private ownership independent of each other,

capable of pecuniary estimation, and if taken from the owner,

considered as a deprivation of property. The owner of improvements
seized through expropriation suffers the same degree of loss as the
owner of land seized through similar means. Equal protection
demands that all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities

imposed. For purposes of expropriation, parcels of land are similarly

situated as the buildings or improvements constructed thereon, and
a disparate treatment between those two classes of real property
infringes the equal protection clause.
Even as the provisions of Rep. Act No. 8974 call for that laws
application in this case, the threshold test must still be met whether
its implementation would conform to the dictates of the Court in the
2004 Resolution. Unlike in the case of Rule 67, the application of
Rep. Act No. 8974 will not contravene the 2004 Resolution, which
requires the payment of just compensation before any takeover of
the NAIA 3 facilities by the Government. The 2004 Resolution does
not particularize the extent such payment must be effected before
the takeover, but it unquestionably requires at least some degree of
payment to the private property owner before a writ of possession
may issue. The utilization of Rep. Act No. 8974 guarantees
compliance with this bare minimum requirement, as it assures the
private property owner the payment of, at the very least, the
proffered value of the property to be seized. Such payment of the
proffered value to the owner, followed by the issuance of the writ of
possession in favor of the Government, is precisely the schematic
under Rep. Act No. 8974, one which facially complies with the
prescription laid down in the 2004 Resolution.
Clearly then, we see no error on the part of the RTC when it
ruled that Rep. Act No. 8974 governs the instant expropriation
proceedings.

The Proper Amount to be Paid

under Rep. Act No. 8974

Then, there is the matter of the proper amount which should

be paid to PIATCO by the Government before the writ of possession
may issue, consonant to Rep. Act No. 8974.
At this juncture, we must address the observation made by the
Office of the Solicitor General in behalf of the Government that there
could be no BIR zonal valuations on the NAIA 3 facility, as
provided in Rep. Act No. 8974, since zonal valuations are only for
parcels of land, not for airport terminals. The Court agrees with this
point, yet does not see it as an impediment for the application of
Rep. Act No. 8974.
It must be clarified that PIATCO cannot be reimbursed or
justly compensated for the value of the parcel of land on which NAIA
3 stands. PIATCO is not the owner of the land on which the NAIA 3
facility is constructed, and it should not be entitled to just
compensation that is inclusive of the value of the land itself. It
would be highly disingenuous to compensate PIATCO for the value
of land it does not own. Its entitlement to just compensation should
be limited to the value of the improvements and/or structures
themselves. Thus, the determination of just compensation cannot
include the BIR zonal valuation under Section 4 of Rep. Act No.
8974.

Under Rep. Act No. 8974, the Government is required to

immediately pay the owner of the property the amount equivalent
to the sum of (1) one hundred percent (100%) of the value of the
property based on the current relevant zonal valuation of the [BIR];

and (2) the value of the improvements and/or structures as

determined under Section 7. As stated above, the BIR zonal
valuation cannot apply in this case, thus the amount subject to
immediate payment should be limited to the value of the
improvements and/or structures as determined under Section 7,
with Section 7 referring to the implementing rules and regulations
for the equitable valuation of the improvements and/or structures
on the land. Under the present implementing rules in place,
the
valuation of the improvements/structures are to be based using
the replacement cost method.[42] However, the replacement cost is
only one of the factors to be considered in determining the just
compensation.
In
addition
to
Rep.
Act
No.
8974,
the
2004 Resolution in Agan also mandated that the payment of just
compensation should be in accordance with equity as well. Thus, in
ascertaining the ultimate amount of just compensation, the duty of
the trial court is to ensure that such amount conforms not only to
the law, such as Rep. Act No. 8974, but to principles of equity as
well.
Admittedly, there is no way, at least for the present, to
immediately ascertain the value of the improvements and structures
since such valuation is a matter for factual determination. [43] Yet
Rep. Act No. 8974 permits an expedited means by wh ich the
Government can immediately take possession of the property
without having to await precise determination of the valuation.
Section 4(c) of Rep. Act No. 8974 states that in case the completion
of a government infrastructure project is of utmost urgency and
importance, and

there

is

no

existing

valuation

of

the

area

concerned, the implementing agency shall immediately pay the

owner of the property its proferred value, taking into consideration

the standards prescribed in Section 5 [of the law]. [44] The proffered
value may strike as a highly subjective standard based solely on
the intuition of the government, but Rep. Act No. 8974 does provide
relevant standards by which proffered value should be
based,[45] as well as the certainty

of judicial determination of the propriety of the proffered value. [46]

In filing the complaint for expropriation, the Government
alleged to have deposited the amount of P3 Billion earmarked for
expropriation, representing the assessed value of the property.
The making of the deposit, including the determination of the
amount of the deposit, was undertaken under the erroneous notion
that Rule 67, and not Rep. Act No. 8974, is the applicable law. Still,
as regards the amount, the Court sees no impediment to recognize
this sum of P3 Billion as the proffered value under Section 4(b) of
Rep. Act No. 8974. After all, in the initial determination of the
proffered value, the Government is not strictly required to adhere to
any predetermined standards, although its proffered value may later
be subjected to judicial review using the standards enumerated
under Section 5 of Rep. Act No. 8974.
How should we appreciate the questioned order of Hon.
Gingoyon, which pegged the amount to be immediately paid to
PIATCO at around $62.3 Million? The Order dated 4 January 2005,
which mandated such amount, proves problematic in that regard.
While the initial sum of P3 Billion may have been based on the
assessed value, a standard which should not however apply in this
case, the RTC cites without qualification Section 4(a) of Rep. Act No.
8974 as the basis for the amount of $62.3 Million, thus leaving the
impression that the BIR zonal valuation may form part of the basis
for just compensation, which should not be the case. Moreover,
respondent judge made no attempt to apply the enumerated
guidelines for determination of just compensation under Section 5

of Rep. Act No. 8974, as required for judicial review of the proffered
value.
The Court notes that in the 10 January 2005 Omnibus Order,
the RTC noted that the concessions agreement entered into between
the Government and PIATCO stated that the actual cost of building
NAIA 3 was not less than US$350 Million.[47] The RTC then
proceeded to observe that while Rep. Act No. 8974 required the
immediate payment to PIATCO the amount equivalent to 100% of
the value of NAIA 3, the amount deposited by the Government
constituted only 18% of this value. At this point, no binding import
should be given to this observation that the actual cost of building
NAIA 3 was not less than US$350 Million, as the final conclusions
on the amount of just compensation can come only after due
ascertainment in accordance with the standards set under Rep. Act
No. 8974, not the declarations of the parties. At the same time, the
expressed linkage between the BIR zonal valuation and the amount
of just compensation in this case, is revelatory of erroneous thought
on the part of the RTC.
We have already pointed out the irrelevance of the BIR zonal
valuation as an appropriate basis for valuation in this case, PIATCO
not being the owner of the land on which the NAIA 3 facilities
stand. The subject order is flawed insofar as it fails to qualify that
such standard is inappropriate.
It does appear that the amount of US$62.3 Million was based
on the certification issued by the LBP-Baclaran that the Republic of
the Philippines maintained a total balance in that branch
amounting to such amount. Yet the actual representation of the
$62.3 Million is not clear. The Land Bank Certification expressing

such amount does state that it was issued upon request of the
Manila International Airport Authority purportedly as guaranty
deposit for the expropriation complaint.[48] The Government claims
in its Memorandum that the entire amount was made available as a
guaranty fund for the final and executory judgment of the trial
court, and not merely for the issuance of the writ of
possession.[49] One could readily conclude that the entire amount of
US$62.3 Million was intended by the Government to answer for
whatever guaranties may be required for the purpose of the
expropriation complaint.
Still, such intention the Government may have had as to the
entire US$62.3 Million is only inferentially established. In
ascertaining the proffered value adduced by the Government, the
amount of P3 Billion as the amount deposited characterized in the
complaint as to be held by [Land Bank] subject to the [RTCs]
orders,[50] should be deemed as controlling. There is no clear
evidence that the Government intended to offer US$62.3 Million as
the initial payment of just compensation, the wording of the Land
Bank Certification notwithstanding, and credence should be given to
the consistent position of the Government on that aspect.
In any event, for the RTC to be able to justify the payment of
US$62.3 Million to PIATCO and not P3 Billion Pesos, he would have
to establish that the higher amount represents the valuation of the
structures/improvements, and not the BIR zonal valuation on the
land wherein NAIA 3 is built. The Order dated 5 January 2005 fails
to establish such integral fact, and in the absence of contravening
proof, the proffered value of P3 Billion, as presented by the
Government, should prevail.

Strikingly, the Government submits that assuming that Rep.

Act No. 8974 is applicable, the deposited amount of P3 Billion
should be considered as the proffered value, since the amount was

based
on
comparative
values
made
by
the
City
Assessor.[51] Accordingly, it should be deemed as having faithfully
complied with the requirements of the statute.[52] While the Court
agrees that P3 Billion should be considered as the correct proffered
value, still we cannot deem the Government as having faithfully
complied with Rep. Act No. 8974. For the law plainly requires direct
payment to the property owner, and not a mere deposit with the
authorized government depositary. Without such direct payment,
no writ of possession may be obtained.
Writ of Possession May Not
Be Implemented Until Actual
Receipt by PIATCO of Proferred
Value
The Court thus finds another error on the part of the
RTC. The RTC authorized the issuance of the writ of possession to
the Government notwithstanding the fact that no payment of any
amount had yet been made to PIATCO, despite the clear command
of Rep. Act No. 8974 that there must first be payment before the
writ of possession can issue. While the RTC did direct the LBPBaclaran to immediately release the amount of US$62 Million to
PIATCO, it should have likewise suspended the writ of possession,
nay, withdrawn it altogether, until the Government shall have
actually paid PIATCO. This is the inevitable consequence of the clear
command of Rep. Act No. 8974 that requires immediate payment of
the initially determined amount of just compensation should be

effected. Otherwise, the overpowering intention of Rep. Act No. 8974

of ensuring payment first before transfer of repossession woul d be
eviscerated.
Rep. Act No. 8974 represents a significant change from
previous expropriation laws such as Rule 67, or even Section 19 of
the Local Government Code. Rule 67 and the Local Government
Code merely provided that the Government deposit the initial

amounts[53] antecedent to acquiring possession

of the property

with, respectively, an authorized

Government depositary[54] or the proper court.[55] In both cases, the
private owner does not receive compensation prior to the deprivation
of property. On the other hand, Rep. Act No. 8974 mandates
immediate payment of the initial just compensation prior to the
issuance of the writ of possession in favor of the Government.
Rep. Act No. 8974 is plainly clear in imposing the requirement
of immediate prepayment, and no amount of statutory
deconstruction can evade such requisite. It enshrines a new
approach towards eminent domain that reconciles the inherent
unease attending expropriation proceedings with a position of
fundamental equity. While expropriation proceedings have always
demanded just compensation in exchange for private property, the
previous deposit requirement impeded immediate compensation to
the private owner, especially in cases wherein the determination
of the final amount of compensation would prove highly disputed.
Under the new modality prescribed by Rep. Act No. 8974, the
private owner sees immediate monetary recompense with the same
degree of speed as the taking of his/her property.

While eminent domain lies as one of the inherent powers of the

State, there is no requirement that it undertake a prolonged
procedure, or that the payment of the private owner be protracted
as far as practicable. In fact, the expedited procedure of payment, as
highlighted under Rep. Act No. 8974, is inherently more fair,
especially to the layperson who would be hard-pressed to fully
comprehend the social value of expropriation in the first place.
Immediate payment placates to some degree whatever ill-will that
arises from expropriation, as well as satisfies the demand of basic
fairness.
The Court has the duty to implement Rep. Act No. 8974 and to

direct compliance with the requirement of immediate payment in

this case. Accordingly, the Writ of Possession dated 21 December
2004 should be held in abeyance, pending proof of actual payment
by the Government to PIATCO of the proffered value of the NAIA 3
facilities, which totals P3,002,125,000.00.
Rights of the Government
upon Issuance of the Writ
of Possession

Once the Government pays PIATCO the amount of the

proffered value of P3 Billion, it will be entitled to the Writ of
Possession. However, the Government questions the qualification
imposed by the RTC in its 4 January 2005 Order consisting of the
prohibition on the Government from performing acts of ownership
such as awarding concessions or leasing any part of NAIA 3 to other
parties.
To be certain, the RTC, in its 10 January 2005 Omnibus

Order, expressly stated that it was not affirming the superfluous

part of the Order [of 4 January 2005] prohibiting the plaintiffs from
awarding concessions or leasing any part of NAIA [3] to other
parties.[56] Still, such statement was predicated on the notion that
since the Government was not yet the owner of NAIA 3 until final
payment of just compensation, it was obviously incapacitated to
perform such acts of ownership.
In deciding this question, the 2004 Resolution in Agan cannot
be ignored, particularly the declaration that [f]or the government to
take over the said facility, it has to compensate respondent PIATCO
as builder of the said structures. The obvious import of this hol ding
is that unless PIATCO is paid just compensation, the Government is
barred from taking over, a phrase which in the strictest sense
could encompass even a bar of physical possession of NAIA 3, much
less operation of the facilities.

There are critical reasons for the Court to view the

2004 Resolution less stringently, and thus allow the operation by
the Government of NAIA 3 upon the effectivity of the Writ of
Possession. For one, the national prestige is diminished every day
that passes with the NAIA 3 remaining mothballed. For another, the
continued non-use of the facilities contributes to its physical
deterioration, if it has not already. And still for another, the
economic benefits to the Government and the country at large are
beyond dispute once the NAIA 3 is put in operation.
Rep. Act No. 8974 provides the appropriate answer for the
standard that governs the extent of the acts the Government may be
authorized to perform upon the issuance of the writ of possession.

Section 4 states that the court shall immediately issue to the

implementing agency an order to take possession of the property
and start the implementation of the project. We hold that
accordingly, once the Writ of Possession is effective, the Government
itself is authorized to perform the acts that are essential to the
operation of the NAIA 3 as an international airport terminal upon
the effectivity of the Writ of Possession. These would include the
repair, reconditioning
and improvement
of the complex,
maintenance of the existing facilities and equipment, installation of
new facilities and equipment, provision of services and facilities
pertaining to the facilitation of air traffic and transport, and other
services that are integral to a modern-day international airport.
The Governments position is more expansive than that
adopted by the Court. It argues that with the writ of possession, it is
enabled to perform acts de jure on the expropriated property. It
cites Republic v. Tagle,[57] as well as the statement therein that the
expropriation of real property does not include mere physical entry
or occupation of land, and from them concludes that its mere
physical entry and occupation of the property fall short of the taking

of title, which includes all the rights that may be exercised by an

owner over the subject property.
This conclusion is indeed lifted directly from statements
in Tagle,[58] but
not
from
the ratio
decidendi of
that
case. Tagle concerned whether a writ of possession in favor of the
Government was still necessary in light of the fact that it was
already in actual possession of the property. In ruling that the
Government was entitled to the writ of possession, the Court
in Tagle explains that such writ vested not only physical possession,

but also the legal right to possess the property. Continues th e

Court, such legal right to possess was particularly important in the
case, as there was a pending suit against the Republic for unlawful
detainer, and the writ of possession would serve to safeguard the
Government from eviction.[59]
At the same time, Tagle conforms to the obvious, that there is
no transfer of ownership as of yet by virtue of the writ of
possession. Taglemay concede that the Government is entitled to
exercise more than just the right of possession by virtue of the writ
of possession, yet it cannot be construed to grant the Government
the entire panoply of rights that are available to the owner.
Certainly, neither Tagle nor any other case or law, lends support to
the Governments proposition that it acquires beneficial or equitable
ownership of the expropriated property merely through the writ of
possession.
Indeed, this Court has been vigilant in defense of the rights of
the property owner who has been validly deprived of possession, yet
retains legal title over the expropriated property pending payment of
just compensation. We reiterated the various doctrines of such
import in our recent holding in Republic v. Lim:[60]
The recognized rule 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.
In Association of Small Landowners in the Philippines, Inc. et al., vs.
Secretary of Agrarian Reform[[61]], thus:
Title to property which is the subject of
condemnation
proceedings
does
not
vest
the
condemnor
until
the
judgment
fixing
just

compensation is entered and paid, but the condemnors

title relates back to the date on which the petition under
the Eminent Domain Act, or the commissioners report
under the Local Improvement Act, is filed.
x x x Although the right to appropriate 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
uniform 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.
Our own Supreme Court has held in Visayan
Refining Co. v. Camus and Paredes, that:
If the laws which we have exhibited or cited in
the preceding discussion are attentively examined it
will be apparent that the method of expropriation
adopted in this jurisdiction is such as to afford
absolute reassurance that no piece of land can be

finally and irrevocably taken from an unwilling owner

until compensation is paid....(Emphasis supplied.)

Clearly, without full payment of just compensation, there can be

no transfer of title from the landowner to the expropriator. Otherwise
stated, the Republics acquisition of ownership is conditioned upon
the full payment of just compensation within a reasonable time.
Significantly, in Municipality of Bian v. Garcia [[62]] this Court
ruled that the expropriation of lands consists of two stages, to wit:
x x x 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 x x x.
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. x x x.
It is only upon the completion of these two stages that
expropriation is said to have been completed. In Republic v. Salem
Investment Corporation[[63]] , we ruled that, the process is not
completed until payment of just compensation. Thus, here, the
failure of the Republic to pay respondent and his predecessors-ininterest for a period of 57 years rendered the expropriation process
incomplete.

Lim serves fair warning to the Government and its agencies

who
consistently
refuse
to
pay
just
compensation
due to the private property owner whose property had been
expropriated. At the same time, Lim emphasizes the fragility of the
rights of the Government as possessor pending the final payment of
just compensation, without diminishing the potency of such rights.
Indeed, the public policy, enshrined foremost in the Constitution,
mandates that the Government must pay for the private property it

expropriates. Consequently, the proper judicial attitude is to

guarantee compliance
compensation.

with

this

primordial

right

to

just

Final Determination of Just

Compensation Within 60 Days

The issuance of the writ of possession does not write finis to

the expropriation proceedings. As earlier pointed out, expropriation
is not completed until payment to the property owner of just
compensation. The proffered value stands as merely a provisional
determination of the amount of just compensation, the payment of
which is sufficient to transfer possession of the property to the
Government. However, to effectuate the transfer of ownership, it is
necessary for the Government to pay the property owner the final
just compensation.

In Lim, the Court went as far as to countenance, given the

exceptional circumstances of that case, the reversion of the validly
expropriated property to private ownership due to the failure of the
Government to pay just compensation in that case.[64] It was noted
in that case that the Government deliberately refused to pay just
compensation. The Court went on to rule that in cases where the
government failed to pay just compensation within five (5) years
from the finality of the judgment in the expropriation proceedings,
the owners concerned shall have the right to recover possession of
their property.[65]

Rep. Act No. 8974 mandates a speedy method by which the

final determination of just compensation may be had. Section 4
provides:

In the event that the owner of the property contests the

implementing agencys proffered value, the court shall determine the
just compensation to be paid the owner within sixty (60) days from
the date of filing of the expropriation case. When the decision of the
court becomes final and executory, the implementing agency shall pay
the owner the difference between the amount already paid and the
just compensation as determined by the court.

We hold that this provision should apply in this case. The sixty
(60)-day period prescribed in Rep. Act No. 8974 gives teeth to the
laws avowed policy to ensure that owners of real property acquired
for national government infrastructure projects are promptly
paid just compensation.[66] In this case, there already has been
irreversible delay in the prompt payment of PIATCO of just
compensation, and it is no longer possible for the RTC to determine
the just compensation due PIATCO within sixty (60) days from the
filing of the complaint last 21 December 2004, as contemplated by
the law. Still, it is feasible to effectuate the spirit of the law by
requiring the trial court to make such determination within sixty
(60) days from finality of this decision, in accordance with the
guidelines laid down in Rep. Act No. 8974 and its Implementing
Rules.
Of course, once the amount of just compensation has been
finally determined, the Government is obliged to pay PIATCO the
said amount. As shown in Lim and other like-minded cases, the
Governments

refusal to make such payment is indubitably

actionable in court.

Appointment of Commissioners

The next argument for consideration is the claim of the

Government that the RTC erred in appointing the three
commissioners
in its 7 January 2005 Order without
prior
consultation with either the Government or PIATCO, or without
affording the Government

the opportunity

to object

to the

appointment of these commissioners. We can dispose of this

argument without complication.
It must be noted that Rep. Act No. 8974 is silent on the
appointment of commissioners tasked with the ascertainment of
just compensation.[67] This protocol though is sanctioned under
Rule 67. We rule that the appointment of commissioners under Rule
67 may be resorted to, even in expropriation proceedings under Rep.
Act No. 8974, since the application of the provisions of Rule 67 in
that regard do not conflict with the statute. As earlier stated,
Section 14 of the Implementing Rules does allow such other
incidents affecting the complaint to be resolved under the provisions
on expropriation of Rule 67 of the Rules of Court. Even without Rule
67, reference during trial to a commissioner of the examination of
an issue of fact is sanctioned under Rule 32 of the Rules of Court.
But while the appointment of commissioners under the aegis of
Rule 67 may be sanctioned in expropriation proceedings under Rep.

Act No. 8974, the standards to be observed for the determination of

just compensation are provided not in Rule 67 but in the statute. In
particular, the governing standards for the determination of just
compensation for the NAIA 3 facilities are found in Section 10 of the
Implementing Rules for Rep. Act No. 8974, which provides for the
replacement cost method in the valuation of improvements and
structures.[68]
Nothing in Rule 67 or Rep. Act No. 8974 requires that the RTC
consult with the parties in the expropriation case on who should be
appointed as commissioners. Neither does the Court feel that such a

requirement should be imposed in this case. We did rule

in Municipality of Talisay v. Ramirez[69] that there is nothing to
prevent [the trial court] from seeking the recommendations of the
parties on [the] matter [of appointment of commissioners], the better
to ensure their fair representation.[70] At the same time, such
solicitation of recommendations is not obligatory on the part of the
court, hence we cannot impute error on the part of the RTC in its
exercise of solitary discretion in the appointment of the
commissioners.
What Rule 67 does allow though is for the parties to protest
the appointment of any of these commissioners, as provided under
Section 5 of the Rule. These objections though must be made filed
within ten (10) days from service of the order of appointment of the
commissioners.[71] In this case, the proper recourse of the
Government to challenge the choice of the commissioners is to file
an objection with the trial court, conformably with Section 5, Rule
67, and not as it has done, assail the same through a special civil
action for certiorari. Considering that the expropriation proceedings

in this case were effectively halted seven (7) days after

the Order appointing the commissioners,[72] it is permissible to allow
the parties to file their objections with the RTC within five (5) days
from finality of this decision.

Insufficient Ground for Inhibition

of Respondent Judge
The final argument for disposition is the claim of the
Government is that Hon. Gingoyon has prejudged the expropriation
case against the Governments cause and, thus, should be required

to inhibit himself. This grave charge is predicated on facts which the

Government characterizes as undeniable. In particular, the
Government notes that the 4 January 2005 Order was issued motu
proprio, without any preceding motion, notice or hearing. Further,
such order, which directed the payment of US$62 Million to
PIATCO, was attended with error in the computation of just
compensation. The Government also notes that the said Order was
issued even before summons had been served on PIATCO.
The disqualification of a judge is a deprivation of his/her
judicial power[73] and should not be allowed on the basis of mere
speculations and surmises. It certainly cannot be predicated on the
adverse nature of the judges rulings towards the movant for
inhibition, especially if these rulings are in accord with law. Neither
could inhibition be justified merely on the erroneous nature of the
rulings of the judge. We emphasized in Webb v. People:[74]

To prove bias and prejudice on the part of respondent

judge, petitioners harp on the alleged adverse and erroneous
rulings of respondent judge on their various motions. By
themselves, however, they do not sufficiently prove bias and
prejudice to disqualify respondent judge. To be disqualifying, the
bias and prejudice must be shown to have stemmed from an
extrajudicial source and result in an opinion on the merits on
some basis other than what the judge learned from his
participation in the case. Opinions formed in the course of judicial
proceedings, although erroneous, as long as they are based on the
evidence presented and conduct observed by the judge, do not prove
personal bias or prejudice on the part of the judge. As a general rule,
repeated rulings against a litigant, no matter how erroneous and
vigorously
and consistently
expressed, are not a basis for
disqualification of a judge on grounds of bias and prejudice.
Extrinsic evidence is required to establish bias, bad faith, malice
or corrupt purpose, in addition to the palpable error which may
be inferred from the decision or order itself. Although the
decision may seem so erroneous as to raise doubts concerning a
judge's integrity, absent extrinsic evidence, the decision itself
would be insufficient to establish a case against the judge. The
only exception to the rule is when the error is so gross and
patent as to produce an ineluctable inference of bad faith or
malice.[75]

The Governments contentions against Hon. Gingoyon are

severely undercut by the fact that the 21 December 2004 Order,
which the 4 January 2005 Order sought to rectify, was indeed
severely flawed as it erroneously applied the provisions of Rule 67 of
the Rules of Court, instead of Rep. Act No. 8974, in ascertaining
compliance
with
the
requisites
for the issuance of the writ of possession. The 4 January

2005 Order, which according to the Government establishes Hon.

Gingoyons bias, was promulgated precisely to correct the previous
error by applying the correct provisions of law. It would not speak
well of the Court if it sanctions a judge for wanting or even
attempting to correct a previous erroneous order which precisely is
the right move to take.
Neither are we convinced that the motu proprio issuance of
the 4 January 2005 Order, without the benefit of notice or hearing,
sufficiently evinces bias on the part of Hon. Gingoyon. The motu
proprio amendment by a court of an erroneous order previously
issued may be sanctioned depending on the circumstances, in line
with the long-recognized principle that every court has inherent
power to do all things reasonably necessary for the administration of
justice within the scope of its jurisdiction.[76] Section 5(g), Rule 135
of the Rules of Court further recognizes the inherent power of courts
to amend and control its process and orders so as to make them
conformable to law and justice,[77] a power which Hon. Gingoyon
noted in his 10 January 2005 Omnibus Order.[78] This inherent
power includes the right of the court to reverse itself, especially
when in its honest opinion it has committed an error or mistake in
judgment, and that to adhere to its decision will cause injustice to a
party litigant.[79]
Certainly, the 4 January 2005 Order was designed to make the
RTCs previous order conformable to law and justice, particularly to

apply the correct law of the case. Of course, as earlier established,

this effort proved incomplete, as the 4 January 2005 Order did not
correctly apply Rep. Act No. 8974 in several respects. Still, at least,

the 4 January 2005 Order correctly reformed the most basic

premise

of

the case that Rep.

Act No. 8974 governs

the

expropriation proceedings.
Nonetheless, the Government belittles Hon. Gingoyons
invocation of Section 5(g), Rule 135 as patently without merit.
Certainly merit can be seen by the fact that the 4 January
2005 Order reoriented the expropriation proceedings towards the
correct governing law. Still, the Government claims that the
unilateral act of the RTC did not conform to law or justice, as it was
not afforded the right to be heard.
The Court would be more charitably disposed towards this
argument if not for the fact that the earlier order with the 4 January
2005 Ordersought to correct was itself issued without the benefit of
any hearing. In fact, nothing either in Rule 67 or Rep. Act No. 8975
requires the conduct of a hearing prior to the issuance of the writ of
possession, which by design is available immediately upon the filing
of the complaint provided that the requisites attaching thereto are
present. Indeed, this expedited process for the obtention of a writ of
possession in expropriation cases comes at the expense of the rights
of the property owner to be heard or to be deprived of possession.
Considering these predicates, it would be highly awry to demand
that an order modifying the earlier issuance of a writ of possession
in an expropriation case be barred until the staging of a hearing,
when the issuance of the writ of possession itself is not subject to
hearing. Perhaps the conduct of a hearing under these
circumstances would be prudent. However, hearing is not
mandatory, and the failure to conduct one does not establish the
manifest bias required for the inhibition of the judge.

The Government likewise faults Hon. Gingoyon for using the

amount of US$350 Million as the basis for the 100% deposit under
Rep. Act No. 8974. The Court has noted that this statement was
predicated on the erroneous belief that the BIR zonal valuation
applies as a standard for determination of just compensation in this
case. Yet this is manifest not of bias, but merely of error on the part
of the judge. Indeed, the Government was not the only victim of the
errors of the RTC in the assailed orders. PIATCO itself was injured
by the issuance by the RTC of the writ of possession, even though
the former had yet to be paid any amount of just compensation. At
the same time, the Government was also prejudiced by the
erroneous ruling of the RTC that the amount of US$62.3 Million,
and not P3 Billion, should be released to PIATCO.
The Court has not been remiss in pointing out the multiple
errors committed by the RTC in its assailed orders, to the prejudice
of both parties. This attitude of error towards all does not ipso
facto negate the charge of bias. Still, great care should be had in
requiring the inhibition of judges simply because the magistrate did
err. Incompetence may be a ground for administrative sanction, but
not for inhibition, which requires lack of objectivity or impartiality to
sit on a case.
The Court should necessarily guard against adopting a
standard that a judge should be inhibited from hearing the case if
one litigant loses trust in the judge. Such loss of trust on the part of
the Government may be palpable, yet inhibition cannot be grounded
merely on the feelings of the party-litigants. Indeed, every losing
litigant in any case can resort to claiming that the judge was biased,

and he/she will gain a sympathetic ear from friends, family, and

people who do not understand the judicial process. The test in

believing such a proposition should not be the vehemence of the
litigants claim of bias, but the Courts judicious estimation, as
people who know better than to believe any old cry of wolf!,
whether such bias has been irrefutably exhibited.

The Court acknowledges that it had been previously held that

at the very first sign of lack of faith and trust in his actions,
whether well-grounded or not, the judge has no other alternative
but to inhibit himself from the case.[80] But this doctrine is qualified
by the entrenched rule that a judge may not be legally prohibited
from sitting in a litigation, but when circumstances appear that will
induce doubt to his honest actuations and probity in favor of either
party, or incite such state of mind, he should conduct a careful
selfexamination. He should exercise his discretion in a way that the
people's faith in the Courts of Justice is not impaired.[81] And a selfassessment by the judge that he/she is not impaired to hear the
case will be respected by the Court absent any evidence to the
contrary. As held in Chin v. Court of Appeals :
An allegation of prejudgment, without more, constitutes mere
conjecture and is not one of the "just and valid reasons" contemplated
in the second paragraph of Rule 137 of the Rules of Court for which a
judge may inhibit himself from hearing the case. We have repeatedly
held that mere suspicion that a judge is partial to a party is not
enough. Bare allegations of partiality and prejudgment will not suffice
in the absence of clear and convincing evidence to overcome the
presumption that the judge will undertake his noble role to dispense

justice according to law and evidence and without fear or favor. There
should be adequate evidence to prove the allegations, and there must
be showing that the judge had an interest, personal or otherwise, in
the prosecution of the case. To be a disqualifying circumstance, the
bias and prejudice must be shown to have stemmed from an
extrajudicial source and result in an opinion on the merits on some
basis other than what the judge learned from his participation in the

case.[82]

The mere vehemence of the Governments claim of bias does

not translate to clear and convincing evidence of impairing bias.
There is no sufficient ground to direct the inhibition of Hon.
Gingoyon from hearing the expropriation case.
In conclusion, the Court summarizes its rulings as follows:
(1) The 2004 Resolution in Agan sets the base requirement that
has to be observed before the Government may take over the NAIA
3, that there must be payment to PIATCO of just compensation in
accordance with law and equity. Any ruling in the present
expropriation case must be conformable to the dictates of the Court
as pronounced in the Agan cases.
(2) Rep. Act No. 8974 applies in this case, particularly insofar
as it requires the immediate payment by the Government of at least
the proffered value of the NAIA 3 facilities to PIATCO and provides
certain valuation standards or methods for the determination of just
compensation.
(3) Applying Rep. Act No. 8974, the implementation of Writ of
Possession in favor of the Government over NAIA 3 is held in
abeyance until PIATCO is directly paid the amount of P3 Billion,

representing the proffered value of NAIA 3 under Section 4(c) of the

law.
(4) Applying Rep. Act No. 8974, the Government is authorized
to start the implementation of the NAIA 3 Airport terminal project by
performing the acts that are essential to the operation of the NAIA 3
as an international airport terminal upon the effectivity of the Writ
of Possession, subject to the conditions above-stated. As prescribed
by the Court, such authority encompasses the repair,

reconditioning and improvement of the complex, maintenance of the

existing facilities and equipment, installation of new facilities and
equipment, provision of services and facilities pertaining to the
facilitation of air traffic and transport, and other services that are
integral to a modern-day international airport.[83]
(5) The RTC is mandated to complete its determination of
the just compensation within sixty (60) days from finality of
this Decision. In doing so, the RTC is obliged to comply with law
and equity as ordained in Again and the standard set under
Implementing Rules of Rep. Act No. 8974 which is the replacement
cost method as the standard of valuation of structures and
improvements.
(6) There was no grave abuse of discretion attending the
RTC Order appointing the commissioners for the purpose of
determining just compensation. The provisions on commissioners
under Rule 67 shall apply insofar as they are not inconsistent with
Rep. Act No. 8974, its Implementing Rules, or the rulings of the
Court in Agan.

(7) The Government shall pay the just compensation fixed in

the decision of the trial court to PIATCO immediately upon the
finality of the said decision.
(8) There is no basis for the Court to direct the inhibition of
Hon. Gingoyon.
All told, the Court finds no grave abuse of discretion on the
part of the RTC to warrant the nullification of the questioned orders.
Nonetheless, portions of these orders should be modified to conform
with law and the pronouncements made by the Court herein.
WHEREFORE, the Petition is GRANTED in PART with respect
to the orders dated 4 January 2005 and 10 January 2005 of the

lower court. Said orders are AFFIRMED with the following

MODIFICATIONS:
1) The implementation of the Writ of Possession dated 21
December 2005 is HELD IN ABEYANCE, pending payment
by petitioners to PIATCO of the amount of Three Billion Two
Million One Hundred Twenty Five Thousand Pesos
(P3,002,125,000.00), representing the proffered value of the
NAIA 3 facilities;
2) Petitioners, upon the effectivity of the Writ of Possession,
are authorized start the implementation of the Ninoy Aquino
International Airport Pasenger Terminal III project by
performing the acts that are essential to the operation of the
said International Airport Passenger Terminal project;

3) RTC Branch 117 is hereby directed, within sixty (60) days

from finality of this Decision, to determine the just
compensation to be paid to PIATCO by the Government.
The Order dated 7 January 2005 is AFFIRMED in all respects
subject to the qualification that the parties are given ten (10) days
from finality of this Decision to file, if they so choose, objections to
the appointment of the commissioners decreed therein.
The Temporary Restraining Order dated 14 January 2005 is
hereby LIFTED.
No pronouncement as to costs.
SO ORDERED.

REPUBLIC

THEPHILIPPINES,
REPRESENTED
BY
THE
TOLL REGULATORY BOARD
(TRB),
Petitioner,
OF

- versus -

G.R. No. 172410

Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
REYES, and
DE CASTRO,* JJ.
Promulgated:
HOLY

TRINITY

REALTY

April 14, 2008

DEVELOPMENT CORP.,

Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, seeking to set aside the Decision[1] dated 21 April 2006 of the Court of
Appeals in CA-G.R. SP No. 90981 which, in turn, set aside two Orders [2] dated 7
February 2005[3] and 16 May 2005[4] of the Regional Trial Court (RTC) of
Malolos, Bulacan, in Civil Case No. 869-M-2000.
The undisputed factual and procedural antecedents of this case are as
follows:
On 29 December 2000, petitioner Republic of the Philippines, represented
by the Toll Regulatory Board (TRB), filed with the RTC a Consolidated Complaint
for Expropriation against landowners whose properties would be affected by the
construction, rehabilitation and expansion of the North Luzon Expressway. The
suit was docketed as Civil Case No. 869-M-2000 and raffled to Branch 85,

Malolos, Bulacan. Respondent Holy Trinity Realty and Development Corporation

(HTRDC) was one of the affected landowners.
On 18 March 2002, TRB filed an Urgent Ex-Parte Motion for the issuance
of a Writ of Possession, manifesting that it deposited a sufficient amount to cover
the payment of 100% of the zonal value of the affected properties, in the total
amount of P28,406,700.00, with the Land Bank of the Philippines, South Harbor
Branch (LBP-South Harbor), an authorized government depository. TRB
maintained that since it had already complied with the provisions of Section 4 of
Republic Act No. 8974[5] in relation to Section 2 of Rule 67 of the Rules of Court,
the issuance of the writ of possession becomes ministerial on the part of the RTC.
The RTC issued, on 19 March 2002, an Order for the Issuance of a Writ of
Possession, as well as the Writ of Possession itself. HTRDC thereafter moved for
the reconsideration of the 19 March 2002 Order of the RTC.

On 7 October 2002, the Sheriff filed with the RTC a Report on Writ of
Possession stating, among other things, that since none of the landowners
voluntarily vacated the properties subject of the expropriation proceedings, the
assistance of the Philippine National Police (PNP) would be necessary in
implementing the Writ of Possession. Accordingly, TRB, through the Office of the
Solicitor General (OSG), filed with the RTC an Omnibus Motion praying for an
Order directing the PNP to assist the Sheriff in the implementation of the Writ of
Possession. On 15 November 2002, the RTC issued an Order directing the
landowners to file their comment on TRBs Omnibus Motion.
On 3 March 2003, HTRDC filed with the RTC a Motion to Withdraw
Deposit, praying that the respondent or its duly authorized representative be
allowed to withdraw the amount of P22,968,000.00, out of TRBs advance deposit
of P28,406,700.00 with LBP-South Harbor, including the interest which accrued
thereon. Acting on said motion, the RTC issued an Order dated 21 April 2003,
directing the manager of LBP-South Harbor to release in favor of HTRDC the
amount of P22,968,000.00 since the latter already proved its absolute ownership
over the subject properties and paid the taxes due thereon to the
government. According to the RTC, (t)he issue however on the interest earned by
the amount deposited in the bank, if there is any, should still be threshed out.[6]
On 7 May 2003, the RTC conducted a hearing on the accrued interest, after
which, it directed the issuance of an order of expropriation, and granted TRB a

period of 30 days to inquire from LBP-South Harbor whether the deposit made by
DPWH with said bank relative to these expropriation proceedings is earning
interest or not.[7]
The RTC issued an Order, on 6 August 2003, directing the appearance of
LBP Assistant Vice-President Atty. Rosemarie M. Osoteo and Department
Manager Elizabeth Cruz to testify on whether the Department of Public Works and
Highways (DPWHs) expropriation account with the bank was earning
interest. On 9 October 2003, TRB instead submitted a Manifestation to which was
attached a letter dated 19 August 2003 by Atty. Osoteo stating that the DPWH
Expropriation Account was an interest bearing current account.

On 11 March 2004, the RTC issued an Order resolving as follows the issue
of ownership of the interest that had accrued on the amount deposited by DPWH in
its expropriation current account with LBP-South Harbor:
WHEREFORE, the interest earnings from the deposit of P22,968,000.00
respecting one hundred (100%) percent of the zonal value of the affected
properties in this expropriation proceedings under the principle of accession are
considered as fruits and should properly pertain to the herein defendant/property
owner [HTRDC]. Accordingly, the Land Bank as the depositary bank in this
expropriation proceedings is (1) directed to make the necessary computation of
the accrued interest of the amount of P22,968,000.00 from the time it was
deposited up to the time it was released to Holy Trinity Realty and Development
Corp. and thereafter (2) to release the same to the defendant Holy Trinity
Development Corporation through its authorized representative.[8]

TRB filed a Motion for Reconsideration of the afore-quoted RTC Order,

contending that the payment of interest on money deposited and/or consigned for
the purpose of securing a writ of possession was sanctioned neither by law nor by
jurisprudence.
TRB filed a Motion to Implement Order dated 7 May 2003, which directed
the issuance of an order of expropriation. On 5 November 2004, the RTC issued
an Order of Expropriation.
On 7 February 2005, the RTC likewise granted TRBs Motion for
Reconsideration. The RTC ruled that the issue as to whether or not HTRDC is
entitled to payment of interest should be ventilated before the Board of
Commissioners which will be created later for the determination of just
compensation.
Now it was HTRDCs turn to file a Motion for Reconsideration of the latest
Order of the RTC. The RTC, however, denied HTRDCs Motion for

Reconsideration in an Order dated 16 May 2005.

HTRDC sought recourse with the Court of Appeals by filing a Petition
for Certiorari, docketed as CA-G.R. SP No. 90981. In its Decision, promulgated
on 21 April 2006, the Court of Appeals vacated the Orders dated 7 February 2005
and 16 May 2005 of the RTC, and reinstated the Order dated 11 March 2004 of the
said trial court wherein it ruled that the interest which accrued on the amount

deposited in the expropriation account belongs to HTRDC by virtue of

accession. The Court of Appeals thus declared:
WHEREFORE, the foregoing premises considered, the assailed Orders
dated 07 February and 16 May 2005 respectively of the Regional Trial Court of
Malolos, Bulacan (Branch 85) are hereby VACATED and SET
ASIDE. Accordingly, the Order dated 11 March 2004 is hereby reinstated.[9]

From the foregoing, the Republic, represented by the TRB, filed the present
Petition for Review on Certiorari, steadfast in its stance that HTRDC is entitled
only to an amount equivalent to the zonal value of the expropriated property,
nothing more and nothing less.[10] According to the TRB, the owner of the subject
properties is entitled to an exact amount as clearly defined in both Section 4 of
Republic Act No. 8974, which reads:
Section 4. Guidelines for Expropriation Proceedings. Whenever it is
necessary to acquire real property for the right-of-way, site or location for any
national government infrastructure project through expropriation, the appropriate
implementing agency shall initiate the expropriation proceedings before the
proper court under the following guidelines:
(a) Upon the filing of the complaint, and after due notice to the defendant,
the implementing agency shall immediately pay the owner of the property
the amount equivalent to the sum of (1) one hundred (100%) percent of the
value of the property based on the current relevant zonal valuation of the
Bureau of Internal Revenue (BIR); and (2) the value of the improvements
and/or structures as determined under Section 7 hereof.

and Section 2, Rule 67 of the Rules of Court, which provides:

Sec. 2. Entry of plaintiff upon depositing value with authorized
government depositary. Upon the filing of the complaint or at anytime
thereafter and after due notice to the defendant, the plaintiff shall have the right
to take or enter upon the possession of the real property involved if he deposits
with the authorized government depositary an amount equivalent to the
assessed value of the property for purposes of taxation to be held by such
bank subject to the orders of the court. Such deposit shall be in money, unless in
lieu thereof the court authorizes the deposit of a certificate of deposit of a
government bank of the Republic of the Philippines payable on demand to the
authorized government depositary.

The TRB reminds us that there are two stages[11] in expropriation

proceedings, the determination of the authority to exercise eminent domain and the
determination of just compensation. The TRB argues that it is only during the
second stage when the court will appoint commissioners and determine claims for
entitlement to interest, citing Land Bank of the Philippines
v.
Wycoco[12] and National Power Corporation v. Angas.[13]
The TRB further points out that the expropriation account with LBPSouth Harbor is not in the name of HTRDC, but of DPWH. Thus, the said
expropriation account includes the compensation for the other landowners named
defendants in Civil Case No. 869-M-2000, and does not exclusively belong to
respondent.
At the outset, we call attention to a significant oversight in the TRBs line of
reasoning. It failed to distinguish between the expropriation procedures under
Republic Act No. 8974 and Rule 67 of the Rules of Court. Republic Act No. 8974
and Rule 67 of the Rules of Court speak of different procedures, with the former
specifically governing expropriation proceedings for national government
infrastructure projects. Thus, in Republic v. Gingoyon, [14] we held:
There are at least two crucial differences between the respective
procedures under Rep. Act No. 8974 and Rule 67. Under the statute, the
Government is required to make immediate payment to the property owner
upon the filing of the complaint to be entitled to a writ of possession,
whereas in Rule 67, the Government is required only to make an initial
deposit with an authorized government depositary. Moreover, Rule 67
prescribes that the initial deposit be equivalent to the assessed value of the
property for purposes of taxation, unlike Rep. Act No. 8974 which provides, as
the relevant standard for initial compensation, the market value of the property as
stated in the tax declaration or the current relevant zonal valuation of the Bureau
of Internal Revenue (BIR), whichever is higher, and the value of the
improvements and/or structures using the replacement cost method.
xxxx
Rule 67 outlines the procedure under which eminent domain may be
exercised by the Government. Yet by no means does it serve at present as the
solitary guideline through which the State may expropriate private property. For
example, Section 19 of the Local Government Code governs as to the exercise by
local government units of the power of eminent domain through an enabling
ordinance. And then there is Rep. Act No. 8974, which covers expropriation
proceedings intended for national government infrastructure projects.

Rep. Act No. 8974, which provides for a procedure eminently more

favorable to the property owner than Rule 67, inescapably applies in instances
when the national government expropriates property for national government
infrastructure projects. Thus, if expropriation is engaged in by the national
government for purposes other than national infrastructure projects, the assessed
value standard and the deposit mode prescribed in Rule 67 continues to apply.

There is no question that the proceedings in this case deal with the
expropriation of properties intended for a national government infrastructure
project. Therefore, the RTC correctly applied the procedure laid out in Republic
Act No. 8974, by requiring the deposit of the amount equivalent to 100% of the
zonal value of the properties sought to be expropriated before the issuance of a writ
of possession in favor of the Republic.
The controversy, though, arises not from the amount of the deposit, but as to
the ownership of the interest that had since accrued on the deposited amount.
Whether the Court of Appeals was correct in holding that the interest earned
by the deposited amount in the expropriation account would accrue to HRTDC by
virtue of accession, hinges on the determination of who actually owns the
deposited amount, since, under Article 440 of the Civil Code, the right of accession
is conferred by ownership of the principal property:
Art. 440. The ownership of property gives the right by accession to
everything which is produced thereby, or which is incorporated or attached thereto,
either naturally or artificially.

The principal property in the case at bar is part of the deposited amount in
the expropriation account of DPWH which pertains particularly to HTRDC. Such
amount, determined to be P22,968,000.00 of the P28,406,700.00 total deposit, was
already ordered by the RTC to be released to HTRDC or its authorized
representative. The Court of Appeals further recognized that the deposit of the
amount was already deemed a constructive delivery thereof to HTRDC:
When the [herein petitioner] TRB deposited the money as advance
payment for the expropriated property with an authorized government depositary
bank for purposes of obtaining a writ of possession, it is deemed to be a
constructive delivery of the amount corresponding to the 100% zonal valuation
of the expropriated property. Since [HTRDC] is entitled thereto and undisputably
the owner of the principal amount deposited by [herein petitioner] TRB,

conversely, the interest yield, as accession, in a bank deposit should likewise

pertain to the owner of the money deposited. [15]

Since the Court of Appeals found that the HTRDC is the owner of the
deposited amount, then the latter should also be entitled to the interest which

accrued thereon.
We agree with the Court of Appeals, and find no merit in the instant
Petition.
The deposit was made in order to comply with Section 4 of Republic Act
No. 8974, which requires nothing less than the immediate payment of 100% of the
value of the property, based on the current zonal valuation of the BIR, to the
property owner. Thus, going back to our ruling in Republic v. Gingoyon[16]:
It is the plain intent of Rep. Act No. 8974 to supersede the system of
deposit under Rule 67 with the scheme of immediate payment in cases
involving national government infrastructure projects. The following portion of
the Senate deliberations, cited by PIATCO in its Memorandum, is worth quoting
to cogitate on the purpose behind the plain meaning of the law:
THE CHAIRMAN (SEN. CAYETANO). x x x Because
the Senate believes that, you know, we have to pay the landowners
immediately not by treasury bills but by cash.
Since we are depriving them, you know, upon payment,
no, of possession, we might as well pay them as much, no, hindi
lang 50 percent.
xxxx
THE CHAIRMAN (REP. VERGARA). Accepted.
xxxx
THE CHAIRMAN (SEN. CAYETANO). Oo. Because
this is really in favor of the landowners, e.
THE CHAIRMAN (REP. VERGARA). Thats why we
need to really secure the availability of funds.
xxxx

THE CHAIRMAN (SEN. CAYETANO). No, no. Its the

same. It says here: iyong first paragraph, diba? Iyong zonal
talagang magbabayad muna. In other words, you know, there
must be a payment kaagad. (TSN, Bicameral Conference on the
Disagreeing Provisions of House Bill 1422 and Senate Bill 2117,
August 29, 2000, pp. 14-20)
xxxx
THE CHAIRMAN (SEN. CAYETANO). Okay, okay,
no. Unang-una, it is not deposit, no. Its payment.
REP. BATERINA. Its payment, ho, payment.

The critical factor in the different modes of effecting delivery which gives
legal effect to the act is the actual intention to deliver on the part of the party
making such delivery.[17] The intention of the TRB in depositing such amount
through DPWH was clearly to comply with the requirement of immediate payment
in Republic Act No. 8974, so that it could already secure a writ of possession over
the properties subject of the expropriation and commence implementation of the
project. In fact, TRB did not object to HTRDCs Motion to Withdraw Deposit
with the RTC, for as long as HTRDC shows (1) that the property is free from any
lien or encumbrance and (2) that respondent is the absolute owner thereof. [18]
A close scrutiny of TRBs arguments would further reveal that it does not
directly challenge the Court of Appeals determinative pronouncement that the
interest earned by the amount deposited in the expropriation account accrues to
HTRDC by virtue of accession. TRB only asserts that HTRDC is entitled only to
an amount equivalent to the zonal value of the expropriated property, nothing more
and nothing less.
We agree in TRBs statement since it is exactly how the amount of the
immediate payment shall be determined in accordance with Section 4 of Republic
Act No. 8974,i.e., an amount equivalent to 100% of the zonal value of the
expropriated properties. However, TRB already complied therewith by depositing
the required amount in the expropriation account of DPWH with LBPSouth Harbor. By depositing the said amount, TRB is already considered to have
paid the same to HTRDC, and HTRDC became the owner thereof. The amount
earned interest after the deposit; hence, the interest should pertain to the owner of
the principal who is already determined as HTRDC. The interest is paid by LBP-

South Harbor on the deposit, and the TRB cannot claim that it paid an amount
more than what it is required to do so by law.
Nonetheless, we find it necessary to emphasize that HTRDC is determined
to be the owner of only a part of the amount deposited in the expropriation
account, in the sum of P22,968,000.00. Hence, it is entitled by right of accession
to the interest that had accrued to the said amount only.
We are not persuaded by TRBs citation of National Power Corporation v.
Angas and Land Bank of the Philippines v. Wycoco, in support of its argument that
the issue on interest is merely part and parcel of the determination of just
compensation which should be determined in the second stage of the proceedings
only. We find that neither case is applicable herein.
The issue in Angas is whether or not, in the computation of the legal rate of
interest on just compensation for expropriated lands, the applicable law is Article
2209 of the Civil Code which prescribes a 6% legal interest rate, or Central Bank

Circular No. 416 which fixed the legal rate at 12% per annum. We ruled
in Angas that since the kind of interest involved therein is interest by way of
damages for delay in the payment thereof, and not as earnings from loans or
forbearances of money, Article 2209 of the Civil Code prescribing the 6% interest
shall apply. In Wycoco, on the other hand, we clarified that interests in the form of
damages cannot be applied where there is prompt and valid payment of just
compensation.
The case at bar, however, does not involve interest as damages for delay in
payment of just compensation. It concerns interest earned by the amount deposited
in the expropriation account.
Under Section 4 of Republic Act No. 8974, the implementing agency of the
government pays just compensation twice: (1) immediately upon the filing of the
complaint, where the amount to be paid is 100% of the value of the property based
on the current relevant zonal valuation of the BIR (initial payment); and (2) when
the decision of the court in the determination of just compensation becomes final
and executory, where the implementing agency shall pay the owner the difference
between the amount already paid and the just compensation as determined by the
court (final payment).[19]
HTRDC never alleged that it was seeking interest because of delay in either
of the two payments enumerated above. In fact, HTRDCs cause of action is based

on the prompt initial payment of just compensation, which effectively transferred

the ownership of the amount paid to HTRDC. Being the owner of the amount
paid, HTRDC is claiming, by the right of accession, the interest earned by the
same while on deposit with the bank.
That the expropriation account was in the name of DPWH, and not of
HTRDC, is of no moment. We quote with approval the following reasoning of the
Court of Appeals:
Notwithstanding that the amount was deposited under the DPWH account,
ownership over the deposit transferred by operation of law to the [HTRDC] and
whatever interest, considered as civil fruits, accruing to the amount of
Php22,968,000.00 should properly pertain to [HTRDC] as the lawful owner of the
principal amount deposited following the principle of accession. Bank interest
partake the nature of civil fruits under Art. 442 of the New Civil Code. And since
these are considered fruits, ownership thereof should be due to the owner of the
principal. Undoubtedly, being an attribute of ownership, the [HTRDCs] right
over the fruits (jus fruendi), that is the bank interests, must be respected.[20]

Considering that the expropriation account is in the name of DPWH, then,

DPWH should at most be deemed as the trustee of the amounts deposited in the
said accounts irrefragably intended as initial payment for the landowners of the

properties subject of the expropriation, until said landowners are allowed by the
RTC to withdraw the same.
As a final note, TRB does not object to HTRDCs withdrawal of the amount
of P22,968,000.00 from the expropriation account, provided that it is able to show
(1) that the property is free from any lien or encumbrance and (2) that it is the
absolute owner thereof.[21] The said conditions do not put in abeyance the
constructive delivery of the said amount to HTRDC pending the latters
compliance therewith. Article 1187[22] of the Civil Code provides that the effects
of a conditional obligation to give, once the condition has been fulfilled, shall
retroact to the day of the constitution of the obligation. Hence, when HTRDC
complied with the given conditions, as determined by the RTC in its
Order[23] dated 21 April 2003, the effects of the constructive delivery retroacted to
the actual date of the deposit of the amount in the expropriation account of DPWH.
WHEREFORE, the Petition is DENIED. The Court of Appeals Decision
dated 21 April 2006 in CA-G.R. SP No. 90981, which set aside the 7 February

This
a petition
review
on certiorari
the Decision
of the of
Court
of
2005 isand
16 Mayfor2005
Orders
of the ofRegional
Trial Court
Malolos,
Bulacan,
is AFFIRMED. No costs.
Court of Makati, Branch 139, which dismissed the complaint filed by
SO ORDERED.

Deposit Unit (FCDU) Savings Account No. 028-187 which he maintained in

Managers Check No. 00014757 dated August 17, 1984, payable to "cash" in
endorsed by private respondent on its dorsal side. It appears that the check
BANK OF THE PHILIPPINE ISLANDS, petitioner, vs. COURT OF
APPEALS and BENJAMIN C. NAPIZA, respondents.
DECISION
YNARES-SANTIAGO, J.:
[1]

Appeals in CA-G.R. CV No. 37392 affirming in toto that of the Regional Trial
[2]

petitioner Bank of the Philippine Islands against private respondent Benjamin

C. Napiza for sum of money. Sdaad
On September 3, 1987, private respondent deposited in Foreign Currency
[3]

petitioner banks Buendia Avenue Extension Branch, Continental Bank

[4]

the amount of Two Thousand Five Hundred Dollars ($2,500.00) and duly
[5]

belonged to a certain Henry Chan who went to the office of private respondent
and requested him to deposit the check in his dollar account by way of
accommodation and for the purpose of clearing the same. Private respondent
acceded, and agreed to deliver to Chan a signed blank withdrawal slip, with
the understanding that as soon as the check is cleared, both of them would go
to the bank to withdraw the amount of the check upon private respondents
presentation to the bank of his passbook.
respondent
was awithdrawal
counterfeitslip
check
it was
"not of the
or on
style of
Using the blank
givenbecause
by private
respondent
to type
Chan,
checks
issued
by
Continental
Bank
International."
Consequently,
Mr.
Ariel
October 23, 1984, one Ruben Gayon, Jr. was able to withdraw the amount of
$2,541.67 from FCDU Savings Account No. 028-187. Notably, the withdrawal
respondents son, to inform his father that the check bounced. Reyes himself

slip shows that the amount was payable to Ramon A. de Guzman and Agnes
C. de Guzman and was duly initialed by the branch assistant manager,
Teresita Lindo.
[6]

On November 20, 1984, petitioner received communication from the Wells

Fargo Bank International of New York that the said check deposited by private
[7]
[8]

Reyes, the manager

petitioners
Buendia
AvenueThis
Extension
Branch,by a letter
appropriate
action to of
protect
the banks
interest.
was followed
instructed one of its employees, Benjamin D. Napiza IV, who is private
[9]

sent a telegram to private respondent regarding the dishonor of the check. In

turn, private respondents son wrote to Reyes stating that the check had been
1985
stating
that he deposited
the check
clearing
purposes"
to
assigned
"for encashment"
to Ramon
A. de"for
Guzman
and/or
Agnesonly
C. de
Guzman after it shall have been cleared upon instruction of Chan. He also
said that upon learning of the dishonor of the check, his father immediately
tried to contact Chan but the latter was out of town.
[10]

Private respondents son undertook to return the amount of $2,500.00 to

petitioner bank. On December 18, 1984, Reyes reminded private respondent
of his sons promise and warned that should he fail to return that amount
within seven (7) days, the matter would be referred to the banks lawyers for
[11]

of the banks lawyer dated April 8, 1985 demanding the return of the
$2,500.00.
[12]

In reply, private respondent wrote petitioners counsel on April 20,

[13]

accommodate Chan. He added:

"Further, please take notice that said check was deposited on
September 3, 1984 and withdrawn on October 23, 1984, or a total

period of fifty (50) days had elapsed at the time of withdrawal.

Also, it may not be amiss to mention here that I merely signed an
authority to withdraw said deposit subject to its clearing, the
reason why the transaction is not reflected in the passbook of the
account. Besides, I did not receive its proceeds as may be
gleaned from the withdrawal slip under the captioned signature of
recipient.
If at all, my obligation on the transaction is moral in nature, which
(sic) I have been and is (sic) still exerting utmost and maximum

efforts to collect from Mr. Henry Chan who is directly liable under
the circumstances. Scsdaad
xxx......xxx...... xxx."
On August 12, 1986, petitioner filed a complaint against private respondent,
praying for the return of the amount of $2,500.00 or the prevailing peso
equivalent plus legal interest from date of demand to date of full payment, a
sum equivalent to 20% of the total amount due as attorney's fees, and
litigation and/or costs of suit.
Private respondent filed his answer, admitting that he indeed signed a "blank"
withdrawal slip with the understanding that the amount deposited would be
withdrawn only after the check in question has been cleared. He likewise
alleged that he instructed the party to whom he issued the signed blank
withdrawal slip to return it to him after the bank drafts clearance so that he
could lend that party his passbook for the purpose of withdrawing the amount
of $2,500.00. However, without his knowledge, said party was able to
withdraw the amount of $2,541.67 from his dollar savings account through
collusion with one of petitioners employees. Private respondent added that he
had "given the Plaintiff fifty one (51) days with which to clear the bank draft in
question." Petitioner should have disallowed the withdrawal because his
passbook was not presented. He claimed that petitioner had no one to blame
except itself "for being grossly negligent;" in fact, it had allegedly admitted
having paid the amount in the check "by mistake" x x x "if not altogether due
to collusion and/or bad faith on the part of (its) employees." Charging
petitioner with "apparent ignorance of routine bank procedures," by way of
counterclaim, private respondent prayed for moral damages of P100,000.00,
exemplary damages of P50,000.00 and attorneys fees of 30% of whatever
amount that would be awarded to him plus an honorarium of P500.00 per
appearance in court.
Private respondent also filed a motion for admission of a third party complaint
against Chan. He alleged that "thru strategem and/or manipulation," Chan
was able to withdraw the amount of $2,500.00 even without private
respondents passbook. Thus, private respondent prayed that third party

defendant Chan be made to refund to him the amount withdrawn and to pay
attorneys fees of P5,000.00 plus P300.00 honorarium per appearance.
Petitioner filed a comment on the motion for leave of court to admit the third
party complaint, wherein it asserted that per paragraph 2 of the Rules and
Regulations governing BPI savings accounts, private respondent alone was

liable "for the value of the credit given on account of the draft or check
deposited." It contended that private respondent was estopped from
disclaiming liability because he himself authorized the withdrawal of the
amount by signing the withdrawal slip. Petitioner prayed for the denial of the
said motion so as not to unduly delay the disposition of the main case
asserting that private respondents claim could be ventilated in another case.
Private respondent replied that for the parties to obtain complete relief and to
avoid multiplicity of suits, the motion to admit third party complaint should be
granted. Meanwhile, the trial court issued orders on August 25, 1987 and
October 28, 1987 directing private respondent to actively participate in
locating Chan. After private respondent failed to comply, the trial court, on
May 18, 1988, dismissed the third party complaint without prejudice.
On November 4, 1991, a decision was rendered dismissing the complaint.
The lower court held that petitioner could not hold private respondent liable
based on the checks face value alone. To so hold him liable "would
render inutile the requirement of clearance from the drawee bank before the
value of a particular foreign check or draft can be credited to the account of a
depositor making such deposit." The lower court further held that "it was
incumbent upon the petitioner to credit the value of the check in question to
the account of the private respondentonly upon receipt of the notice of final
payment and should not have authorized the withdrawal from the latters
account of the value or proceeds of the check." Having admitted that it
committed a "mistake" in not waiting for the clearance of the check before
authorizing the withdrawal of its value or proceeds, petitioner should suffer the
resultant loss. Supremax
On appeal, the Court of Appeals affirmed the lower courts decision. The
appellate court held that petitioner committed "clear gross negligence" in
allowing Ruben Gayon, Jr. to withdraw the money without presenting private
respondents passbook and, before the check was cleared and in crediting the
amount indicated therein in private respondents account. It stressed that the
mere deposit of a check in private respondents account did not mean that the
check was already private respondents property. The check still had to be
cleared and its proceeds can only be withdrawn upon presentation of a
passbook in accordance with the banks rules and regulations. Furthermore,
petitioners contention that private respondent warranted the checks
genuineness by endorsing it is untenable for it would render useless the
clearance requirement. Likewise, the requirement of presentation of a

passbook to ascertain the propriety of the accounting reflected would be a

meaningless exercise. After all, these requirements are designed to protect

the bank from deception or fraud.
The
Court
Appeals
thestated
case that
of Roman
Catholic
Bishop
Malolos,
Inc. v.
IAC,of where
thiscited
Court
a personal
check
is not of
legal
tender
[14]

or money, and held that the check deposited in this case must be cleared
before its value could be properly transferred to private respondent's account.
Without filing a motion for the reconsideration of the Court of Appeals
Decision, petitioner filed this petition for review on certiorari, raising the
following issues:
1....... WHETHER OR NOT RESPONDENT NAPIZA IS LIABLE
UNDER HIS WARRANTIES AS A GENERAL INDORSER.
2....... WHETHER OR NOT A CONTRACT OF AGENCY WAS
CREATED BETWEEN RESPONDENT NAPIZA AND RUBEN
GAYON.
3....... WHETHER OR NOT PETITIONER WAS GROSSLY
NEGLIGENT IN ALLOWING THE WITHDRAWAL.
Petitioner claims that private respondent, having affixed his signature at the
dorsal side of the check, should be liable for the amount stated therein in
accordance with the following provision of the Negotiable Instruments Law
(Act No. 2031):
"SEC. 66. Liability of general indorser. Every indorser who
indorses without qualification, warrants to all subsequent holders
in due course
(a)...... The matters and things mentioned in subdivisions (a), (b),
and (c) of the next preceding section; and
(b)...... That the instrument is at the time of his indorsement, valid
and subsisting.
And, in addition, he engages that on due presentment, it shall be
accepted or paid, or both, as the case may be, according to its
tenor, and that if it be dishonored, and the necessary proceedings
on dishonor be duly taken, he will pay the amount thereof to the

holder, or to any subsequent indorser who may be compelled to

pay it."
Section 65, on the other hand, provides for the following warranties of a
person negotiating an instrument by delivery or by qualified indorsement: (a)
that the instrument is genuine and in all respects what it purports to be; (b)
that he has a good title to it, and (c) that all prior parties had capacity to
[15]

[16]

indorser as follows: Juris

"Appellants contention that as mere indorser, she may not be
liable on account of the dishonor of the checks indorsed by her, is
contract. Inlikewise
People untenable.
v. Maniego,Under
this Court
described
theor
liabilities
of an of a
the law,
the holder
last indorsee
negotiable instrument has the right to enforce payment of the
being returned
yet." We
however,
the propriety
withdrawal
instrument
forhold,
the full
amountthat
thereof
against of
all the
parties
liable
thereon. Among the parties liable thereon is an indorser of the
instrument, i.e., a person placing his signature upon an
instrument otherwise than as a maker, drawer or acceptor * *
unless he clearly indicated by appropriate words his intention to
be bound in some other capacity. Such an indorser who indorses
without qualification, inter alia engages that on due presentment,
* * (the instrument) shall be accepted or paid, or both, as the case
may be, according to its tenor, and that if it be dishonored, and
the necessary proceedings on dishonor be duly taken, he will pay
the amount thereof to the holder, or any subsequent indorser who
may be compelled to pay it. Maniego may also be deemed an
accommodation party in the light of the facts, i.e., a person who
has signed the instrument as maker, drawer, acceptor, or
indorser, without receiving value therefor, and for the purpose of
lending his name to some other person. As such, she is under the
law liable on the instrument to a holder for value, notwithstanding
such holder at the time of taking the instrument knew * * (her) to
be only an accommodation party, although she has the right, after
paying the holder, to obtain reimbursement from the party
accommodated, since the relation between them is in effect that
of principal and surety, the accommodation party being the
surety."
It is thus clear that ordinarily private respondent may be held liable as an
[17]

private respondent liable for the amount of the check he deposited by the
strict application of the law and without considering the attending
withdrawal form supplied by the Bank at the counter." Scjuris
indorser of the check or even as an accommodation party.
However, to hold
circumstances in the case would result in an injustice and in the erosion of the
public trust in the banking system. The interest of justice thus demands
looking into the events that led to the encashment of the check.

Petitioner asserts that by signing the withdrawal slip, private respondent

"presented the opportunity for the withdrawal of the amount in question."
Petitioner relied "on the genuine signature on the withdrawal slip, the
personality of private respondents son and the lapse of more than fifty (50)
days from date of deposit of the Continental Bank draft, without the same
[18]

should be gauged by compliance with the rules thereon that both petitioner
bank and its depositors are duty-bound to observe.
In the passbook that petitioner issued to private respondent, the following
rules on withdrawal of deposits appear:

same."

"4....... Withdrawals must be made by the depositor personally but

in some exceptional circumstances, the Bank may allow
withdrawal by another upon the depositors written authority duly
authenticated; and neither a deposit nor a withdrawal will be
permitted except upon the presentation of the depositors savings
passbook, in which the amount deposited withdrawn shall be
entered only by the Bank.

5....... Withdrawals may be made by draft, mail or telegraphic

transfer in currency of the account at the request of the depositor
in writing on the withdrawal slip or by authenticated cable. Such
in petitionersrequest
Buendia
Ave.indicate
Extension
was
not the amount
proper payee
of
must
the branch,
name of the
payee/s,
and the
place where the funds are to be paid. Any stamp, transmission
and other charges related to such withdrawals shall be for the
account of the depositor and shall be paid by him/her upon
demand. Withdrawals may also be made in the form of travellers
checks and in pesos. Withdrawals in the form of notes/bills are
allowed subject however, to their (availability).
6....... Deposits shall not be subject to withdrawal by check, and
may be withdrawn only in the manner above provided, upon
presentation of the depositors savings passbook and with the
[19]

Under these rules, to be able to withdraw from the savings account deposit
under the Philippine foreign currency deposit system, two requisites must be

presented to petitioner bank by the person withdrawing an amount: (a) a duly

filled-up withdrawal slip, and (b) the depositors passbook. Privat e respondent
admits that he signed a blank withdrawal slip ostensibly in violation of Rule
No. 6 requiring that the request for withdrawal must name the payee, the
amount to be withdrawn and the place where such withdrawal should be
made. That the withdrawal slip was in fact a blank one with only private
respondents two signatures affixed on the proper spaces is buttressed by
petitioners allegation in the instant petition that had private respondent

indicated therein the person authorized to receive the money, then Ruben
Gayon, Jr. could not have withdrawn any amount. Petitioner contends that
"(i)n failing to do so (i.e., naming his authorized agent), he practically
authorized any possessor thereof to write any amount and to collect the
[20]

Such contention would have been valid if not for the fact that the withdrawal
slip itself indicates a special instruction that the amount is payable to "Ramon
A. de Guzman &/or Agnes C. de Guzman." Such being the case, petitioners
personnel should have been duly warned that Gayon, who was also employed
[21]

the proceeds of the check. Otherwise, either Ramon or Agnes de Guzman

should have issued another authority to Gayon for such withdrawal. Of
course, at the dorsal side of the withdrawal slip is an "authority to withdraw"
naming Gayon the person who can withdraw the amount indicated in the
check. Private respondent does not deny having signed such authority.
However, considering petitioners clear admission that the withdrawal slip was
a blank one except for private respondents signature, the unavoidable
conclusion is that the typewritten name of "Ruben C. Gayon, Jr." was
intercalated and thereafter it was signed by Gayon or whoever was allowed by
petitioner to withdraw the amount. Under these facts, there could not have
been a principal-agent relationship between private respondent and Gayon so
as to render the former liable for the amount withdrawn.
Moreover, the withdrawal slip contains a boxed warning that states: "This
receipt must be signed and presented with the corresponding foreign currency
savings passbook by the depositor in person. For withdrawals thru a
representative, depositor should accomplish the authority at the back." The
requirement of presentation of the passbook when withdrawing an amount
cannot be given mere lip service even though the person making the
withdrawal is authorized by the depositor to do so. This is clear from Rule No.
6 set out by petitioner so that, for the protection of the banks interest and as a
reminder to the depositor, the withdrawal shall be entered in the depositors

passbook. The fact that private respondents passbook was not presented
tender.
such, afteris receiving
under
its own
rules, that
petitioner
during theAs
withdrawal
evidencedthe
bydeposit,
the entries
therein
showing
the last
transaction that he made with the bank was on September 3, 1984, the date
he deposited the controversial check in the amount of $2,500.00.
[22]

In allowing the withdrawal, petitioner likewise overlooked another rule that is

printed in the passbook. Thus:
"2....... All deposits will be received as current funds and will be
repaid in the same manner; provided, however, that deposits
of drafts, checks, money orders, etc. will be accepted as subject
to collection only and credited to the account only upon receipt of
the notice of final payment. Collection charges by the Banks

foreign correspondent in effecting such collection shall be for the

account of the depositor. If the account has sufficient balance, the
collection shall be debited by the Bank against the account. If, for
any reason, the proceeds of the deposited checks, drafts, money
orders, etc., cannot be collected or if the Bank is required to return
such proceeds, the provisional entry therefor made by the Bank in
of the endorsements."
The rule finds
meaning
thisdeemed
case where the
the savings passbook
and more
its records
shallinbe
automatically cancelled regardless of the time that has elapsed,
and whether or not the defective items can be returned to the
question is a managers check. Misjuris
depositor; and the Bank is hereby authorized to execute
immediately
the necessary
amendments
or changes
In Banco Atlantico
v. Auditor
General, corrections,
Banco Atlantico,
a commercial
bank in
in its record, as well as on the savings passbook at the first
opportunity to reflect such cancellation." (Italics and underlining
supplied.) Jurissc
As correctly held by the Court of Appeals, in depositing the check in his name,
private respondent did not become the outright owner of the amount stated
therein. Under the above rule, by depositing the check with petitioner, private
respondent was, in a way, merely designating petitioner as the collecting
bank. This is in consonance with the rule that a negotiable instrument, such as
a check, whether a managers check or ordinary check, is not legal
[23]

shall credit the amount in private respondents account or infuse value thereon
only after the drawee bank shall have paid the amount of the check or the
check has been cleared for deposit. Again, this is in accordance with ordinary
banking practices and with this Courts pronouncement that "the collecting
bank or last endorser generally suffers the loss because it has the duty to
mind the fiduciary nature of their relationship."
As such, in dealing with its
ascertain the genuineness of all prior endorsements considering that the act
of presenting the check for payment to the drawee is an assertion that the

party making the presentment has done its duty to ascertain the genuineness
[24]

check involved is drawn on a foreign bank and therefore collection is more

difficult than when the drawee bank is a local one even though the check in
[25]

[26]

Madrid, Spain, paid the amounts represented in three (3) checks to Virginia
Boncan, the finance officer of the Philippine Embassy in Madrid. The bank did
so without previously clearing the checks with the drawee bank, the Philippine
National Bank in New York, on account of the "special treatment" that Boncan
received from the personnel of Banco Atlanticos foreign department. The
Court held that the encashment of the checks without prior clearance is
"contrary to normal or ordinary banking practice specially so where the
drawee bank is a foreign bank and the amounts involved were large."
Accordingly, the Court approved the Auditor Generals denial of Banco
Atlanticos claim for payment of the value of the checks that was withdrawn by

Boncan.
Said ruling brings to light the fact that the banking business is affected with
public interest. By the nature of its functions, a bank is under obligation to
treat the accounts of its depositors "with meticulous care, always having in
[27]

depositors, a bank should exercise its functions not only with the diligence of a
good father of a family but it should do so with the highest degree of care.
[28]

In the case at bar, petitioner, in allowing the withdrawal of private

respondents deposit, failed to exercise the diligence of a good father of a
prudence
and
liability
by that."personnel negligently
family. In total
disregard
of determines
its own rules,
petitioners
handled private respondents account to petitioners detriment. As this Court
once said on this matter:
"Negligence is the omission to do something which a reasonable
man, guided by those considerations which ordinarily regulate the
respondent had
a balance
of only
$750.00.
Upon
private
respondents
conduct
of human
affairs,
would do,
or the
doing
of something
which a prudent and reasonable man would do. The seventy-eight
(78)-year-old, yet still relevant, case of Picart v. Smith, provides
$3,250.00. the
On test
September
10,to1984,
the amount
of $600.00ofand
the
by which
determine
the existence
negligence
in a
particular case which may be stated as follows: Did the defendant
in doing the alleged negligent act use that reasonable care and
caution which an ordinarily prudent person would have used in the
was entered same
as withdrawn
with
a balance
On November
19,
situation?
If not,
then heofis$109.92.
guilty of negligence.
The law
1984 the word "hold" was written beside the balance of $109.92.
That must

in effect20,
adopts
standard supposed
to be Fargo
supplied
by the
following day,here
November
1984.theAccording
to Reyes, Wells
Bank
imaginary conduct of the discreet pater-familias of the Roman law.
The with
existence
of negligence
in a given case is not determined by
were deposited
petitioner.
Jjlex
reference to the personal judgment of the actor in the situation
before him. The law considers what would be reckless,
blameworthy, or negligent in the man of ordinary intelligence and
[29]

Petitioner violated its own rules by allowing the withdrawal of an amount that
is definitely over and above the aggregate amount of private respondents
dollar deposits that had yet to be cleared. The banks ledger on private
respondents
account
shows that
before
deposited $2,500.00,
privateSaid
a long time before
a depositor
could
makehe
a withdrawal,
is untenable.
[30]

deposit of $2,500.00 on September 3, 1984, that amount was credited in his

ledger as a deposit resulting in the corresponding total balance of
[31]

additional charges of $10.00 were indicated therein as withdrawn thereby

leaving a balance of $2,640.00. On September 30, 1984, an interest of $11.59
was reflected in the ledger and on October 23, 1984, the amount of $2,541.67
[32]
[33]

have been the time when Reyes, petitioners branch manager, was informed
unofficially of the fact that the check deposited was a counterfeit, but
petitioners Buendia Ave. Extension Branch received a copy of the
communication thereon from Wells Fargo Bank International in New York the
[34]

International handled the clearing of checks drawn against U.S. banks that
[35]

From these facts on record, it is at once apparent that petitioners personnel

allowed
withdrawal
of have
an amount
bigger than
the originalcause
deposit
of
which thethe
result
would not
occurred."
The proximate
of the
$750.00 and the value of the check deposited in the amount of $2,500.00
although they had not yet received notice from the clearing bank in the United
States on whether or not the check was funded. Reyes contention that after
the lapse of the 35-day period the amount of a deposited check could be
withdrawn even in the absence of a clearance thereon, otherwise it could take
[36]

practice amounts to a disregard of the clearance requirement of the banking

system.
While it is true that private respondents having signed a blank wit hdrawal slip
set in motion the events that resulted in the withdrawal and encashment of the

counterfeit check, the negligence of petitioners personnel was the proximate

cause of the loss that petitioner sustained. Proximate cause, which is
determined by a mixed consideration of logic, common sense, policy and
precedent, is "that cause, which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the injury, and without
[37]

withdrawal and eventual loss of the amount of $2,500.00 on petitioners part

was its personnels negligence in allowing such withdrawal in disregard of its
own rules and the clearing requirement in the banking system. In so doing,
petitioner assumed the risk of incurring a loss on account of a forged or
counterfeit foreign check and hence, it should suffer the resulting damage.
WHEREFORE, the petition for review on certiorari is DENIED. The Decision
of the Court of Appeals in CA-G.R. CV No. 37392 is AFFIRMED.
SO ORDERED.

FERNANDO
GABATIN,
GABATIN, petitioners,

JOSE
vs.

GABATIN
AND
LAND
BANK

ALBERTO
OF
THE

PHILIPPINES, respondents.
DECISION
CHICO-NAZARIO,

J.:

No. T-107863 (0.3965 hectare), TCT No. T-107864 (1.4272 hectares) and
Before Us is a petition for Review on Certiorari under Rule 45 of the Rules
TCT No. T-107865 (1.4330 hectares). In 1989, the properties, pursuant to the
of Court seeking to set aside the Decision and Resolution dated 15
September 2000 and 03 May 2001, respectively, of the Court of Appeals in
Decree (P.D.) No. 27 and Executive Order (E.O.) No. 228, were placed by
CA-G.R. CV No. 61240, entitled, Fernando Gabatin, Alberto Gabatin and
Jose Gabatin, petitioners-appellees v. Department of Agrarian Reform,
respondent. The Decision set aside the order of the Special Agrarian Court
(SAC) dated 04 May 1998, and the Resolution denied petitioners motion for
The formula prescribed under P.D. No. 27 and E.O. No. 228 for
reconsideration.
Petitioners Fernando, Alberto, and Jose, all surnamed Gabatin, were
registered owners of three parcels of rice land situated in Sariaya, Quezon,
under separate certificates of title, namely: Transfer Certificate of Title (TCT)

[1]

[2]
[3]

Land Reform Program of the Government as defined under Presidential

[4]

[5]

the Department of Agrarian Reform (DAR) under its Operation Land Transfer
(OLT). The properties were distributed to deserving farmer beneficiaries
through the issuance of emancipation patents.
[6]

[7]

computing the Land Value (LV) of rice lands is 2.5 x Average Gross
Production (AGP) x Government Support Price (GSP). Otherwise stated, the
formula is as follows:
LV = 2.5 x AGP x GSP
The AGP for the lots covered under TCTs No. T-107863 and No. T107864 was at 94.64 cavans per hectare while that of TCT No. T-107865 was
at 118.47.
The DAR and respondent Land Bank of the Philippines (Land
Bank), fixed the GSP at P35 which was the price of each cavan of palay in
1972, when the lots were deemed taken for distribution. Hence, respondents
valuation of the properties:
[8]

Acquired Property

Area in hectares

Land Value

TCT No. T-107864

1.4272

P 11,818.47

TCT No. T-107865

1.4330

14,854.66

TCT No. T-107863

.3965

3,283.41

[9]

======
TOTAL

P 29,956.54

andPetitioners
not at rejected
the timetheofvaluation.
taking.
The SAC, in it
s order,
fixed
the
GSP
On 16 April 1996, petitioners filed a case for the determination of just
compensation of their lands with the Regional Trial Court (RTC) of Lucena
[10]

docketed as Civil Case No. 96-57 and raffled to Branch 56, the designated
Special Agrarian Court (SAC). Petitioners prayed that the just compensation
be fixed in accordance with the formula in P.D. No. 27, with 6% compounded

annual interest to be paid based on the price of palay at the time of payment
[11]

Respondent
Bank
filedofa motion
for basis
reconsideration
dated 04ofJune
of palay
at the Land
current
price
P400 as
for the computation
the
1998 which was denied by the trial court in its Order
dated 23 July 1998. Of
payment, and not the GSP at the time of taking, thus:
TCT T-107863

P 37,524.76

TCT T-107864

P 135,070.20

TCT T-107865

P 169,767.50
=======
[12]

TOTAL

P 342,362.46
[13]
[14]

the two respondents in the trial court, only Land Bank appealed to the Court of
Appeals under Rule 41 of the Rules of Court.
[15]

On 10 July 2000, petitioners filed a motion to remand the records to the

SAC and to dismiss the appeal on the grounds that the decision of the SAC
became final and executory, and that the appeal raised issues involving purely
questions of law. They maintained that the appeal of respondent, not being
an indispensable party, did not stop the running of the period to appeal,
City,
andfinal.
Land
Bank
respondents.
case
was
therebynaming
makingthe
the DAR
decision
They
alsoas
claimed
that the The
appeal
should
be dismissed because the proper venue is the Supreme Court via a petition
for review under Rule 45, and not the Court of Appeals.
[16]

On 15 September 2000, the Court of Appeals rendered a decision denying

the motion to dismiss and reversing the decision of the SAC. It ruled it has
jurisdiction over the appeal reasoning that its jurisdiction over appeals from
RTCs cannot simply be disregarded on the submission that the issues
presented before it are purely legal in nature. As to the personality of Land

Bank to file the said appeal, the Court of Appeals made a finding that
respondent was a necessary party; hence, it had a personality to appeal the
SAC decision. It also fixed the GSP at the time of taking of the land in 1972,
instead of the GSP at the time of payment. Thus:
Based on the foregoing, the appropriate land valuation formula for the appellees
property should be two and a half (2) multiplied by the average gross production
multiplied by the price of palay (P35.00), (P.D. No. 27). In addition, the said amount
shall accumulate compounded interest at 6% per annum, pursuant to A.O. No. 13,

(1994) (supra) computed from the time of taking, i.e., when P.D. No. 27 came into
effect in October, 1972, until the full amount is paid.
...
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The
appealed order of the Regional Trial Court below is hereby REVERSED and SET
ASIDE. In lieu thereof, judgment is hereby rendered fixing the just compensation due
to the petitioners-appellees based on the price of palay per cavan at the time the
subject properties were taken, under the formula abovementioned, with interest at 6%
per annum, compounded annually, starting October, 1972 until the full amount is
paid.
[17]

[18]

The petitioners motion for reconsideration was likewise denied.

Hence, this petition for review. The following issues were raised:
FIRST: Is the special mode of appeal by petition for review from a decision of the
Special Agrarian Court (SAC) pursuant to Section 60 of R.A. 6657 still effective as the
only mode of appeal from decisions of the SAC?
In the caseMayofthe
Land
v. De
(hereinafter
referred
to a as
SECOND:
CourtBank
of Appeals
giveLeon
due course
to the appeal
filed by
necessary party without being joined by the indispensable party which did not appeal
the decision?
case,
LandWhether
Bank filed
motion for reconsideration.
In atime
resolution
THIRD:
just a
compensation
in kind (palay) at the
of the takingdated
of the20
properties shall be appraised at the price of the commodity at the time of the taking or
at the time it was ordered paid by the SAC?
FIRST ISSUE
[19]

Decision), we made the definitive pronouncement that a petition for review

under Rule 42, and not an ordinary appeal under Rule 41, is the appropriate
mode of appeal on the decisions of the RTCs acting as SACs. In the said
[20]

March 2003 (hereinafter referred to as Resolution), we resolved the Motion for

Reconsideration in this wise:

WHEREFORE, the motion for reconsideration dated October 16, 2002 and the
supplement to the motion for reconsideration dated November 11, 2002 are
PARTIALLY GRANTED. While we clarify that the Decision of this Court dated
September 10, 2002 stands, our ruling therein that a petition for review is the correct
appealed after the finality of this Resolution. (Emphasis supplied)

mode of appeal from decisions of Special Agrarian Courts shall apply only to cases
[21]

Herein petitioners assailed the Resolution. It is the remonstration of the

petitioners that since the notice of appeal filed by respondent under Rule 41
was incorrect, the same did not stop the running of the reglementary period to
file a petition for review under Rule 42. The decision, therefore, of the SAC
became final and executory and, consequently, respondent had completely
lost the remedy of appeal. In effect, petitioners contended that the Resolution,
when it prescribed for the prospective application of the Decision, took away
their vested rights to immediate payment of just compensation and created a
second right to appeal in favor of the respondent.
On the other hand, respondent asseverates that since its appeal of the
decision of the SAC, via notice of appeal under Rule 41, was perfected prior
to the promulgation of the Resolution, the same cannot be dismissed outright
since the Resolution applies prospectively.
[22]

We do not agree with the petitioners.

It bears noting that the Decision, which prescribed for Rule 42 as the
correct mode of appeal from the decisions of the SAC, was promulgated by
this Court only on 10 September 2002, while the Resolution of the motion for
reconsideration of the said case giving it a prospective application was
promulgated
onSAC.
20 In
March
2003.v.Respondent
appealed
decisions
of the
Land Bank
De Leon, we
held: to the Court of
Appeals on 31 July 1998 via ordinary appeal under Rule 41 of the Rules of
Court. Though appeal under said rule is not the proper mode of appeal, said
erroneous course of action cannot be blamed on respondent. It was of the
belief that such recourse was the appropriate manner to question the
[23]

On account of the absence of jurisprudence interpreting Sections 60 and 61 of RA

6657 regarding the proper way to appeal decisions of Special Agrarian Courts as well
as the conflicting decisions of the Court of Appeals thereon, LBP cannot be blamed
for availing of the wrong mode. Based on its own interpretation and reliance on the
Buenaventura ruling, LBP acted on the mistaken belief that an ordinary appeal is the
appropriate manner to question decisions of Special Agrarian Courts.
Thus, while the rule is that the appropriate mode of appeal from the
decisions of the SAC is through petition for review under Rule 42, the same
rule is inapplicable in the instant case. The Resolution categorically stated
that said ruling shall apply only to those cases appealed after 20 March
2003.
[24]

It is beyond cavil, therefore, that since this Court had already ruled on the
prospective application of the Land Bank v. De Leon decision, said issue must
be laid to rest and must no longer be disturbed in this decision. Stare decisis
et non quieta movere. Stand by the decisions and disturb not what is
settled. It is a very desirable and necessary judicial practice that when a court
has laid down a principle of law as applicable to a certain state of facts, it will
adhere to that principle and apply it to all future cases where the facts are
substantially the same, absent any countervailing considerations.
An indepth study of the case at bar clearly shows that it does not fall under the
exception of the stare decisis rule.
[25]

[26]

SECOND ISSUE
Petitioners find fault in the decision of the Court of Appeals which ruled
that Land Bank has the right to appeal on the ground that it is a necessary
party. It is argued that DAR, being the only agency authorized by law to
represent the Republic of the Philippines in the acquisition of private
agricultural lands for agrarian reform, as stated under Section 51(1) of
Republic Act No. 3844 and amended by Rep. Act No. 6389, is an
indispensable party in expropriation proceedings. Petitioners allege that Land
Bank is only a necessary party, thus, the Court of Appeals should have
dismissed the appeal pursuant to MWSS v. Court of Appeals which states
that when indispensable parties are not before the courts, the action should
be dismissed. Hence, petitioners concluded that the Court of Appeals acted
without jurisdiction when it gave due course and decided the appeal filed by
Land Bank, a necessary party, without being joined by the DAR, the
indispensable party.
[27]

Respondent answered that it can file an appeal independently of the DAR

in land valuation or in just compensation cases arising from the agrarian
reform program. In support of its argument, respondent avers that it is an
agency created primarily to provide financial support in all phases of agrarian
reform pursuant to Section 74 of Rep. Act No. 3844 and Section 64 of Rep.
Act No. 6657. It is also vested with the primary responsibility and authority in
the valuation and compensation of covered landholdings to carry out the full
implementation of the Agrarian Reform Program.
It may agree with the DAR
and the landowner as to the amount of just compensation to be paid to the
latter and may also disagree with them and bring the matter to court for
judicial determination.
[28]

[29]

Respondent cited jurisprudence pronouncing that it is not just a mere

rubber stamp but a necessary cog in agrarian reform as it does not just
exercise a ministerial function but has an independent discretionary role
in
[30]

[31]

the valuation process of the land covered by land reform. Respondent further
stressed that this Court, in the Decision, has recognized its right to appeal
from an adverse decision in a just compensation case.
We agree with the respondent.
The Rules of Court provides that parties in interest without whom no final
determination can be had of an action shall be joined either as plaintiffs or
defendants.
[32]

[33]

. . . An indispensable party is one whose interest will be affected by the courts action
in the litigation, and without whom no final determination of the case can be had. The
partys interest in the subject matter of the suit and in the relief sought are so
In BPI v.
Court
of Appeals,
this
explained:
inextricably intertwined
with
the other
parties that
hisCourt
legal presence
as a party to the
proceeding is an absolute necessity. In his absence there cannot be a resolution of the
dispute of the parties before the court which is effective, complete, or equitable.
Conversely, a party is not indispensable to the suit if his interest in the controversy or
subject matter is distinct and divisible from the interest of the other parties and will
not necessarily be prejudiced by a judgment which does complete justice to the parties
in court. He is not indispensable if his presence would merely permit complete relief
between him and those already parties to the action or will simply avoid multiple
litigation.
Without the presence of indispensable parties to a suit or proceeding, judgment of a
court cannot attain real finality. (emphasis supplied)
It must be observed that once an expropriation proceeding for the
acquisition of private agricultural lands is commenced by the DAR, the
indispensable role of Land Bank begins.
Even in the preliminary stage of the valuation and the determination of just
compensation, the respondents task is inseparably interwoven with that of the
DAR, thus:
. . . under the law, the Land Bank of the Philippines is charged with the initial
responsibility of determining the value of lands placed under agrarian reform and
compensation to be paid for their taking (Section 1, E.O. 405). Through the notice
sent to the landowner pursuant to 16(a) of R.A. No. 6657, the DAR makes an
offer. In case the landowner rejects the offer, a summary administrative proceeding is
held and afterward, the provincial (PARAD), the regional (RARAD) or the central
(DARAB) adjudicator as the case maybe, depending on the value of the land, fixes the

price to be paid for the land. If the landowner does not agree to the price fixed, he
may bring the matter to the RTC acting as Special Agrarian Court.
[34]

E.O. No. 405 provides that the DAR is required to make use of the
determination of the land valuation and compensation by the Land Bank as
the latter is primarily responsible for the determination of the land valuation

and compensation for all private lands under Rep. Act No. 6657.

[35]

[36]

went on to say that without the Land Bank, there would be no amount to be
established by the government for the payment of just compensation, thus:
affected by the judgment, order or decree.
The fact that a person is made a
As may be gleaned very clearly from EO 229, the LBP is an essential part of the
government sector with regard to the payment of compensation to the landowner. It
is, after all, the instrumentality that is charged with the disbursement of public funds
for purposes of agrarian reform. It is therefore part, an indispensable cog, in the
governmental machinery that fixes and determines the amount compensable to the
landowner. Were LBP to be excluded from that intricate, if not sensitive, function of
establishing the compensable amount, there would be no amount to be established by
In Sharp International Marketing v. Court of Appeals, this Court even
the government as required in Section 6 of EO 229. (emphasis supplied)
More telling is the fact that Land Bank can disagree with the decision of
the DAR in the determination of just compensation, and bring the matter to the
RTC designated as a SAC for final determination of just compensation.
[37]

The foregoing clearly shows that there would never be a judicial

determination of just compensation absent respondent Land Banks
v.
Court of Appeals,
Bank was ordered
to pay the land
value
participation.
Logically, itwherein
followsLand
that respondent
is an indispensable
party
in
an action for the determination of just compensation in cases arising from
agrarian reform program.
Assuming arguendo that respondent is not an indispensable party but only
a necessary party as is being imposed upon us by the petitioners, we find the
argument of the petitioners that only indispensable parties can appeal to be
incorrect.
There is nothing in the Rules of Court that prohibits a party in an action
before the lower court to make an appeal merely on the ground that he is not
an indispensable party. The Rules of Court does not distinguish whether the
appellant is an indispensable party or not. To avail of the remedy, the only
requirement is that the person appealing must have a present interest in the
subject matter of the litigation and must be aggrieved or prejudiced by the
[38]

interest, recognized by law in the subject matter of the lawsuit, is injuriously

[39]

party to a case before the lower court, and eventually be made liable if the
judgment be against him, necessarily entitles him to exercise his right to
appeal. To prohibit such party to appeal is nothing less than an outright
judgment.
A party,
in fair
turn,
is deemed aggrieved or prejudiced when his
violation of the
rules on
play.
THIRD ISSUE
To determine the land value under P.D. No. 27 and E.O. No. 228, the
following formula is used:

LV (land value) = 2.5 x AGP x GSP

Petitioners argue that the GSP be fixed at the time of payment by SAC
which was then at P400. In support thereof, they cited the case of Land Bank
[40]

based on the GSP at the time the Provincial Agrarian Reform Adjudicators
(PARAD) decision was rendered, and not at the time of the taking of the
property. Petitioners also made reference to Article 1958 of the Civil Code
which provides for the appraisal of an interest payable in kind at the current
price of the product at the time and place of payment.
[41]

counters
thatbeneficiaries,
in keeping
with to
settled
jurisprudence,
theirRespondent
lands in favor
of qualified
pursuant
E.O. No.
228
andthe
determination of compensation for lands covered by P.D. No. 27 is reckoned
P35. Prescinding from the foregoing discussion, the GSP should be fixed at
1972 was the time of taking for this was when the landowner was effectively
deprived of possession and dominion over his landholding.
[42]

[43]

In the case at bar, parties are in harmony as to the AGP of the lots under
consideration. The AGP for the lots covered under TCTs No. T-107863 and
No. T-107864 was at 94.64 cavans per hectare, and that for the lot under TCT
1994.
As amply
No. T-107865
was explained
at 118.47. by this Court:
[44]

The pith of the controversy is the determination of the GSP for one cavan
of palay. Should the same be based on the price at the time of taking or at
the time of payment as ordered by the SAC?
We must stress, at the outset, that the taking of private lands under the
agrarian reform program partakes of the nature of an expropriation
[45]

compensation for expropriation proceedings, it is the value of the land at the

from
of not
the attaking
of of
thethesame.Under
E.O. No. which
228, should
21 October
time ofthe
thetime
taking,
the time
rendition of judgment,
be
[46]

land for the payment of just compensation, the time of taking should be the
basis. In the instant case, since the dispute over the valuation of the land
depends on the rate of the GSP used in the equation, it necessarily follows
that the GSP should be pegged at the time of the taking of the properties.
In the instant case, the said taking of the properties was deemed effected
on 21 October 1972, when the petitioners were deprived of ownership over
[47]

proceeding. In a number of cases, we have stated that in computing the just

by virtue of P.D. No. 27.
The GSP for one cavan of palay at that time was at
[48]

[49]

said rate, which was the GSP at the time of the taking of the subject
taken into consideration.
This being so, then in determining the value of the
properties.
Petitioners are not rendered disadvantaged by the computation inasmuch
as they are entitled to receive the increment of six percent (6%) yearly interest
compounded annually pursuant to DAR Administrative Order No. 13, Series of
[50]

[51]

The purpose of AO No. 13 is to compensate the landowners for unearned

interests. Had they been paid in 1972 when the GSP for rice and corn was valued at
P35.00 and P31.00, respectively, and such amounts were deposited in a bank, they
would have earned a compounded interest of 6% per annum. Thus, if the PARAD
used the 1972 GSP, then the product of (2.5 x AGP x P35.00 or P31.00) could be
multiplied by (1.06) to determine the value of the land plus the additional 6%
compounded interest it would have earned from 1972.
[52]

Land Bank to pay the just compensation based on the GSP at the time the
PARAD rendered the decision, and not at the time of the taking, is not well
taken. In that case, PARAD, in its decision, used the GSP at the time of
payment in determining the land value. When the decision became final and
executory, Land Bank, however, refused to pay the landowner arguing that
the PARADs valuation was null and void for want of jurisdiction. We ruled
therein that the PARAD has the authority to determine the initial valuation of
lands involving agrarian reform. Thus, the decision of the PARAD was
binding on Land Bank. Land Bank was estopped from questioning the land
valuation made by PARAD because it participated in the valuation
proceedings and did not appeal the said decision. Hence, Land Bank was
compelled to pay the land value based on the GSP at the time of payment.
The factual milieu of the case relied upon by petitioners is different from
the case at bar. In the case on hand, respondent insisted from the very start
that the land valuation be based on the GSP at the time of the taking -

Petitioners reliance on Land Bank v. Court of Appeals

where we ordered
1972. It stood firm on that ground. When SAC ordered Land Bank to pay
petitioners the land value based on the GSP at the time of payment,
respondent vehemently disagreed and questioned the valuation before the
Court of Appeals.
WHEREFORE, we DENY the instant petition. The Decision of the Court
of Appeals dated 15 September 2000 and its Resolution dated 03 May 2001
in CA-G.R. CV No. 61240 are hereby AFFIRMED. No costs.
SO ORDERED.

COMMERCIAL BANKING
CORPORATION,
Petitioners-inIntervention,
HACIENDA LUISITA,
INCORPORATED,
Petitioner,
LUISITA INDUSTRIAL PARK
CORPORATION and RIZAL

- versus PRESIDENTIAL AGRARIAN

REFORM COUNCIL; SECRETARY
NASSER PANGANDAMAN OF THE
DEPARTMENT OF AGRARIAN

REFORM; ALYANSA NG MGA

MANGGAGAWANG BUKID NG
HACIENDA LUISITA, RENE
GALANG, NOEL MALLARI, and
JULIO SUNIGA[1] and his
SUPERVISORY GROUP OF THE
HACIENDA LUISITA, INC. and
WINDSOR ANDAYA,

G.R. No. 171101

Present:
CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA, and
SERENO,
REYES,
PERLAS-BERNABE, JJ.

Promulgated:
Respondents.
November 22, 2011
x-----------------------------------------------------------------------------------------x
RESOLUTION
VELASCO, JR., J.:

For resolution are the (1) Motion for Clarification and Partial
Reconsideration dated July 21, 2011 filed by petitioner Hacienda Luisita, Inc.
(HLI); (2) Motion for Partial Reconsideration dated July 20, 2011 filed by public
respondents Presidential Agrarian Reform Council (PARC) and Department of
Agrarian Reform (DAR); (3) Motion for Reconsideration dated July 19, 2011 filed
by private respondent Alyansa ng mga Manggagawang Bukid sa Hacienda Luisita

(AMBALA); (4) Motion for Reconsideration dated July 21, 2011 filed by

respondent-intervenor Farmworkers Agrarian Reform Movement, Inc. (FARM);

(5) Motion for Reconsideration dated July 21, 2011 filed by private respondents
Noel Mallari, Julio Suniga, Supervisory Group of Hacienda Luisita, Inc.
(Supervisory Group) and Windsor Andaya (collectively referred to as Mallari, et
al.); and (6) Motion for Reconsideration dated July 22, 2011 filed by private
respondents Rene Galang and AMBALA.[2]
On July 5, 2011, this Court promulgated a Decision[3] in the above-captioned
case, denying the petition filed by HLI and affirming Presidential Agrarian Reform
Council (PARC) Resolution No. 2005-32-01 dated December 22, 2005 and PARC
Resolution No. 2006-34-01 dated May 3, 2006 with the modification that the
original 6,296 qualified farmworker-beneficiaries of Hacienda Luisita (FWBs)
shall have the option to remain as stockholders of HLI.
In its Motion for Clarification and Partial Reconsideration dated July 21,
2011, HLI raises the following issues for Our consideration:
A
IT IS NOT PROPER, EITHER IN LAW OR IN EQUITY, TO
DISTRIBUTE TO THE ORIGINAL FWBs OF 6,296 THE UNSPENT
OR UNUSED BALANCE OF THE PROCEEDS OF THE SALE OF
THE 500 HECTARES AND 80.51 HECTARES OF THE HLI LAND,
BECAUSE:
(1) THE PROCEEDS OF THE SALE BELONG TO THE
CORPORATION, HLI, AS CORPORATE CAPITAL AND ASSETS IN
SUBSTITUTION FOR THE PORTIONS OF ITS LAND ASSET
WHICH WERE SOLD TO THIRD PARTY;
(2) TO DISTRIBUTE THE CASH SALES PROCEEDS OF THE
PORTIONS OF THE LAND ASSET TO THE FWBs, WHO ARE
STOCKHOLDERS OF HLI, IS TO DISSOLVE THE CORPORATION
AND DISTRIBUTE THE PROCEEDS AS LIQUIDATING
DIVIDENDS WITHOUT EVEN PAYING THE CREDITORS OF THE
CORPORATION;

(3) THE DOING OF SAID ACTS WOULD VIOLATE THE

STRINGENT PROVISIONS OF THE CORPORATION CODE AND
CORPORATE PRACTICE.
B
IT IS NOT PROPER, EITHER IN LAW OR IN EQUITY, TO

RECKON THE PAYMENT OF JUST COMPENSATION FROM

NOVEMBER 21, 1989 WHEN THE PARC, THEN UNDER THE
CHAIRMANSHIP OF DAR SECRETARY MIRIAM DEFENSORSANTIAGO, APPROVED THE STOCK DISTRIBUTION PLAN
(SDP) PROPOSED BY TADECO/HLI, BECAUSE:
(1) THAT PARC RESOLUTION NO. 89-12-2 DATED NOVEMBER
21, 1989 WAS NOT THE ACTUAL TAKING OF THE
TADECOs/HLIs AGRICULTURAL LAND;
(2) THE RECALL OR REVOCATION UNDER RESOLUTION NO.
2005-32-01 OF THAT SDP BY THE NEW PARC UNDER THE
CHAIRMANSHIP
OF
DAR
SECRETARY
NASSER
PANGANDAMAN ON DECEMBER 22, 2005 OR 16 YEARS
EARLIER WHEN THE SDP WAS APPROVED DID NOT RESULT
IN ACTUAL TAKING ON NOVEMBER 21, 1989;
(3) TO PAY THE JUST COMPENSATION AS OF NOVEMBER 21,
1989 OR 22 YEARS BACK WOULD BE ARBITRARY, UNJUST,
AND OPPRESSIVE, CONSIDERING THE IMPROVEMENTS,
EXPENSES IN THE MAINTENANCE AND PRESERVATION OF
THE LAND, AND RISE IN LAND PRICES OR VALUE OF THE
PROPERTY.

On the other hand, PARC and DAR, through the Office of the Solicitor
General (OSG), raise the following issues in their Motion for Partial
Reconsideration dated July 20, 2011:
THE DOCTRINE OF OPERATIVE FACT DOES NOT APPLY TO
THIS CASE FOR THE FOLLOWING REASONS:
I

THERE IS NO LAW OR RULE WHICH HAS BEEN INVALIDATED

ON THE GROUND OF UNCONSTITUTIONALITY; AND
II
THIS DOCTRINE IS A RULE OF EQUITY WHICH MAY BE
APPLIED ONLY IN THE ABSENCE OF A LAW. IN THIS CASE,
THERE IS A POSITIVE LAW WHICH MANDATES THE
DISTRIBUTION OF THE LAND AS A RESULT OF THE
REVOCATION OF THE STOCK DISTRIBUTION PLAN (SDP).

For its part, AMBALA poses the following issues in its Motion for
Reconsideration dated July 19, 2011:

I
THE MAJORITY OF THE MEMBERS OF THE HONORABLE
COURT, WITH DUE RESPECT, ERRED IN HOLDING THAT
SECTION 31 OF REPUBLIC ACT 6657 (RA 6657) IS
CONSTITUTIONAL.
II
THE MAJORITY OF THE MEMBERS OF THE HONORABLE
COURT, WITH DUE RESPECT, ERRED IN HOLDING THAT ONLY
THE [PARCS] APPROVAL OF HLIs PROPOSAL FOR STOCK
DISTRIBUTION UNDER CARP AND THE [SDP] WERE REVOKED
AND NOT THE STOCK DISTRIBUTION OPTION AGREEMENT
(SDOA).
III
THE MAJORITY OF THE MEMBERS OF THE HONORABLE
COURT, WITH DUE RESPECT, ERRED IN APPLYING THE
DOCTRINE OF OPERATIVE FACTS AND IN MAKING THE
[FWBs] CHOOSE TO OPT FOR ACTUAL LAND DISTRIBUTION
OR TO REMAIN AS STOCKHOLDERS OF [HLI].
IV
THE MAJORITY OF THE MEMBERS OF THE HONORABLE
COURT, WITH DUE RESPECT, ERRED IN HOLDING THAT

IMPROVING THE ECONOMIC STATUS OF FWBs IS NOT AMONG

THE LEGAL OBLIGATIONS OF HLI UNDER THE SDP AND AN
IMPERATIVE IMPOSITION BY [RA 6657] AND DEPARTMENT OF
AGRARIAN REFORM ADMINISTRATIVE ORDER NO. 10 (DAO
10).
V
THE HONORABLE COURT, WITH DUE RESPECT, ERRED IN
HOLDING THAT THE CONVERSION OF THE AGRICULTURAL
LANDS DID NOT VIOLATE THE CONDITIONS OF RA 6657 AND
DAO 10.
VI
THE HONORABLE COURT, WITH DUE RESPECT, ERRED IN
HOLDING THAT PETITIONER IS ENTITLED TO PAYMENT OF
JUST COMPENSATION. SHOULD THE HONORABLE COURT
AFFIRM THE ENTITLEMENT OF THE PETITIONER TO JUST

COMPENSATION, THE SAME SHOULD BE PEGGED TO FORTY

THOUSAND PESOS (PhP 40,000.00) PER HECTARE.
VII
THE HONORABLE COURT, WITH DUE RESPECT, ERRED IN
HOLDING THAT LUISITA INDUSTRIAL PARK CORP. (LIPCO)
AND RIZAL COMMERCIAL BANKING CORPORATION (RCBC)
ARE INNOCENT PURCHASERS FOR VALUE.

In its Motion for Reconsideration dated July 21, 2011, FARM similarly puts
forth the following issues:
I
THE HONORABLE SUPREME COURT SHOULD HAVE STRUCK
DOWN
SECTION
31
OF
[RA 6657]
FOR
BEING
UNCONSTITUTIONAL. THE CONSTITUTIONALITY ISSUE THAT
WAS RAISED BY THE RESPONDENTS-INTERVENORS IS
THE LIS MOTA OF THE CASE.
II

THE HONORABLE SUPREME COURT SHOULD NOT HAVE

APPLIED THE DOCTRINE OF OPERATIVE FACT TO THE
CASE. THE OPTION GIVEN TO THE FARMERS TO REMAIN AS
STOCKHOLDERS OF HACIENDA LUISITA IS EQUIVALENT TO
AN OPTION FOR HACIENDA LUISITA TO RETAIN LAND IN
DIRECT VIOLATION OF THE COMPREHENSIVE AGRARIAN
REFORM LAW. THE DECEPTIVE STOCK DISTRIBUTION
OPTION / STOCK DISTRIBUTION PLAN CANNOT JUSTIFY SUCH
RESULT, ESPECIALLY AFTER THE SUPREME COURT HAS
AFFIRMED ITS REVOCATION.
III
THE HONORABLE SUPREME COURT SHOULD NOT HAVE
CONSIDERED
[LIPCO]
AND [RCBC]
AS INNOCENT
PURCHASERS FOR VALUE IN THE INSTANT CASE.

Mallari, et al., on the other hand, advance the following grounds in support
of their Motion for Reconsideration dated July 21, 2011:
(1) THE HOMELOTS REQUIRED TO BE DISTRIBUTED HAVE ALL
BEEN DISTRIBUTED PURSUANT TO THE MEMORANDUM OF

AGREEMENT. WHAT REMAINS MERELY IS THE RELEASE OF

TITLE FROM THE REGISTER OF DEEDS.
(2) THERE HAS BEEN NO DILUTION OF SHARES. CORPORATE
RECORDS WOULD SHOW THAT IF EVER NOT ALL OF THE
18,804.32 SHARES WERE GIVEN TO THE ACTUAL ORIGINAL
FARMWORKER BENEFICIARY, THE RECIPIENT OF THE
DIFFERENCE IS THE NEXT OF KIN OR CHILDREN OF SAID
ORIGINAL [FWBs]. HENCE, WE RESPECTFULLY SUBMIT THAT
SINCE THE SHARES WERE GIVEN TO THE SAME FAMILY
BENEFICIARY, THIS SHOULD BE DEEMED AS SUBSTANTIAL
COMPLIANCE WITH THE PROVISIONS OF SECTION 4 OF DAO
10.
(3) THERE HAS BEEN NO VIOLATION OF THE 3-MONTH PERIOD
TO IMPLEMENT THE [SDP] AS PROVIDED FOR BY SECTION 11
OF DAO 10 AS THIS PROVISION MUST BE READ IN LIGHT OF
SECTION 10 OF EXECUTIVE ORDER NO. 229, THE PERTINENT
PORTION OF WHICH READS, THE APPROVAL BY THE PARC

OF A PLAN FOR SUCH STOCK DISTRIBUTION, AND ITS INITIAL

IMPLEMENTATION, SHALL BE DEEMED COMPLIANCE WITH
THE LAND DISTRIBUTION REQUIREMENT OF THE CARP.
(4) THE VALUATION OF THE LAND CANNOT BE BASED AS OF
NOVEMBER 21, 1989, THE DATE OF APPROVAL OF THE STOCK
DISTRIBUTION OPTION. INSTEAD, WE RESPECTFULLY SUBMIT
THAT THE TIME OF TAKING FOR VALUATION PURPOSES IS
A FACTUAL ISSUE BEST LEFT FOR THE TRIAL COURTS TO
DECIDE.
(5) TO THOSE WHO WILL CHOOSE LAND, THEY MUST RETURN
WHAT WAS GIVEN TO THEM UNDER THE SDP. IT WOULD BE
UNFAIR IF THEY ARE ALLOWED TO GET THE LAND AND AT
THE SAME TIME HOLD ON TO THE BENEFITS THEY RECEIVED
PURSUANT TO THE SDP IN THE SAME WAY AS THOSE WHO
WILL CHOOSE TO STAY WITH THE SDO.

Lastly, Rene Galang and AMBALA, through the Public Interest Law Center
(PILC), submit the following grounds in support of their Motion for
Reconsideration dated July 22, 2011:
I
THE HONORABLE COURT, WITH DUE RESPECT, GRAVELY
ERRED IN ORDERING THE HOLDING OF A VOTING OPTION

INSTEAD OF TOTALLY REDISTRIBUTING

LANDS TO [FWBs] in [HLI].

THE SUBJECT

A. THE HOLDING OF A VOTING OPTION HAS NO LEGAL BASIS.

THE REVOCATION OF THE [SDP] CARRIES WITH IT THE
REVOCATION OF THE [SDOA].
B. GIVING THE [FWBs] THE OPTION TO REMAIN AS
STOCKHOLDERS OF HLI WITHOUT MAKING THE NECESSARY
CHANGES IN THE CORPORATE STRUCTURE WOULD ONLY
SUBJECT THEM TO FURTHER MANIPULATION AND
HARDSHIP.

C. OTHER VIOLATIONS COMMITTED BY HLI UNDER THE

[SDOA] AND PERTINENT LAWS JUSTIFY TOTAL LAND
REDISTRIBUTION OF HACIENDA LUISITA.
II
THE HONORABLE COURT, WITH DUE RESPECT, GRAVELY
ERRED IN HOLDING THAT THE [RCBC] AND [LIPCO] ARE
INNOCENT PURCHASERS FOR VALUE OF THE 300-HECTARE
PROPERTY IN HACIENDA LUISITA THAT WAS SOLD TO THEM
PRIOR TO THE INCEPTION OF THE PRESENT CONTROVERSY.

Ultimately, the issues for Our consideration are the following: (1)
applicability of the operative fact doctrine; (2) constitutionality of Sec. 31 of RA
6657 or theComprehensive Agrarian Reform Law of 1988 ; (3) coverage of
compulsory acquisition; (4) just compensation; (5) sale to third parties; (6) the
violations of HLI; and (7) control over agricultural lands.
We shall discuss these issues accordingly.
I.

Applicability of the Operative Fact Doctrine

In their motion for partial reconsideration, DAR and PARC argue that the
doctrine of operative fact does not apply to the instant case since: (1) there is no
law or rule which has been invalidated on the ground of unconstitutionality;[4] (2)
the doctrine of operative fact is a rule of equity which may be applied only in the
absence of a law, and in this case, they maintain that there is a positive law which
mandates the distribution of the land as a result of the revocation of the stock
distribution plan (SDP).[5]

Echoing the stance of DAR and PARC, AMBALA submits that the
operative fact doctrine should only be made to apply in the extreme case in which
equity demands it, which allegedly is not in the instant case.[6] It further argues that
there would be no undue harshness or injury to HLI in case lands are actually
distributed to the farmworkers, and that the decision which orders the farmworkers
to choose whether to remain as stockholders of HLI or to opt for land distribution

would result in inequity and prejudice to the farmworkers.[7] The foregoing views
are also similarly shared by Rene Galang and AMBALA, through the PILC. [8] In
addition, FARM posits that the option given to the FWBs is equivalent to an option
for HLI to retain land in direct violation of RA 6657.[9]
(a) Operative Fact Doctrine Not Limited to
Invalid or Unconstitutional Laws

Contrary to the stance of respondents, the operative fact doctrine does not
only apply to laws subsequently declared unconstitutional or unlawful, as it also
applies to executive acts subsequently declared as invalid. As We have discussed
in Our July 5, 2011 Decision:
That the operative fact doctrine squarely applies to executive
actsin this case, the approval by PARC of the HLI proposal for stock
distributionis well-settled in our jurisprudence. In Chavez v. National
Housing Authority, We held:
Petitioner postulates that the operative fact
doctrine is inapplicable to the present case because it is an
equitable doctrine which could not be used to countenance
an inequitable result that is contrary to its proper office.
On the other hand, the petitioner Solicitor General
argues that the existence of the various agreements
implementing the SMDRP is an operative fact that can no
longer be disturbed or simply ignored, citing Rieta v.
People of the Philippines.
The argument
meritorious.

of

the

Solicitor

General

is

The operative fact doctrine is embodied in De

Agbayani v. Court of Appeals, wherein it is stated that a
legislative or executive act, prior to its being declared as

unconstitutional by the courts, is valid and must be

complied with, thus:

xxx

xxx

xxx

This doctrine was reiterated in the more recent case

of City of Makati v. Civil Service Commission, wherein we
ruled that:
Moreover, we certainly cannot nullify the City
Government's order of suspension, as we have no reason to
do so, much less retroactively apply such nullification to
deprive private respondent of a compelling and valid reason
for not filing the leave application. For as we have held, a
void act though in law a mere scrap of paper
nonetheless confers legitimacy upon past acts or
omissions done in reliance thereof. Consequently, the
existence of a statute or executive order prior to its being
adjudged void is an operative fact to which legal
consequences are attached. It would indeed be ghastly
unfair to prevent private respondent from relying upon the
order of suspension in lieu of a formal leave application.
The applicability of the operative fact doctrine to executive acts
was further explicated by this Court in Rieta v. People, thus:
Petitioner contends that his arrest by virtue of Arrest
Search and Seizure Order (ASSO) No. 4754 was invalid, as
the law upon which it was predicated General Order No.
60, issued by then President Ferdinand E. Marcos was
subsequently declared by the Court, in Taada v. Tuvera,
33 to have no force and effect. Thus, he asserts, any
evidence obtained pursuant thereto is inadmissible in
evidence.
We do not agree. In Taada, the Court addressed the
possible effects of its declaration of the invalidity of
various presidential issuances. Discussing therein how such
a declaration might affect acts done on a presumption of
their validity, the Court said:
. . .. In similar situations in the past
this Court had taken the pragmatic and

realistic course set forth in Chicot County

Drainage District vs. Baxter Bank to wit:
The courts below have proceeded on
the theory that the Act of Congress, having
been found to be unconstitutional, was not a
law; that it was inoperative, conferring no
rights and imposing no duties, and hence
affording no basis for the challenged decree. .
. . It is quite clear, however, that such broad
statements as to the effect of a determination
of unconstitutionality must be taken with
qualifications. The actual existence of a
statute, prior to [the determination of its
invalidity], 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 conduct, private and
official. Questions of rights claimed to have
become vested, of status, of prior
determinations deemed to have finality and
acted upon accordingly, of public policy in the
light of the nature both of the statute and of its
previous application, demand examination.
These questions are among the most difficult
of those which have engaged the attention of
courts, state and federal, and it is manifest
from numerous decisions that an all-inclusive
statement of a principle of absolute retroactive
invalidity cannot be justified.
xxx

xxx

xxx

Similarly,
the
implementation/
enforcement of presidential decrees prior to
their publication in the Official Gazette is an
operative fact which may have consequences
which cannot be justly ignored. The past

cannot always be erased by a new judicial

declaration . . .
that an all-inclusive statement
of a principle of absolute retroactive invalidity
cannot be justified.

The Chicot doctrine cited in Taada advocates that,

prior to the nullification of a statute, there is an imperative
necessity of taking into account its actual existence as an
operative fact negating the acceptance of a principle of
absolute retroactive invalidity. Whatever was done while
the legislative or the executive act was in operation should
be duly recognized and presumed to be valid in all
respects. The ASSO that was issued in 1979 under
General Order No. 60 long before our Decision
in Taada and the arrest of petitioner is an operative
fact that can no longer be disturbed or simply
ignored. (Citations omitted; emphasis in the original.)

Bearing in mind that PARC Resolution No. 89-12-2[10]an executive act

was declared invalid in the instant case, the operative fact doctrine is clearly
applicable.
Nonetheless, the minority is of the persistent view that the applicability of
the operative fact doctrine should be limited to statutes and rules and regulations
issued by the executive department that are accorded the same status as that of a
statute or those which are quasi-legislative in nature. Thus, the minority concludes
that the phrase executive act used in the case of De Agbayani v. Philippine
National Bank[11] refers only to acts, orders, and rules and regulations that have the
force and effect of law. The minority also made mention of the Concurring
Opinion of Justice Enrique Fernando in Municipality of Malabang v.
Benito,[12] where it was supposedly made explicit that the operative fact doctrine
applies to executive acts, which are ultimately quasi-legislative in nature.
We
disagree. For
one, neither the De Agbayani case
nor
the Municipality of Malabang case elaborates what executive act mean.
Moreover, while orders, rules and regulations issued by the President or the

executive branch have fixed definitions and meaning in the Administrative Code
and jurisprudence, the phrase executive act does not have such specific
definition under existing laws. It should be noted that in the cases cited by the
minority, nowhere can it be found that the term executive act is confined to the
foregoing. Contrarily, the term executive act is broad enough to encompass
decisions of administrative bodies and agencies under the executive department
which are subsequently revoked by the agency in question or nullified by the

Court.
A case in point is the concurrent appointment of Magdangal B. Elma (Elma)
as Chairman of the Presidential Commission on Good Government (PCGG) and as
Chief Presidential Legal Counsel (CPLC) which was declared unconstitutional by
this Court in Public Interest Center, Inc. v. Elma.[13] In said case, this Court ruled
that the concurrent appointment of Elma to these offices is in violation of Section
7, par. 2, Article IX-B of the 1987 Constitution, since these are incompatible
offices. Notably, the appointment of Elma as Chairman of the PCGG and as CPLC
is, without a question, an executive act. Prior to the declaration of
unconstitutionality of the said executive act, certain acts or transactions were made
in good faith and in reliance of the appointment of Elma which cannot just be set
aside or invalidated by its subsequent invalidation.
In Tan v. Barrios,[14] this Court, in applying the operative fact doctrine, held
that despite the invalidity of the jurisdiction of the military courts over civilians,
certain operative facts must be acknowledged to have existed so as not to trample
upon the rights of the accused therein. Relevant thereto, in Olaguer v. Military
Commission No. 34,[15] it was ruled that military tribunals pertain to the
Executive Department of the Government and are simply instrumentalities of the
executive power, provided by the legislature for the President as Commander-inChief to aid him in properly commanding the army and navy and enforcing
discipline therein, and utilized under his orders or those of his authorized military
representatives.[16]
Evidently, the operative fact doctrine is not confined to statutes and rules
and regulations issued by the executive department that are accorded the same
status as that of a statute or those which are quasi-legislative in nature.

Even assuming that De Agbayani initially applied the operative fact doctrine
only to executive issuances like orders and rules and regulations, said principle can
nonetheless be applied, by analogy, to decisions made by the President or the
agencies under the executive department. This doctrine, in the interest of justice
and equity, can be applied liberally and in a broad sense to encompass said
decisions of the executive branch. In keeping with the demands of equity, the
Court can apply the operative fact doctrine to acts and consequences that resulted
from the reliance not only on a law or executive act which is quasi-legislative in
nature but also on decisions or orders of the executive branch which were later
nullified. This Court is not unmindful that such acts and consequences must be

recognized in the higher interest of justice, equity and fairness.

Significantly, a decision made by the President or the administrative
agencies has to be complied with because it has the force and effect of law,
springing from the powers of the President under the Constitution and existing
laws. Prior to the nullification or recall of said decision, it may have produced acts
and consequences in conformity to and in reliance of said decision, which must be
respected. It is on this score that the operative fact doctrine should be applied to
acts and consequences that resulted from the implementation of the PARC
Resolution approving the SDP of HLI.
More importantly, respondents, and even the minority, failed to clearly
explain how the option to remain in HLI granted to individual farmers would result
in inequity and prejudice. We can only surmise that respondents misinterpreted the
option as a referendum where all the FWBs will be bound by a majority vote
favoring the retention of all the 6,296 FWBs as HLI stockholders. Respondents are
definitely mistaken. The fallo of Our July 5, 2011 Decision is unequivocal that
only those FWBs who signified their desire to remain as HLI stockholders are
entitled to 18,804.32 shares each, while those who opted not to remain as HLI
stockholders will be given land by DAR. Thus, referendum was not required but
only individual options were granted to each FWB whether or not they will remain
in HLI.
The application of the operative fact doctrine to the FWBs is not iniquitous
and prejudicial to their interests but is actually beneficial and fair to them. First,

they are granted the right to remain in HLI as stockholders and they acquired said
shares without paying their value to the corporation. On the other hand, the
qualified FWBs are required to pay the value of the land to the Land Bank of the
Philippines (LBP) if land is awarded to them by DAR pursuant to RA 6657. If the
qualified FWBs really want agricultural land, then they can simply say no to the
option. And second, if the operative fact doctrine is not applied to them, then the
FWBs will be required to return to HLI the 3% production share, the 3% share in
the proceeds of the sale of the 500-hectare converted land, and the 80.51hectare Subic-Clark-Tarlac Expressway (SCTEX) lot, the homelots and other
benefits received by the FWBs from HLI. With the application of the operative fact
doctrine, said benefits, homelots and the 3% production share and 3% share from
the sale of the 500-hectare and SCTEX lots shall be respected with no obligation to
refund or return them. The receipt of these things is an operative fact that can no

longer be disturbed or simply ignored.

(b)

The Operative Fact Doctrine as Recourse in Equity

As mentioned above, respondents contend that the operative fact doctrine is

a rule of equity which may be applied only in the absence of a law, and that in the
instant case, there is a positive law which mandates the distribution of the land as a
result of the revocation of the SDP.
Undeniably, the operative fact doctrine is a rule of equity.[17] As a
complement of legal jurisdiction, equity seeks to reach and complete justice
where courts of law, through the inflexibility of their rules and want of power to
adapt their judgments to the special circumstances of cases, are incompetent to do
so. Equity regards the spirit and not the letter, the intent and not the form, the
substance rather than the circumstance, as it is variously expressed by different
courts.[18] Remarkably, it is applied only in the absence of statutory law and never
in contravention of said law.[19]
In the instant case, respondents argue that the operative fact doctrine should
not be applied since there is a positive law, particularly, Sec. 31 of RA 6657, which

directs the distribution of the land as a result of the revocation of the SDP.
Pertinently, the last paragraph of Sec. 31 of RA 6657 states:
If within two (2) years from the approval of this Act, the land or
stock transfer envisioned above is not made or realized or the plan for
such stock distribution approved by the PARC within the same period,
the agricultural land of the corporate owners or corporation shall be
subject to the compulsory coverage of this Act. (Emphasis supplied.)

Markedly, the use of the word or under the last paragraph of Sec. 31 of
RA 6657 connotes that the law gives the corporate landowner an option to avail
of the stock distribution option or to have the SDP approved within two (2) years
from the approval of RA 6657. This interpretation is consistent with the wellestablished principle in statutory construction that [t]he word or is a disjunctive
term signifying disassociation and independence of one thing from the other things
enumerated; it should, as a rule, be construed in the sense in which it ordinarily
implies, as a disjunctive word.[20] In PCI Leasing and Finance, Inc. v. Giraffe-X
Creative Imaging, Inc.,[21] this Court held:

Evidently, the letter did not make a demand for the payment of the
P8,248,657.47 AND the return of the equipment; only either one of the
two was required. The demand letter was prepared and signed by Atty.
Florecita R. Gonzales, presumably petitioners counsel. As such, the use
of or instead of and in the letter could hardly be treated as a simple
typographical error, bearing in mind the nature of the demand, the
amount involved, and the fact that it was made by a lawyer. Certainly
Atty. Gonzales would have known that a world of difference exists
between and and or in the manner that the word was employed in
the letter.
A rule in statutory construction is that the word or
is a disjunctive term signifying dissociation and
independence of one thing from other things enumerated
unless the context requires a different interpretation.[22]
In its elementary sense, or, as used in a statute,
is a disjunctive article indicating an alternative. It often
connects a series of words or propositions indicating a

choice of either. When or

members of the enumeration
separately.[23]

is used,
are to

the various
be taken

The word or is a disjunctive term signifying

disassociation and independence of one thing from each of
the other things enumerated.[24] (Emphasis in the original.)

Given that HLI secured approval of its SDP in November 1989, well within
the two-year period reckoned from June 1988 when RA 6657 took effect, then HLI
did not violate the last paragraph of Sec. 31 of RA 6657. Pertinently, said provision
does not bar Us from applying the operative fact doctrine.
Besides, it should be recognized that this Court, in its July 5, 2011 Decision,
affirmed the revocation of Resolution No. 89-12-2 and ruled for the compulsory
coverage of the agricultural lands of Hacienda Luisita in view of HLIs violation of
the SDP and DAO 10. By applying the operative fact doctrine, this Court merely
gave the qualified FWBs the option to remain as stockholders of HLI and ruled
that they will retain the homelots and other benefits which they received from HLI
by virtue of the SDP.
It bears stressing that the application of the operative fact doctrine by the
Court in its July 5, 2011 Decision is favorable to the FWBs because not only were

the FWBs allowed to retain the benefits and homelots they received under the
stock distribution scheme, they were also given the option to choose for themselves
whether they want to remain as stockholders of HLI or not. This is in recognition
of the fact that despite the claims of certain farmer groups that they represent the
qualified FWBs in Hacienda Luisita, none of them can show that they are duly
authorized to speak on their behalf. As We have mentioned, To date, such
authorization document, which would logically include a list of the names of the
authorizing FWBs, has yet to be submitted to be part of the records.
II.

Constitutionality of Sec. 31, RA 6657

FARM insists that the issue of constitutionality of Sec. 31 of RA 6657 is

the lis mota of the case, raised at the earliest opportunity, and not to be considered
as moot and academic.[25]
This contention is unmeritorious. As We have succinctly discussed in Our
July 5, 2011 Decision:
While there is indeed an actual case or controversy, intervenor
FARM, composed of a small minority of 27 farmers, has yet to explain
its failure to challenge the constitutionality of Sec. 3l of RA 6657, since
as early as November 21, l989 when PARC approved the SDP of
Hacienda Luisita or at least within a reasonable time thereafter and why
its members received benefits from the SDP without so much of a
protest. It was only on December 4, 2003 or 14 years after approval of
the SDP via PARC Resolution No. 89-12-2 dated November 21, 1989
that said plan and approving resolution were sought to be revoked, but
not, to stress, by FARM or any of its members, but by petitioner
AMBALA. Furthermore, the AMBALA petition did NOT question the
constitutionality of Sec. 31 of RA 6657, but concentrated on the
purported flaws and gaps in the subsequent implementation of the SDP.
Even the public respondents, as represented by the Solicitor General, did
not question the constitutionality of the provision. On the other hand,
FARM, whose 27 members formerly belonged to AMBALA, raised the
constitutionality of Sec. 31 only on May 3, 2007 when it filed its
Supplemental Comment with the Court. Thus, it took FARM some
eighteen (18) years from November 21, 1989 before it challenged the
constitutionality of Sec. 31 of RA 6657 which is quite too late in the
day. The FARM members slept on their rights and even accepted
benefits from the SDP with nary a complaint on the alleged
unconstitutionality of Sec. 31 upon which the benefits were
derived. The Court cannot now be goaded into resolving a constitutional
issue that FARM failed to assail after the lapse of a long period of time

and the occurrence of numerous events and activities which resulted

from the application of an alleged unconstitutional legal provision.
It has been emphasized in a number of cases that the question of
constitutionality will not be passed upon by the Court unless it is
properly raised and presented in an appropriate case at the first
opportunity. FARM is, therefore, remiss in belatedly questioning the
constitutionality of Sec. 31 of RA 6657. The second requirement that

the constitutional question should be raised at the earliest possible

opportunity is clearly wanting.
The last but the most important requisite that the constitutional
issue must be the very lis mota of the case does not likewise obtain.
The lis mota aspect is not present, the constitutional issue tendered not
being critical to the resolution of the case. The unyielding rule has been
to avoid, whenever plausible, an issue assailing the constitutionality of a
statute or governmental act. If some other grounds exist by which
judgment can be made without touching the constitutionality of a law,
such recourse is favored. Garcia v. Executive Secretary explains why:
Lis Mota the fourth requirement to satisfy before
this Court will undertake judicial review means that the
Court will not pass upon a question of unconstitutionality,
although properly presented, if the case can be disposed of
on some other ground, such as the application of the statute
or the general law. The petitioner must be able to show that
the case cannot be legally resolved unless the constitutional
question raised is determined. This requirement is based on
the rule that every law has in its favor the presumption of
constitutionality; to justify its nullification, there must be a
clear and unequivocal breach of the Constitution, and not
one that is doubtful, speculative, or argumentative.
The lis mota in this case, proceeding from the basic positions
originally taken by AMBALA (to which the FARM members previously
belonged) and the Supervisory Group, is the alleged non-compliance by
HLI with the conditions of the SDP to support a plea for its revocation.
And before the Court, the lis mota is whether or not PARC acted in
grave abuse of discretion when it ordered the recall of the SDP for such
non-compliance and the fact that the SDP, as couched and implemented,
offends certain constitutional and statutory provisions. To be sure, any of
these key issues may be resolved without plunging into the
constitutionality of Sec. 31 of RA 6657. Moreover, looking deeply into
the underlying petitions of AMBALA, et al., it is not the said section per
se that is invalid, but rather it is the alleged application of the said
provision in the SDP that is flawed.

It may be well to note at this juncture that Sec. 5 of RA 9700,

amending Sec. 7 of RA 6657, has all but superseded Sec. 31 of RA 6657
vis--vis the stock distribution component of said Sec. 31. In its pertinent

part, Sec. 5 of RA 9700 provides: [T]hat after June 30, 2009, the
modes of acquisition shall be limited to voluntary offer to sell and
compulsory acquisition. Thus, for all intents and purposes, the stock
distribution scheme under Sec. 31 of RA 6657 is no longer an available
option under existing law. The question of whether or not it is
unconstitutional should be a moot issue. (Citations omitted; emphasis in
the original.)

Based on the foregoing disquisitions, We maintain that this Court is NOT

compelled to rule on the constitutionality of Sec. 31 of RA 6657. In this regard,
We clarify that this Court, in its July 5, 2011 Decision, made no ruling in favor of
the constitutionality of Sec. 31 of RA 6657. There was, however, a determination
of the existence of an apparent grave violation of the Constitution that may justify
the resolution of the issue of constitutionality, to which this Court ruled in the
negative. Having clarified this matter, all other points raised by both FARM and
AMBALA concerning the constitutionality of RA 6657 deserve scant
consideration.

III.

Coverage of Compulsory Acquisition

FARM argues that this Court ignored certain material facts when it limited
the maximum area to be covered to 4,915.75 hectares, whereas the area that
should, at the least, be covered is 6,443 hectares,[26] which is the agricultural land
allegedly covered by RA 6657 and previously held by Tarlac Development
Corporation (Tadeco).[27]
We cannot subscribe to this view. Since what is put in issue before the Court
is the propriety of the revocation of the SDP, which only involves 4,915.75 has. of
agricultural land and not 6,443 has., then We are constrained to rule only as
regards the 4,915.75 has. of agricultural land.
Moreover, as admitted by FARM itself, this issue was raised for the first
time by FARM in its Memorandum dated September 24, 2010 filed before this

Court.[28] In this regard, it should be noted that [a]s a legal recourse, the special
civil action of certiorari is a limited form of review.[29] The certiorari jurisdiction
of this Court is narrow in scope as it is restricted to resolving errors of jurisdiction
and grave abuse of discretion, and not errors of judgment.[30] To allow additional
issues at this stage of the proceedings is violative of fair play, justice and due
process.[31]
Nonetheless, it should be taken into account that this should not prevent the
DAR, under its mandate under the agrarian reform law, from subsequently
subjecting to agrarian reform other agricultural lands originally held by Tadeco
that were allegedly not transferred to HLI but were supposedly covered by RA
6657.
DAR, however, contends that the declaration of the area[32] to be awarded to
each FWB is too restrictive. It stresses that in agricultural landholdings like
Hacienda Luisita, there are roads, irrigation canals, and other portions of the land
that are considered commonly-owned by farmworkers, and this may necessarily
result in the decrease of the area size that may be awarded per FWB. [33] DAR also
argues that the July 5, 2011 Decision of this Court does not give it any leeway in
adjusting the area that may be awarded per FWB in case the number of actual
qualified FWBs decreases.[34]
The argument is meritorious. In order to ensure the proper distribution of the
agricultural lands of Hacienda Luisita per qualified FWB, and considering that
matters involving strictly the administrative implementation and enforcement of
agrarian reform laws are within the jurisdiction of the DAR,[35] it is the latter which
shall determine the area with which each qualified FWB will be awarded.
(a)

Conversion of Agricultural Lands

AMBALA insists that the conversion of the agricultural lands violated the
conditions of RA 6657 and DAO 10, stating that keeping the land intact and
unfragmented is one of the essential conditions of [the] SD[P], RA 6657 and DAO
10.[36] It asserts that this provision or conditionality is not mere decoration and is

intended to ensure that the farmers can continue with the tillage of the soil

especially since it is the only occupation that majority of them knows.[37]

We disagree. As We amply discussed in Our July 5, 2011 Decision:
Contrary to the almost parallel stance of the respondents, keeping
Hacienda Luisita unfragmented is also not among the imperative
impositions by the SDP, RA 6657, and DAO 10.
The Terminal Report states that the proposed distribution plan
submitted in 1989 to the PARC effectively assured the intended stock
beneficiaries that the physical integrity of the farm shall remain
inviolate. Accordingly, the Terminal Report and the PARC-assailed
resolution would take HLI to task for securing approval of the
conversion to non-agricultural uses of 500 hectares of the hacienda. In
not too many words, the Report and the resolution view the conversion
as an infringement of Sec. 5(a) of DAO 10 which reads: a. that the
continued operation of the corporation with its agricultural land intact
and unfragmented is viable with potential for growth and increased
profitability.
The PARC is wrong.
In the first place, Sec. 5(a)just like the succeeding Sec. 5(b) of
DAO 10 on increased income and greater benefits to qualified
beneficiariesis but one of the stated criteria to guide PARC in deciding
on whether or not to accept an SDP. Said Sec. 5(a) does not exact from
the corporate landowner-applicant the undertaking to keep the farm
intact and unfragmented ad infinitum. And there is logic to HLIs stated
observation that the key phrase in the provision of Sec. 5(a) is viability
of corporate operations: [w]hat is thus required is not the agricultural
land remaining intact x x x but the viability of the corporate operations
with its agricultural land being intact and unfragmented. Corporate
operation may be viable even if the corporate agricultural land does not
remain intact or [un]fragmented.[38]
It is, of course, anti-climactic to mention that DAR viewed the
conversion as not violative of any issuance, let alone undermining the
viability of Hacienda Luisitas operation, as the DAR Secretary
approved the land conversion applied for and its disposition via his

Conversion Order dated August 14, 1996 pursuant to Sec. 65 of RA

6657 which reads:
Sec. 65. Conversion of Lands. After the lapse of
five years from its award when the land ceases to be
economically feasible and sound for agricultural purposes,
or the locality has become urbanized and the land will have

a greater economic value for residential, commercial or

industrial purposes, the DAR upon application of the
beneficiary or landowner with due notice to the affected
parties, and subject to existing laws, may authorize the x x
x conversion of the land and its dispositions. x x x

Moreover, it is worth noting that the application for conversion had the
backing of 5,000 or so FWBs, including respondents Rene Galang, and Jose Julio
Suniga, then leaders of the AMBALA and the Supervisory Group, respectively, as
evidenced by the Manifesto of Support they signed and which was submitted to the
DAR.[39] If at all, this means that AMBALA should be estopped from questioning
the conversion of a portion of Hacienda Luisita, which its leader has fully
supported.
(b)

LIPCO and RCBC as Innocent Purchasers for Value

The AMBALA, Rene Galang and the FARM are in accord that Rizal
Commercial Banking Corporation (RCBC) and Luisita Industrial Park Corporation
(LIPCO) are not innocent purchasers for value. The AMBALA, in particular,
argues that LIPCO, being a wholly-owned subsidiary of HLI, is conclusively
presumed to have knowledge of the agrarian dispute on the subject land and could
not feign ignorance of this fact, especially since they have the same directors and
stockholders.[40] This is seconded by Rene Galang and AMBALA, through the
PILC, which intimate that a look at the General Information Sheets of the
companies involved in the transfers of the 300-hectare portion of Hacienda Luisita,
specifically, Centennary Holdings, Inc. (Centennary), LIPCO and RCBC, would
readily reveal that their directors are interlocked and connected to Tadeco and
HLI.[41] Rene Galang and AMBALA, through the PILC, also allege that with the
clear-cut involvement of the leadership of all the corporations concerned, LIPCO

and RCBC cannot feign ignorance that the parcels of land they bought are under
the coverage of the comprehensive agrarian reform program [CARP] and that the
conditions of the respective sales are imbued with public interest where normal
property relations in the Civil Law sense do not apply.[42]
Avowing that the land subject of conversion still remains undeveloped, Rene
Galang and AMBALA, through the PILC, further insist that the condition that
[t]he development of the land should be completed within the period of five [5]
years from the issuance of this Order was not complied with. AMBALA also
argues that since RCBC and LIPCO merely stepped into the shoes of HLI, then

they must comply with the conditions imposed in the conversion order. [43]
In addition, FARM avers that among the conditions attached to the
conversion order, which RCBC and LIPCO necessarily have knowledge of, are (a)
that its approval shall in no way amend, diminish, or alter the undertaking and
obligations of HLI as contained in the [SDP] approved on November 21, 1989; and
(b) that the benefits, wages and the like, received by the FWBs shall not in any
way be reduced or adversely affected, among others.[44]
The contentions of respondents are wanting. In the first place, there is no
denying that RCBC and LIPCO knew that the converted lands they bought were
under the coverage of CARP. Nevertheless, as We have mentioned in Our July 5,
2011 Decision, this does not necessarily mean that both LIPCO and RCBC already
acted in bad faith in purchasing the converted lands. As this Court explained:
It cannot be claimed that RCBC and LIPCO acted in bad faith in
acquiring the lots that were previously covered by the SDP. Good faith
consists in the possessors belief that the person from whom he
received it was the owner of the same and could convey his title. Good
faith requires a well-founded belief that the person from whom title was
received was himself the owner of the land, with the right to convey
it. There is good faith where there is an honest intention to abstain from
taking any unconscientious advantage from another. It is the opposite
of fraud.

To be sure, intervenor RCBC and LIPCO knew that the lots

they bought were subjected to CARP coverage by means of a stock
distribution plan, as the DAR conversion order was annotated at the
back of the titles of the lots they acquired. However, they are of the
honest belief that the subject lots were validly converted to
commercial or industrial purposes and for which said lots were
taken out of the CARP coverage subject of PARC Resolution No. 8912-2 and, hence, can be legally and validly acquired by them. After
all, Sec. 65 of RA 6657 explicitly allows conversion and disposition of
agricultural lands previously covered by CARP land acquisition after
the lapse of five (5) years from its award when the land ceases to be
economically feasible and sound for agricultural purposes or the locality
has become urbanized and the land will have a greater economic value
for residential, commercial or industrial purposes. Moreover, DAR
notified all the affected parties, more particularly the FWBs, and gave
them the opportunity to comment or oppose the proposed
conversion. DAR, after going through the necessary processes, granted
the conversion of 500 hectares of Hacienda Luisita pursuant to its

primary jurisdiction under Sec. 50 of RA 6657 to determine and

adjudicate agrarian reform matters and its original exclusive jurisdiction
over all matters involving the implementation of agrarian reform. The
DAR conversion order became final and executory after none of the
FWBs interposed an appeal to the CA. In this factual setting, RCBC and
LIPCO purchased the lots in question on their honest and well-founded
belief that the previous registered owners could legally sell and convey
the lots though these were previously subject of CARP coverage. Ergo,
RCBC and LIPCO acted in good faith in acquiring the subject lots.
(Emphasis supplied.)

In the second place, the allegation that the converted lands remain
undeveloped is contradicted by the evidence on record, particularly, Annex X of
LIPCOs Memorandum dated September 23, 2010,[45] which has photographs
showing that the land has been partly developed.[46] Certainly, it is a general rule
that the factual findings of administrative agencies are conclusive and binding on
the Court when supported by substantial evidence.[47] However, this rule admits of
certain exceptions, one of which is when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on record. [48]

In the third place, by arguing that the companies involved in the transfers of
the 300-hectare portion of Hacienda Luisita have interlocking directors and, thus,
knowledge of one may already be imputed upon all the other companies,
AMBALA and Rene Galang, in effect, want this Court to pierce the veil of
corporate fiction. However, piercing the veil of corporate fiction is warranted only
in cases when the separate legal entity is used to defeat public convenience, justify
wrong, protect fraud, or defend crime, such that in the case of two corporations, the
law will regard the corporations as merged into one.[49] As succinctly discussed by
the Court in Velarde v. Lopez, Inc.:[50]
Petitioner argues nevertheless that jurisdiction over the subsidiary
is justified by piercing the veil of corporate fiction. Piercing the veil of
corporate fiction is warranted, however, only in cases when the separate
legal entity is used to defeat public convenience, justify wrong, protect
fraud, or defend crime, such that in the case of two corporations, the law
will regard the corporations as merged into one. The rationale behind
piercing a corporations identity is to remove the barrier between the
corporation from the persons comprising it to thwart the fraudulent and
illegal schemes of those who use the corporate personality as a shield for
undertaking certain proscribed activities.
In applying the doctrine of piercing the veil of corporate fiction,
the following requisites must be established: (1) control, not merely

majority or complete stock control; (2) such control must have been used
by the defendant to commit fraud or wrong, to perpetuate the violation of
a statutory or other positive legal duty, or dishonest acts in contravention
of plaintiffs legal rights; and (3) the aforesaid control and breach of duty
must proximately cause the injury or unjust loss complained
of. (Citations omitted.)
Nowhere, however, in the pleadings and other records of the case
can it be gathered that respondent has complete control over Sky Vision,
not only of finances but of policy and business practice in respect to
the transaction attacked, so that Sky Vision had at the time of the
transaction no separate mind, will or existence of its own. The existence
of interlocking directors, corporate officers and shareholders is not
enough justification to pierce the veil of corporate fiction in the absence
of fraud or other public policy considerations.

Absent any allegation or proof of fraud or other public policy considerations,

the existence of interlocking directors, officers and stockholders is not enough
justification to pierce the veil of corporate fiction as in the instant case.
And in the fourth place, the fact that this Court, in its July 5, 2011 Decision,
ordered the payment of the proceeds of the sale of the converted land, and even of
the 80.51-hectare land sold to the government, through the Bases Conversion
Development Authority, to the qualified FWBs, effectively fulfils the conditions in
the conversion order, to wit: (1) that its approval shall in no way amend, diminish,
or alter the undertaking and obligations of HLI as contained in the SDP approved
on November 21, 1989; and (2) that the benefits, wages and the like, received by
the FWBs shall not in any way be reduced or adversely affected, among others.
A view has also been advanced that the 200-hectare lot transferred to Luisita
Realty Corporation (LRC) should be included in the compulsory coverage because
the corporation did not intervene.
We disagree. Since the 200-hectare lot formed part of the SDP that was
nullified by PARC Resolution 2005-32-01, this Court is constrained to make a
ruling on the rights of LRC over the said lot. Moreover, the 500-hectare portion of
Hacienda Luisita, of which the 200-hectare portion sold to LRC and the 300hectare portion subsequently acquired by LIPCO and RCBC were part of, was
already the subject of the August 14, 1996 DAR Conversion Order. By virtue of
the said conversion order, the land was already reclassified as
industrial/commercial land not subject to compulsory coverage. Thus, if We place
the 200-hectare lot sold to LRC under compulsory coverage, this Court would, in

effect, be disregarding the DAR Conversion Order, which has long attained its
finality. And as this Court held in Berboso v. CA,[51] Once final and executory, the
Conversion Order can no longer be questioned. Besides, to disregard the
Conversion Order through the revocation of the approval of the SDP would create
undue prejudice to LRC, which is not even a party to the proceedings below, and
would be tantamount to deprivation of property without due process of law.

Nonethess, the minority is of the adamant view that since LRC failed to
intervene in the instant case and was, therefore, unable to present evidence
supporting its good faith purchase of the 200-hectare converted land, then LRC
should be given full opportunity to present its case before the DAR. This minority
view is a contradiction in itself. Given that LRC did not intervene and is, therefore,
not a party to the instant case, then it would be incongruous to order them to
present evidence before the DAR. Such an order, if issued by this Court, would not
be binding upon the LRC.
Moreover, LRC may be considered to have waived its right to participate in
the instant petition since it did not intervene in the DAR proceedings for the
nullification of the PARC Resolution No. 89-12-2 which approved the SDP.
(c) Proceeds of the sale of the 500-hectare converted land
and of the 80.51-hectare land used for the SCTEX

As previously mentioned, We ruled in Our July 5, 2011 Decision that since

the Court excluded the 500-hectare lot subject of the August 14, 1996 Conversion
Order and the 80.51-hectare SCTEX lot acquired by the government from
compulsory coverage, then HLI and its subsidiary, Centennary, should be liable to
the FWBs for the price received for said lots. Thus:
There is a claim that, since the sale and transfer of the 500
hectares of land subject of the August 14, 1996 Conversion Order and
the 80.51-hectare SCTEX lot came after compulsory coverage has taken
place, the FWBs should have their corresponding share of the lands
value. There is merit in the claim. Since the SDP approved by PARC
Resolution No. 89-12-2 has been nullified, then all the lands subject of
the SDP will automatically be subject of compulsory coverage under
Sec. 31 of RA 6657. Since the Court excluded the 500-hectare lot
subject of the August 14, 1996 Conversion Order and the 80.51-hectare
SCTEX lot acquired by the government from the area covered by SDP,
then HLI and its subsidiary, Centennary, shall be liable to the FWBs for
the price received for said lots. HLI shall be liable for the value received

for the sale of the 200-hectare land to LRC in the amount of PhP
500,000,000 and the equivalent value of the 12,000,000 shares of its

subsidiary, Centennary, for the 300-hectare lot sold to LIPCO for the
consideration of PhP 750,000,000. Likewise, HLI shall be liable for PhP
80,511,500 as consideration for the sale of the 80.51-hectare SCTEX lot.
We, however, note that HLI has allegedly paid 3% of the proceeds
of the sale of the 500-hectare land and 80.51-hectare SCTEX lot to the
FWBs. We also take into account the payment of taxes and expenses
relating to the transfer of the land and HLIs statement that most, if not
all, of the proceeds were used for legitimate corporate purposes. In order
to determine once and for all whether or not all the proceeds were
properly utilized by HLI and its subsidiary, Centennary, DAR will
engage the services of a reputable accounting firm to be approved by the
parties to audit the books of HLI to determine if the proceeds of the sale
of the 500-hectare land and the 80.51-hectare SCTEX lot were actually
used for legitimate corporate purposes, titling expenses and in
compliance with the August 14, 1996 Conversion Order. The cost of the
audit will be shouldered by HLI. If after such audit, it is determined that
there remains a balance from the proceeds of the sale, then the balance
shall be distributed to the qualified FWBs.

HLI, however, takes exception to the above-mentioned ruling and contends

that it is not proper to distribute the unspent or unused balance of the proceeds of
the sale of the 500-hectare converted land and 80.51-hectare SCTEX lot to the
qualified FWBs for the following reasons: (1) the proceeds of the sale belong to
the corporation, HLI, as corporate capital and assets in substitution for the portions
of its land asset which were sold to third parties; (2) to distribute the cash sales
proceeds of the portions of the land asset to the FWBs, who are stockholders of
HLI, is to dissolve the corporation and distribute the proceeds as liquidating
dividends without even paying the creditors of the corporation; and (3) the doing of
said acts would violate the stringent provisions of the Corporation Code and
corporate practice.[52]
Apparently, HLI seeks recourse to the Corporation Code in order to avoid its
liability to the FWBs for the price received for the 500-hectare converted lot and
the 80.51-hectare SCTEX lot. However, as We have established in Our July 5,
2011 Decision, the rights, obligations and remedies of the parties in the instant case
are primarily governed by RA 6657 and HLI cannot shield itself from the CARP
coverage merely under the convenience of being a corporate entity. In this regard,

it should be underscored that the agricultural lands held by HLI by virtue of the
SDP are no ordinary assets. These are special assets, because, originally, these
should have been distributed to the FWBs were it not for the approval of the SDP
by PARC. Thus, the government cannot renege on its responsibility over these
assets. Likewise, HLI is no ordinary corporation as it was formed and organized
precisely to make use of these agricultural lands actually intended for distribution
to the FWBs. Thus, it cannot shield itself from the coverage of CARP by invoking
the Corporation Code. As explained by the Court:
HLI also parlays the notion that the parties to the SDOA should
now look to the Corporation Code, instead of to RA 6657, in
determining their rights, obligations and remedies. The Code, it adds,
should be the applicable law on the disposition of the
agricultural land of HLI.
Contrary to the view of HLI, the rights, obligations and
remedies of the parties to the SDOA embodying the SDP are
primarily governed by RA 6657. It should abundantly be made clear
that HLI was precisely created in order to comply with RA 6657, which
the OSG aptly described as the mother law of the SDOA and the
SDP.[53] It is, thus, paradoxical for HLI to shield itself from the
coverage of CARP by invoking exclusive applicability of the
Corporation Code under the guise of being a corporate entity.
Without in any way minimizing the relevance of the
Corporation Code since the FWBs of HLI are also stockholders, its
applicability is limited as the rights of the parties arising from the
SDP should not be made to supplant or circumvent the agrarian
reform program.
Without doubt, the Corporation Code is the general law providing
for the formation, organization and regulation of private corporations.
On the other hand, RA 6657 is the special law on agrarian reform. As
between a general and special law, the latter shall prevailgeneralia
specialibus non derogant.[54] Besides, the present impasse between HLI
and the private respondents is not an intra-corporate dispute which
necessitates the application of the Corporation Code. What private
respondents questioned before the DAR is the proper implementation of
the SDP and HLIs compliance with RA 6657. Evidently, RA 6657
should be the applicable law to the instant case. (Emphasis supplied.)

Considering that the 500-hectare converted land, as well as the 80.51-hectare

SCTEX lot, should have been included in the compulsory coverage were it not for

their conversion and valid transfers, then it is only but proper that the price
received for the sale of these lots should be given to the qualified FWBs. In effect,
the proceeds from the sale shall take the place of the lots.
The Court, in its July 5, 2011 Decision, however, takes into account, inter
alia, the payment of taxes and expenses relating to the transfer of the land, as well
as HLIs statement that most, if not all, of the proceeds were used for legitimate
corporate purposes. Accordingly, We ordered the deduction of the taxes and
expenses relating to the transfer of titles to the transferees, and the expenditures
incurred by HLI and Centennary for legitimate corporate purposes, among others.
On this note, DAR claims that the [l]egitimate corporate expenses should
not be deducted as there is no basis for it, especially since only the auditing to be
conducted on the financial records of HLI will reveal the amounts to be offset
between HLI and the FWBs.[55]
The contention is unmeritorious. The possibility of an offsetting should not
prevent Us from deducting the legitimate corporate expenses incurred by HLI and
Centennary. After all, the Court has ordered for a proper auditing [i]n order to
determine once and for all whether or not all the proceeds were properly utilized
by HLI and its subsidiary, Centennary. In this regard, DAR is tasked to engage
the services of a reputable accounting firm to be approved by the parties to audit
the books of HLI to determine if the proceeds of the sale of the 500-hectare land
and the 80.51-hectare SCTEX lot were actually used for legitimate corporate
purposes, titling expenses and in compliance with the August 14, 1996 Conversion
Order. Also, it should be noted that it is HLI which shall shoulder the cost of audit
to reduce the burden on the part of the FWBs. Concomitantly, the legitimate
corporate expenses incurred by HLI and Centennary, as will be determined by a
reputable accounting firm to be engaged by DAR, shall be among the allowable
deductions from the proceeds of the sale of the 500-hectare land and the 80.51hectare SCTEX lot.

We, however, find that the 3% production share should not be deducted
from the proceeds of the sale of the 500-hectare converted land and the 80.51hectare SCTEX lot. The 3% production share, like the homelots, was among the
benefits received by the FWBs as farmhands in the agricultural enterprise of HLI
and, thus, should not be taken away from the FWBs.
Contrarily, the minority is of the view that as a consequence of the

revocation of the SDP, the parties should be restored to their respective conditions
prior to its execution and approval, subject to the application of the principle of setoff or compensation. Such view is patently misplaced.
The law on contracts, i.e. mutual restitution, does not apply to the case at
bar. To reiterate, what was actually revoked by this Court, in its July 5, 2011
Decision, is PARC Resolution No. 89-12-2 approving the SDP. To elucidate, it
was the SDP, not the SDOA, which was presented for approval by Tadeco to
DAR.[56] The SDP explained the mechanics of the stock distribution but did not
make any reference nor correlation to the SDOA. The pertinent portions of the
proposal read:
MECHANICS OF STOCK DISTRIBUTION PLAN
Under Section 31 of Republic Act No. 6657, a corporation owning
agricultural land may distribute among the qualified beneficiaries such
proportion or percentage of its capital stock that the value of the
agricultural land actually devoted to agricultural activities, bears in
relation to the corporations total assets. Conformably with this legal
provision, Tarlac Development Corporation hereby submits for
approval a stock distribution
plan that envisions
the
[57]
following: (Terms and conditions omitted; emphasis supplied)
xxxx
The above stock distribution plan is hereby submitted on the
basis of all these benefits that the farmworker-beneficiaries of Hacienda
Luisita will receive under its provisions in addition to their regular
compensation as farmhands in the agricultural enterprise and the fringe
benefits granted to them by their collective bargaining agreement with
management.[58]

Also, PARC Resolution No. 89-12-2 reads as follows:

RESOLUTION APPROVING THE STOCK DISTRIBUTION
PLAN OF TARLAC DEVELOPMENT COMPANY/HACIENDA
LUISITA INCORPORATED (TDC/HLI)
NOW THEREFORE, on motion duly seconded,
RESOLVED, as it is hereby resolved, to approve the stock
distribution plan of TDC/HLI.
UNANIMOUSLY APPROVED.[59] (Emphasis supplied)

Clearly, what was approved by PARC is the SDP and not the SDOA. There
is, therefore, no basis for this Court to apply the law on contracts to the revocation
of the said PARC Resolution.
IV.

Just Compensation

In Our July 5, 2011 Decision, We stated that HLI shall be paid just
compensation for the remaining agricultural land that will be transferred to DAR
for land distribution to the FWBs. We also ruled that the date of the taking is
November 21, 1989, when PARC approved HLIs SDP per PARC Resolution No.
89-12-2.
In its Motion for Clarification and Partial Reconsideration , HLI disagrees
with the foregoing ruling and contends that the taking should be reckoned from
finality of the Decision of this Court, or at the very least, the reckoning period may
be tacked to January 2, 2006, the date when the Notice of Coverage was issued by
the DAR pursuant to PARC Resolution No. 2006-34-01 recalling/revoking the
approval of the SDP.[60]
For their part, Mallari, et al. argue that the valuation of the land cannot be
based on November 21, 1989, the date of approval of the SDP. Instead, they aver

that the date of taking for valuation purposes is a factual issue best left to the
determination of the trial courts.[61]
At the other end of the spectrum, AMBALA alleges that HLI should no
longer be paid just compensation for the agricultural land that will be distributed to
the FWBs, since the Manila Regional Trial Court (RTC) already rendered a
decision ordering the Cojuangcos to transfer the control of Hacienda Luisita to the
Ministry of Agrarian Reform, which will distribute the land to small farmers after
compensating the landowners P3.988 million.[62] In the event, however, that this
Court will rule that HLI is indeed entitled to compensation, AMBALA contends
that it should be pegged at forty thousand pesos (PhP 40,000) per hectare, since
this was the same value that Tadeco declared in 1989 to make sure that the farmers
will not own the majority of its stocks.[63]
Despite the above propositions, We maintain that the date of taking is
November 21, 1989, the date when PARC approved HLIs SDP per PARC

Resolution No. 89-12-2, in view of the fact that this is the time that the FWBs were
considered to own and possess the agricultural lands in Hacienda Luisita. To be
precise, these lands became subject of the agrarian reform coverage through the
stock distribution scheme only upon the approval of the SDP, that is, November
21, 1989. Thus, such approval is akin to a notice of coverage ordinarily issued
under compulsory acquisition. Further, any doubt should be resolved in favor of
the FWBs. As this Court held in Perez-Rosario v. CA:[64]
It is an established social and economic fact that the escalation of
poverty is the driving force behind the political disturbances that have in
the past compromised the peace and security of the people as well as the
continuity of the national order. To subdue these acute disturbances, the
legislature over the course of the history of the nation passed a series of
laws calculated to accelerate agrarian reform, ultimately to raise the
material standards of living and eliminate discontent. Agrarian reform is
a perceived solution to social instability. The edicts of social justice
found in the Constitution and the public policies that underwrite
them, the extraordinary national experience, and the prevailing
national consciousness, all command the great departments of
government to tilt the balance in favor of the poor and

underprivileged whenever reasonable doubt arises in the

interpretation of the law. But annexed to the great and sacred charge of
protecting the weak is the diametric function to put every effort to arrive
at an equitable solution for all parties concerned: the jural postulates of
social justice cannot shield illegal acts, nor do they sanction false
sympathy towards a certain class, nor yet should they deny justice to the
landowner whenever truth and justice happen to be on her side. In the
occupation of the legal questions in all agrarian disputes whose
outcomes can significantly affect societal harmony, the considerations of
social advantage must be weighed, an inquiry into the prevailing social
interests is necessary in the adjustment of conflicting demands and
expectations of the people, and the social interdependence of these
interests, recognized. (Emphasis supplied.)

The minority contends that it is the date of the notice of coverage, that is,
January 2, 2006, which is determinative of the just compensation HLI is entitled to
for its expropriated lands. To support its contention, it cited numerous cases where
the time of the taking was reckoned on the date of the issuance of the notice of
coverage.
However, a perusal of the cases cited by the minority would reveal that none
of them involved the stock distribution scheme. Thus, said cases do not squarely

apply to the instant case. Moreover, it should be noted that it is precisely because
the stock distribution option is a distinctive mechanism under RA 6657 that it
cannot be treated similarly with that of compulsory land acquisition as these are
two (2) different modalities under the agrarian reform program. As We have stated
in Our July 5, 2011 Decision, RA 6657 provides two (2) alternative modalities,
i.e., land or stock transfer, pursuant to either of which the corporate landowner can
comply with CARP.
In this regard, it should be noted that when HLI submitted the SDP to DAR
for approval, it cannot be gainsaid that the stock distribution scheme is clearly
HLIs preferred modality in order to comply with CARP. And when the SDP was
approved, stocks were given to the FWBs in lieu of land distribution. As aptly
observed by the minority itself, [i]nstead of expropriating lands, what the
government took and distributed to the FWBs were shares of stock of petitioner

HLI in proportion to the value of the agricultural lands that should have been
expropriated and turned over to the FWBs. It cannot, therefore, be denied that
upon the approval of the SDP submitted by HLI, the agricultural lands of Hacienda
Luisita became subject of CARP coverage. Evidently, the approval of the SDP
took the place of a notice of coverage issued under compulsory acquisition.
Also, it is surprising that while the minority opines that under the stock
distribution option, title to the property remains with the corporate
landowner, which should presumably be dominated by farmers with majority
stockholdings in the corporation, it still insists that the just compensation that
should be given to HLI is to be reckoned on January 2, 2006, the date of the
issuance of the notice of coverage, even after it found that the FWBs did not have
the majority stockholdings in HLI contrary to the supposed avowed policy of the
law. In effect, what the minority wants is to prejudice the FWBs twice. Given that
the FWBs should have had majority stockholdings in HLI but did not, the minority
still wants the government to pay higher just compensation to HLI. Even if it is the
government which will pay the just compensation to HLI, this will also affect the
FWBs as they will be paying higher amortizations to the government if the
taking will be considered to have taken place only on January 2, 2006.
The foregoing notwithstanding, it bears stressing that the DAR's land
valuation is only preliminary and is not, by any means, final and conclusive upon
the landowner. The landowner can file an original action with the RTC acting as a
special agrarian court to determine just compensation. The court has the right to

review with finality the determination in the exercise of what is admittedly a

judicial function.[65]
A view has also been advanced that HLI should pay the qualified FWBs
rental for the use and possession of the land up to the time it surrenders possession
and control over these lands. What this view fails to consider is the fact that the
FWBs are also stockholders of HLI prior to the revocation of PARC Resolutio n
No. 89-12-2. Also, the income earned by the corporation from its possession and
use of the land ultimately redounded to the benefit of the FWBs based on its
business operations in the form of salaries, benefits voluntarily granted by HLI and
other fringe benefits under their Collective Bargaining Agreement. That being so,

there would be unjust enrichment on the part of the FWBs if HLI will still be
required to pay rent for the use of the land in question.
V.

Sale to Third Parties

There is a view that since the agricultural lands in Hacienda Luisita were
placed under CARP coverage through the SDOA scheme on May 11, 1989, then
the 10-year period prohibition on the transfer of awarded lands under RA 6657
lapsed on May 10, 1999, and, consequently, the qualified FWBs should already be
allowed to sell these lands with respect to their land interests to third parties,
including HLI, regardless of whether they have fully paid for the lands or not.
The proposition is erroneous. Sec. 27 of RA 6657 states:
SEC. 27. Transferability of Awarded Lands. - Lands acquired by
beneficiaries under this Act may not be sold, transferred or
conveyed except through hereditary succession, or to the
government, or to the LBP, or to other qualified beneficiaries for a
period of ten (10) years: Provided, however, That the children or the
spouse of the transferor shall have a right to repurchase the land from the
government or LBP within a period of two (2) years. Due notice of the
availability of the land shall be given by the LBP to the Barangay
Agrarian Reform Committee (BARC) of the barangay where the land is
situated.
The
Provincial Agrarian Coordinating Committee
(PARCCOM), as herein provided, shall, in turn, be given due notice
thereof by the BARC.
If the land has not yet been fully paid by the beneficiary, the
right to the land may be transferred or conveyed, with prior approval of

the DAR, to any heir of the beneficiary or to any other beneficiary

who, as a condition for such transfer or conveyance, shall cultivate
the land himself. Failing compliance herewith, the land shall be
transferred to the LBP which shall give due notice of the availability of
the land in the manner specified in the immediately preceding paragraph.
In the event of such transfer to the LBP, the latter shall
compensate the beneficiary in one lump sum for the amounts the latter

has already paid, together with the value of improvements he has made
on the land. (Emphasis supplied.)

To implement the above-quoted provision, inter alia, DAR issued

Administrative Order No. 1, Series of 1989 (DAO 1) entitled Rules and
Procedures Governing Land Transactions. Said Rules set forth the rules on
validity of land transactions, to wit:
II. RULES ON VALIDITY OF LAND TRANSACTIONS
A. The following transactions are valid:
1. Those executed by the original landowner in favor of the
qualified beneficiary from among those certified by DAR.
2. Those in favor of the government, DAR or the Land Bank of
the Philippines.
3. Those covering lands retained by the landowner under Section 6
of R.A. 6657 duly certified by the designated DAR Provincial
Agrarian Reform Officer (PARO) as a retention area, executed in
favor of transferees whose total landholdings inclusive of the land
to be acquired do not exceed five (5) hectares; subject, however,
to the right of pre-emption and/or redemption of tenant/lessee
under Section 11 and 12 of R.A. 3844, as amended.
xxxx
4. Those executed by beneficiaries covering lands acquired under
any agrarian reform law in favor of the government, DAR, LBP or
other qualified beneficiaries certified by DAR.
5. Those executed after ten (10) years from the issuance and
registration of the Emancipation Patent or Certificate of Land
Ownership Award.
B. The following transactions are not valid:

1. Sale, disposition, lease management contract or transfer of

possession of private lands executed by the original landowner
prior to June 15, 1988, which are registered on or before
September 13, 1988, or those executed after June 15, 1988,

covering an area in excess of the five-hectare retention limit in

violation of R.A. 6657.
2. Those covering lands acquired by the beneficiary under R.A.
6657 and executed within ten (10) years from the issuance and
registration of an Emancipation Patent or Certificate of Land
Ownership Award.
3. Those executed in favor of a person or persons not qualified to
acquire land under R.A. 6657.
4. Sale, transfer, conveyance or change of nature of the land outside
of urban centers and city limits either in whole or in part as of
June 15, 1988, when R.A. 6657 took effect, except as provided for
under DAR Administrative Order No. 15, series of 1988.
5. Sale, transfer or conveyance by beneficiary of the right to use or
any other usufructuary right over the land he acquired by virtue of
being a beneficiary, in order to circumvent the law.
x x x x (Emphasis supplied.)

Without a doubt, under RA 6657 and DAO 1, the awarded lands may only
be
transferred
or
conveyed
after
ten
(10)
years
from
the issuance and registration of the emancipation patent (EP) or certificate of land
ownership award (CLOA). Considering that the EPs or CLOAs have not yet been
issued to the qualified FWBs in the instant case, the 10-year prohibitive period has
not even started. Significantly, the reckoning point is the issuance of the EP or
CLOA, and not the placing of the agricultural lands under CARP coverage .
Moreover, if We maintain the position that the qualified FWBs should be
immediately allowed the option to sell or convey the agricultural lands in Hacienda
Luisita, then all efforts at agrarian reform would be rendered nugatory by this
Court, since, at the end of the day, these lands will just be transferred to persons
not entitled to land distribution under CARP. As aptly noted by the late Senator
Neptali Gonzales during the Joint Congressional Conference Committee on the
Comprehensive Agrarian Reform Program Bills:

SEN. GONZALES. My point is, as much as possible let the

said lands be distributed under CARP remain with the beneficiaries
and their heirs because that is the lesson that we have to learn from PD
No. 27. If you will talk with the Congressmen representing Nueva Ecija,
Pampanga and Central Luzon provinces, law or no law, you will find
out that more than one-third of the original, of the lands distributed
under PD 27 are no longer owned, possessed or being worked by the
grantees or the awardees of the same, something which we ought to
avoid under the CARP bill that we are going to enact.[66] (Emphasis
supplied.)

Worse, by raising that the qualified beneficiaries may sell their interest back
to HLI, this smacks of outright indifference to the provision on retention
limits[67] under RA 6657, as this Court, in effect, would be allowing HLI, the
previous landowner, to own more than five (5) hectares of agricultural land, which
We cannot countenance. There is a big difference between the ownership of
agricultural lands by HLI under the stock distribution scheme and its eventual
acquisition of the agricultural lands from the qualified FWBs under the proposed
buy-back scheme. The rule on retention limits does not apply to the former but
only to the latter in view of the fact that the stock distribution scheme is sanctioned
by Sec. 31 of RA 6657, which specifically allows corporations to divest a
proportion of their capital stock that the agricultural land, actually devoted to
agricultural activities, bears in relation to the companys total assets. On the other
hand, no special rules exist under RA 6657 concerning the proposed buy-back
scheme; hence, the general rules on retention limits should apply.
Further, the position that the qualified FWBs are now free to transact with
third parties concerning their land interests, regardless of whether they have fully
paid for the lands or not, also transgresses the second paragraph of Sec. 27 of RA
6657, which plainly states that [i]f the land has not yet been fully paid by the
beneficiary, the right to the land may be transferred or conveyed, with prior
approval of the DAR, to any heir of the beneficiary or to any other beneficiary
who, as a condition for such transfer or conveyance, shall cultivate the land
himself. Failing compliance herewith, the land shall be transferred to the LBP x x
x. When the words and phrases in the statute are clear and unequivocal, the law is

applied according to its express terms.[68] Verba legis non est recedendum, or from
the words of a statute there should be no departure.[69]
The minority, however, posits that [t]o insist that the FWBs rights sleep

for a period of ten years is unrealistic, and may seriously deprive them of real
opportunities to capitalize and maximize the victory of direct land distribution. By
insisting that We disregard the ten-year restriction under the law in the case at bar,
the minority, in effect, wants this Court to engage in judicial legislation, which is
violative of the principle of separation of powers.[70] The discourse by Ruben E.
Agpalo, in his book on statutory construction, is enlightening:
Where the law is clear and unambiguous, it must be taken to mean
exactly what it says and the court has no choice but to see to it that its
mandate is obeyed. Where the law is clear and free from doubt or
ambiguity, there is no room for construction or interpretation. Thus,
where what is not clearly provided in the law is read into the law by
construction because it is more logical and wise, it would be to
encroach upon legislative prerogative to define the wisdom of the
law, which is judicial legislation. For whether a statute is wise or
expedient is not for the courts to determine. Courts must administer
the law, not as they think it ought to be but as they find it and
without regard to consequences.[71] (Emphasis supplied.)

And as aptly stated by Chief Justice Renato Corona in his Dissenting

Opinion in Ang Ladlad LGBT Party v. COMELEC:[72]
Regardless of the personal beliefs and biases of its individual
members, this Court can only apply and interpret the Constitution and
the laws. Its power is not to create policy but to recognize, review or
reverse the policy crafted by the political departments if and when a
proper case is brought before it. Otherwise, it will tread on the dangerous
grounds of judicial legislation.

Considerably, this Court is left with no other recourse but to respect and
apply the law.

VI.

Grounds for Revocation of the SDP

AMBALA and FARM reiterate that improving the economic status of the
FWBs is among the legal obligations of HLI under the SDP and is an imperative
imposition by RA 6657 and DAO 10.[73] FARM further asserts that [i]f that
minimum threshold is not met, why allow [stock distribution option] at all, unless
the purpose is not social justice but a political accommodation to the powerful.[74]
Contrary to the assertions of AMBALA and FARM, nowhere in the SDP,

RA 6657 and DAO 10 can it be inferred that improving the economic status of the
FWBs is among the legal obligations of HLI under the SDP or is an imperative
imposition by RA 6657 and DAO 10, a violation of which would justify discarding
the stock distribution option. As We have painstakingly explained in Our July 5,
2011 Decision:
In the Terminal Report adopted by PARC, it is stated that the SDP
violates the agrarian reform policy under Sec. 2 of RA 6657, as the said
plan failed to enhance the dignity and improve the quality of lives of the
FWBs through greater productivity of agricultural lands. We disagree.
Sec. 2 of RA 6657 states:
SECTION 2. Declaration of Principles and
Policies. It is the policy of the State to pursue a
Comprehensive Agrarian Reform Program (CARP). The
welfare of the landless farmers and farm workers will
receive the highest consideration to promote social justice
and to move the nation towards sound rural development
and industrialization, and the establishment of owner
cultivatorship of economic-sized farms as the basis of
Philippine agriculture.

To this end, a more equitable distribution and

ownership of land, with due regard to the rights of

landowners to just compensation and to the ecological

needs of the nation, shall be undertaken to provide farmers
and farm workers with the opportunity to enhance their
dignity and improve the quality of their lives through
greater productivity of agricultural lands.
The agrarian reform program is founded on the right
of farmers and regular farm workers, who are landless, to
own directly or collectively the lands they till or, in the case
of other farm workers, to receive a share of the fruits
thereof. To this end, the State shall encourage the just
distribution of all agricultural lands, subject to the priorities
and retention limits set forth in this Act, having taken into
account
ecological,
developmental,
and
equity
considerations, and subject to the payment of just
compensation. The State shall respect the right of small

landowners and shall provide incentives for voluntary landsharing.

Paragraph 2 of the above-quoted provision specifically mentions
that a more equitable distribution and ownership of land x x x shall be
undertaken to provide farmers and farm workers with the opportunity to
enhance their dignity and improve the quality of their lives through
greater productivity of agricultural lands. Of note is the term
opportunity which is defined as a favorable chance or opening offered
by circumstances. Considering this, by no stretch of imagination can said
provision be construed as a guarantee in improving the lives of the
FWBs. At best, it merely provides for a possibility or favorable chance
of uplifting the economic status of the FWBs, which may or may not be
attained.
Pertinently, improving the economic status of the FWBs is
neither among the legal obligations of HLI under the SDP nor an
imperative imposition by RA 6657 and DAO 10, a violation of which
would justify discarding the stock distribution option. Nothing in that
option agreement, law or department order indicates otherwise.
Significantly, HLI draws particular attention to its having paid its
FWBs, during the regime of the SDP (1989-2005), some PhP 3 billion
by way of salaries/wages and higher benefits exclusive of free hospital
and medical benefits to their immediate family. And attached as Annex
G to HLIs Memorandum is the certified true report of the finance

manager of Jose Cojuangco & Sons Organizations-Tarlac Operations,

captioned as HACIENDA LUISITA, INC. Salaries, Benefits and Credit
Privileges (in Thousand Pesos) Since the Stock Option was Approved by
PARC/CARP, detailing what HLI gave their workers from 1989 to
2005. The sum total, as added up by the Court, yields the following
numbers: Total Direct Cash Out (Salaries/Wages & Cash Benefits) =
PhP 2,927,848; Total Non-Direct Cash Out (Hospital/Medical Benefits)
= PhP 303,040. The cash out figures, as stated in the report, include the
cost of homelots; the PhP 150 million or so representing 3% of the gross
produce of the hacienda; and the PhP 37.5 million representing 3% from
the proceeds of the sale of the 500-hectare converted lands. While not
included in the report, HLI manifests having given the FWBs 3% of the
PhP 80 million paid for the 80 hectares of land traversed by the
SCTEX. On top of these, it is worth remembering that the shares of
stocks were given by HLI to the FWBs for free. Verily, the FWBs have
benefited from the SDP.
To address urgings that the FWBs be allowed to disengage from
the SDP as HLI has not anyway earned profits through the years, it
cannot be over-emphasized that, as a matter of common business sense,
no corporation could guarantee a profitable run all the time. As has been

suggested, one of the key features of an SDP of a corporate landowner is

the likelihood of the corporate vehicle not earning, or, worse still, losing
money.
The Court is fully aware that one of the criteria under DAO 10 for
the PARC to consider the advisability of approving a stock distribution
plan is the likelihood that the plan would result in increased income
and greater benefits to [qualified beneficiaries] than if the lands
were divided and distributed to them individually. But as aptly
noted during the oral arguments, DAO 10 ought to have not, as it cannot,
actually exact assurance of success on something that is subject to the
will of man, the forces of nature or the inherent risky nature of
business.[75] Just like in actual land distribution, an SDP cannot
guarantee, as indeed the SDOA does not guarantee, a comfortable life
for the FWBs. The Court can take judicial notice of the fact that there
were many instances wherein after a farmworker beneficiary has been
awarded with an agricultural land, he just subsequently sells it and is
eventually left with nothing in the end.
In all then, the onerous condition of the FWBs economic status,
their life of hardship, if that really be the case, can hardly be attributed to

HLI and its SDP and provide a valid ground for the plans revocation.
(Citations omitted; emphasis in the original.)

This Court, despite the above holding, still affirmed the revocation by PARC
of its approval of the SDP based on the following grounds: (1) failure of HLI to
fully comply with its undertaking to distribute homelots to the FWBs under the
SDP; (2) distribution of shares of stock to the FWBs based on the number of man
days or number of days worked by the FWB in a years time; and (3) 30-year
timeframe for the implementation or distribution of the shares of stock to the
FWBs.
Just the same, Mallari, et al. posit that the homelots required to be
distributed have all been distributed pursuant to the SDOA, and that what merely
remains to be done is the release of title from the Register of Deeds. [76] They
further assert that there has been no dilution of shares as the corporate records
would show that if ever not all of the 18,804.32 shares were given to the actual
original FWB, the recipient of the difference is the next of kin or children of said
original FWB.[77] Thus, they submit that since the shares were given to the same
family beneficiary, this should be deemed as substantial compliance with the
provisions of Sec. 4 of DAO 10.[78] Also, they argue that there has been no
violation of the three-month period to implement the SDP as mandated by Sec. 11

of DAO, since this provision must be read in light of Sec. 10 of Executive Order
No. 229, the pertinent portion of which reads, The approval by the PARC of a
plan for such stock distribution, and its initial implementation, shall be deemed
compliance with the land distribution requirement of the CARP.[79]
Again, the matters raised by Mallari, et al. have been extensively discussed
by the Court in its July 5, 2011 Decision. As stated:
On Titles to Homelots
Under RA 6657, the distribution of homelots is required only for
corporations or business associations owning or operating farms which
opted for land distribution. Sec. 30 of RA 6657 states:

SEC. 30. Homelots and Farmlots for Members of

Cooperatives. The
individual members
of
the
cooperatives or corporations mentioned in the preceding
section shall be provided with homelots and small farmlots
for their family use, to be taken from the land owned by the
cooperative or corporation.
The preceding section referred to in the above-quoted provision
is as follows:
SEC. 29. Farms Owned or Operated by
Corporations or Other Business Associations. In the case
of farms owned or operated by corporations or other
business associations, the following rules shall be observed
by the PARC.
In general, lands shall be distributed directly to the
individual worker-beneficiaries.
In case it is not economically feasible and sound to
divide the land, then it shall be owned collectively by the
worker-beneficiaries who shall form a workers cooperative
or association which will deal with the corporation or
business association. Until a new agreement is entered into
by and between the workers cooperative or association and
the corporation or business association, any agreement
existing at the time this Act takes effect between the former
and the previous landowner shall be respected by both the
workers cooperative or association and the corporation or
business association.
Noticeably, the foregoing provisions do not make reference to

corporations which opted for stock distribution under Sec. 31 of RA

6657. Concomitantly, said corporations are not obliged to provide for it
except by stipulation, as in this case.
Under the SDP, HLI undertook to subdivide and allocate for free
and without charge among the qualified family-beneficiaries x x x
residential or homelots of not more than 240 sq. m. each, with each
family beneficiary being assured of receiving and owning a homelot in
the barrio or barangay where it actually resides, within a reasonable
time.

More than sixteen (16) years have elapsed from the time the SDP
was approved by PARC, and yet, it is still the contention of the FWBs
that not all was given the 240-square meter homelots and, of those who
were already given, some still do not have the corresponding titles.
During the oral arguments, HLI was afforded the chance to refute
the foregoing allegation by submitting proof that the FWBs were already
given the said homelots:
Justice Velasco: x x x There is also an allegation that
the farmer beneficiaries, the qualified family beneficiaries
were not given the 240 square meters each. So, can you
also [prove] that the qualified family beneficiaries were
already provided the 240 square meter homelots.
Atty. Asuncion: We will, your Honor please.
Other than the financial report, however, no other substantial
proof showing that all the qualified beneficiaries have received homelots
was submitted by HLI. Hence, this Court is constrained to rule that HLI
has not yet fully complied with its undertaking to distribute homelots to
the FWBs under the SDP.
On Man Days and the Mechanics of Stock Distribution
In our review and analysis of par. 3 of the SDOA on the
mechanics and timelines of stock distribution, We find that
it violates two (2) provisions of DAO 10. Par. 3 of the SDOA states:
3.
At the end of each fiscal year, for a period of
30 years, the SECOND PARTY [HLI] shall arrange with
the FIRST PARTY [TDC] the acquisition and distribution
to the THIRD PARTY [FWBs] on the basis of number of
days worked and at no cost to them of one-thirtieth (1/30)
of 118,391,976.85 shares of the capital stock of the
SECOND PARTY that are presently owned and held by the
FIRST PARTY, until such time as the entire block of
118,391,976.85 shares shall have been completely acquired

and distributed to the THIRD PARTY.

Based on the above-quoted provision, the distribution of the
shares of stock to the FWBs, albeit not entailing a cash out from them, is
contingent on the number of man days, that is, the number of days that

the FWBs have worked during the year. This formula deviates from Sec.
1 of DAO 10, which decrees the distribution of equal number of shares
to the FWBs as the minimum ratio of shares of stock for purposes of
compliance with Sec. 31 of RA 6657. As stated in Sec. 4 of DAO 10:
Section 4. Stock Distribution Plan. The [SDP]
submitted by the corporate landowner-applicant shall
provide for the distribution of an equal number of
shares of the same class and value, with the same rights
and features as all other shares, to each of the qualified
beneficiaries. This distribution plan in all cases, shall be at
least theminimum ratio for purposes of compliance with
Section 31 of R.A. No. 6657.
On top of the minimum ratio provided under
Section 3 of this Implementing Guideline, the corporate
landowner-applicant
may
adopt additional
stock
distribution schemes taking into account factors such as
rank, seniority, salary, position and other circumstances
which may be deemed desirable as a matter of sound
company policy.
The above proviso gives two (2) sets or categories of shares of
stock which a qualified beneficiary can acquire from the corporation
under the SDP. The first pertains, as earlier explained, to the mandatory
minimum ratio of shares of stock to be distributed to the FWBs in
compliance with Sec. 31 of RA 6657. This minimum ratio contemplates
of that proportion of the capital stock of the corporation that the
agricultural land, actually devoted to agricultural activities, bears in
relation to the companys total assets. It is this set of shares of stock
which, in line with Sec. 4 of DAO 10, is supposed to be allocated for
the distribution of an equal number of shares of stock of the same class
and value, with the same rights and features as all other shares, to each
of the qualified beneficiaries.
On the other hand, the second set or category of shares partakes of
a gratuitous extra grant, meaning that this set or category constitutes an
augmentation share/s that the corporate landowner may give under an
additional stock distribution scheme, taking into account such variables
as rank, seniority, salary, position and like factors which the
management, in the exercise of its sound discretion, may deem desirable.

Before anything else, it should be stressed that, at the time PARC

approved HLIs SDP, HLI recognized 6,296 individuals as qualified
FWBs. And under the 30-year stock distribution program envisaged
under the plan, FWBs who came in after 1989, new FWBs in fine, may
be accommodated, as they appear to have in fact been accommodated as
evidenced by their receipt of HLI shares.
Now then, by providing that the number of shares of the original
1989 FWBs shall depend on the number of man days, HLI violated the
afore-quoted rule on stock distribution and effectively deprived the
FWBs of equal shares of stock in the corporation, for, in net effect, these
6,296 qualified FWBs, who theoretically had given up their rights to the
land that could have been distributed to them, suffered a dilution of their
due share entitlement. As has been observed during the oral arguments,
HLI has chosen to use the shares earmarked for farmworkers as reward
system chips to water down the shares of the original 6,296 FWBs.
Particularly:
Justice Abad: If the SDOA did not take place, the
other thing that would have happened is that there would be
CARP?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: Thats the only point I want to know x
x x. Now, but they chose to enter SDOA instead of placing
the land under CARP. And for that reason those who would
have gotten their shares of the land actually gave up their
rights to this land in place of the shares of the stock, is that
correct?
Atty. Dela Merced: It would be that way, Your
Honor.
Justice Abad: Right now, also the government, in a
way, gave up its right to own the land because that way the
government takes own [sic] the land and distribute it to the
farmers and pay for the land, is that correct?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: And then you gave thirty-three percent
(33%) of the shares of HLI to the farmers at that time that

numbered x x x those who signed five thousand four

hundred ninety eight (5,498) beneficiaries, is that correct?

Atty. Dela Merced: Yes, Your Honor.
Justice Abad: But later on, after assigning them their
shares, some workers came in from 1989, 1990, 1991, 1992
and the rest of the years that you gave additional shares
who were not in the original list of owners?
Atty. Dela Merced: Yes, Your Honor.
Justice Abad: Did those new workers give up any
right that would have belong to them in 1989 when the land
was supposed to have been placed under CARP?
Atty. Dela Merced: If you are talking or referring
(interrupted)
Justice Abad: None! You tell me. None. They gave
up no rights to land?
Atty. Dela Merced: They did not do the same thing
as we did in 1989, Your Honor.
Justice Abad: No, if they were not workers in 1989
what land did they give up? None, if they become workers
later on.
Atty. Dela Merced: None, Your Honor, I was
referring, Your Honor, to the original (interrupted)
Justice Abad: So why is it that the rights of those
who gave up their lands would be diluted, because the
company has chosen to use the shares as reward system for
new workers who come in? It is not that the new workers,
in effect, become just workers of the corporation whose
stockholders were already fixed. The TADECO who has
shares there about sixty six percent (66%) and the five
thousand four hundred ninety eight (5,498) farmers at the
time of the SDOA? Explain to me. Why, why will you x x
x what right or where did you get that right to use this
shares, to water down the shares of those who should have

been benefited, and to use it as a reward system decided by

the company?
From the above discourse, it is clear as day that the original 6,296
FWBs, who were qualified beneficiaries at the time of the approval of
the SDP, suffered from watering down of shares. As determined earlier,

each original FWB is entitled to 18,804.32 HLI shares. The original

FWBs got less than the guaranteed 18,804.32 HLI shares per
beneficiary, because the acquisition and distribution of the HLI shares
were based on man days or number of days worked by the FWB in a
years time. As explained by HLI, a beneficiary needs to work for at
least 37 days in a fiscal year before he or she becomes entitled to HLI
shares. If it falls below 37 days, the FWB, unfortunately, does not get
any share at year end. The number of HLI shares distributed varies
depending on the number of days the FWBs were allowed to work in one
year. Worse, HLI hired farmworkers in addition to the original 6,296
FWBs, such that, as indicated in the Compliance dated August 2, 2010
submitted by HLI to the Court, the total number of farmworkers of HLI
as of said date stood at 10,502. All these farmworkers, which include
the original 6,296 FWBs, were given shares out of the 118,931,976.85
HLI shares representing the 33.296% of the total outstanding capital
stock of HLI. Clearly, the minimum individual allocation of each
original FWB of 18,804.32 shares was diluted as a result of the use of
man days and the hiring of additional farmworkers.
Going into another but related matter, par. 3 of the SDOA
expressly providing for a 30-year timeframe for HLI-to-FWBs stock
transfer is an arrangement contrary to what Sec. 11 of DAO 10
prescribes. Said Sec. 11 provides for the implementation of the
approved stock distribution plan within three (3) months from receipt by
the corporate landowner of the approval of the plan by PARC. In fact,
based on the said provision, the transfer of the shares of stock in the
names of the qualified FWBs should be recorded in the stock and
transfer books and must be submitted to the SEC within sixty (60) days
from implementation. As stated:
Section
11. Implementation/Monitoring
of
Plan. The approved stock distribution plan shall
be implemented within three (3) months from receipt by
the corporate landowner-applicant of the approval
thereof by the PARC, and the transfer of the shares of
stocks in the names of the qualified beneficiaries shall be

recorded in stock and transfer books and submitted to the

Securities and Exchange Commission (SEC) within
sixty (60) days from the said implementation of the
stock distribution plan.
It is evident from the foregoing provision that the implementation,
that is, the distribution of the shares of stock to the FWBs, must be made
within three (3) months from receipt by HLI of the approval of the stock
distribution plan by PARC. While neither of the clashing parties has
made a compelling case of the thrust of this provision, the Court is of the
view and so holds that the intent is to compel the corporate landowner to

complete, not merely initiate, the transfer process of shares within that
three-month timeframe. Reinforcing this conclusion is the 60-day stock
transfer recording (with the SEC) requirement reckoned from the
implementation of the SDP.
To the Court, there is a purpose, which is at once discernible as it
is practical, for the three-month threshold. Remove this timeline and the
corporate landowner can veritably evade compliance with agrarian
reform by simply deferring to absurd limits the implementation of the
stock distribution scheme.
The argument is urged that the thirty (30)-year distribution
program is justified by the fact that, under Sec. 26 of RA 6657,
payment by beneficiaries of land distribution under CARP shall be made
in thirty (30) annual amortizations. To HLI, said section provides a
justifying dimension to its 30-year stock distribution program.
HLIs reliance on Sec. 26 of RA 6657, quoted in part below, is
obviously misplaced as the said provision clearly deals with land
distribution.
SEC. 26. Payment by Beneficiaries. Lands
awarded pursuant to this Act shall be paid for by the
beneficiaries to the LBP in thirty (30) annual amortizations
x x x.
Then, too, the ones obliged to pay the LBP under the said
provision are the beneficiaries. On the other hand, in the instant case,
aside from the fact that what is involved is stock distribution, it is the
corporate landowner who has the obligation to distribute the shares of
stock among the FWBs.

Evidently, the land transfer beneficiaries are given thirty (30)

years within which to pay the cost of the land thus awarded them to
make it less cumbersome for them to pay the government. To be sure,
the reason underpinning the 30-year accommodation does not apply to
corporate landowners in distributing shares of stock to the qualified
beneficiaries, as the shares may be issued in a much shorter period of
time.
Taking into account the above discussion, the revocation of the
SDP by PARC should be upheld for violating DAO 10. It bears stressing
that under Sec. 49 of RA 6657, the PARC and the DAR have the power
to issue rules and regulations, substantive or procedural. Being a product
of such rule-making power, DAO 10 has the force and effect of law and
must be duly complied with. The PARC is, therefore, correct in
revoking the SDP. Consequently, the PARC Resolution No. 89-12-2
dated November 21, l989 approving the HLIs SDP is nullified and

voided. (Citations omitted; emphasis in the original.)

Based on the foregoing ruling, the contentions of Mallari, et al. are either not
supported by the evidence on record or are utterly misplaced. There is, therefore,
no basis for the Court to reverse its ruling affirming PARC Resolution No. 200532-01 and PARC Resolution No. 2006-34-01, revoking the previous approval of
the SDP by PARC.
VII.

Control over Agricultural Lands

After having discussed and considered the different contentions raised by the
parties in their respective motions, We are now left to contend with one crucial
issue in the case at bar, that is, control over the agricultural lands by the qualified
FWBs.
Upon a review of the facts and circumstances, We realize that the FWBs will
never have control over these agricultural lands for as long as they remain as
stockholders of HLI. In Our July 5, 2011 Decision, this Court made the following
observations:

There is, thus, nothing unconstitutional in the formula prescribed

by RA 6657. The policy on agrarian reform is that control over the
agricultural land must always be in the hands of the farmers. Then
it falls on the shoulders of DAR and PARC to see to it the farmers
should always own majority of the common shares entitled to elect the
members of the board of directors to ensure that the farmers will have a
clear majority in the board. Before the SDP is approved, strict scrutiny
of the proposed SDP must always be undertaken by the DAR and PARC,
such that the value of the agricultural land contributed to the corporation
must always be more than 50% of the total assets of the corporation to
ensure that the majority of the members of the board of directors are
composed of the farmers. The PARC composed of the President of
the Philippines and cabinet secretaries must see to it that control over the
board of directors rests with the farmers by rejecting the inclusion of
non-agricultural assets which will yield the majority in the board of
directors to non-farmers. Any deviation, however, by PARC or DAR
from the correct application of the formula prescribed by the second
paragraph of Sec. 31 of RA 6675 does not make said provision
constitutionally infirm. Rather, it is the application of said provision that
can be challenged. Ergo, Sec. 31 of RA 6657 does not trench on the
constitutional policy of ensuring control by the farmers. (Emphasis
supplied.)

In line with Our finding that control over agricultural lands must always be
in the hands of the farmers, We reconsider our ruling that the qualified FWBs
should be given an option to remain as stockholders of HLI, inasmuch as these
qualified FWBs will never gain control given the present proportion of
shareholdings in HLI.
A revisit of HLIs Proposal for Stock Distribution under CARP and the
Stock Distribution Option Agreement (SDOA) upon which the proposal was based
reveals that the total assets of HLI is PhP 590,554,220, while the value of the
4,915.7466 hectares is PhP 196,630,000. Consequently, the share of the farmerbeneficiaries in the HLI capital stock is 33.296% (196,630,000 divided by
590,554.220); 118,391,976.85 HLI shares represent 33.296%. Thus, even if all the

holders of the 118,391,976.85 HLI shares unanimously vote to remain as HLI

stockholders, which is unlikely, control will never be placed in the hands of the
farmer-beneficiaries. Control, of course, means the majority of 50% plus at least
one share of the common shares and other voting shares. Applying the formula to
the HLI stockholdings, the number of shares that will constitute the majority is
295,112,101 shares (590,554,220 divided by 2 plus one [1] HLI share). The
118,391,976.85 shares subject to the SDP approved by PARC substantially fall
short of the 295,112,101 shares needed by the FWBs to acquire control over
HLI. Hence, control can NEVER be attained by the FWBs. There is even no
assurance that 100% of the 118,391,976.85 shares issued to the FWBs will all be
voted in favor of staying in HLI, taking into account the previous referendum
among the farmers where said shares were not voted unanimously in favor of
retaining the SDP. In light of the foregoing consideration, the option to remain in
HLI granted to the individual FWBs will have to be recalled and revoked.

Moreover, bearing in mind that with the revocation of the approval of the
SDP, HLI will no longer be operating under SDP and will only be treated as an
ordinary private corporation; the FWBs who remain as stockholders of HLI will be
treated as ordinary stockholders and will no longer be under the protective mantle
of RA 6657.

In addition to the foregoing, in view of the operative fact doctrine, all the
benefits and homelots[80] received by all the FWBs shall be respected with no
obligation to refund or return them, since, as We have mentioned in our July 5,
2011 Decision, the benefits x x x were received by the FWBs as farmhands in the
agricultural enterprise of HLI and other fringe benefits were granted to them
pursuant to the existing collective bargaining agreement with Tadeco.
One last point, the HLI land shall be distributed only to the 6,296 original
FWBs. The remaining 4,206 FWBs are not entitled to any portion of the HLI land,
because the rights to said land were vested only in the 6,296 original FWBs
pursuant to Sec. 22 of RA 6657.

In this regard, DAR shall verify the identities of the 6,296 original FWBs,
consistent with its administrative prerogative to identify and select the agrarian
reform beneficiaries under RA 6657.[81]

WHEREFORE, the Motion for Partial Reconsideration dated July 20,

2011 filed by public respondents Presidential Agrarian Reform Council and
Department of Agrarian Reform, the Motion for Reconsideration dated July 19,
2011 filed by private respondent Alyansa ng mga Manggagawang Bukid sa
Hacienda Luisita, the Motion for Reconsideration dated July 21, 2011 filed by
respondent-intervenor Farmworkers Agrarian Reform Movement, Inc., and
the Motion for Reconsideration dated July 22, 2011 filed by private respondents
Rene Galang and AMBALA are PARTIALLY GRANTED with respect to the
option granted to the original farmworker-beneficiaries of Hacienda Luisita
to remain with Hacienda Luisita, Inc., which is hereby RECALLED and SET
ASIDE. The Motion for Clarification and Partial Reconsideration dated July 21,
2011 filed by petitioner HLI and the Motion for Reconsideration dated July 21,
2011 filed by private respondents Noel Mallari, Julio Suniga, Supervisory Group
of Hacienda Luisita, Inc. and Windsor Andaya are DENIED.
The fallo of the Courts July 5, 2011 Decision is hereby amended and shall

read:
PARC Resolution No. 2005-32-01 dated December 22, 2005 and Resolution
No. 2006-34-01 dated May 3, 2006, placing the lands subject of HLIs SDP under
compulsory coverage on mandated land acquisition scheme of the CARP, are
hereby AFFIRMED with the following modifications:

All salaries, benefits, the 3% of the gross sales of the production of the
agricultural lands, the 3% share in the proceeds of the sale of the 500-hectare
converted land and the 80.51-hectare SCTEX lot and the homelots already
received by the 10,502 FWBs composed of 6,296 original FWBs and the 4,206
non-qualified FWBs shall be respected with no obligation to refund or return
them. The 6,296 original FWBs shall forfeit and relinquish their rights over the
HLI shares of stock issued to them in favor of HLI. The HLI Corporate Secretary
shall cancel the shares issued to the said FWBs and transfer them to HLI in the
stocks and transfer book, which transfers shall be exempt from taxes, fees and
charges. The 4,206 non-qualified FWBs shall remain as stockholders of HLI.
DAR shall segregate from the HLI agricultural land with an area of 4,915.75
hectares subject of PARCs SDP-approving Resolution No. 89-12-2 the 500hectare lot subject of the August 14, l996 Conversion Order and the 80.51-hectare
lot sold to, or acquired by, the government as part of the SCTEX complex. After
the segregation process, as indicated, is done, the remaining area shall be turned
over to DAR for immediate land distribution to the original 6,296 FWBs or their
successors-in-interest which will be identified by the DAR. The 4,206 nonqualified FWBs are not entitled to any share in the land to be distributed by DAR.
HLI is directed to pay the original 6,296 FWBs the consideration of PhP
500,000,000 received by it from Luisita Realty, Inc. for the sale to the latter of 200
hectares out of the 500 hectares covered by the August 14, 1996 Conversion Order,
the consideration of PhP 750,000,000 received by its owned subsidiary,
Centennary Holdings, Inc., for the sale of the remaining 300 hectares of the
aforementioned 500-hectare lot to Luisita Industrial Park Corporation, and the
price of PhP 80,511,500 paid by the government through the Bases Conversion
Development Authority for the sale of the 80.51-hectare lot used for the
construction of the SCTEX road network. From the total amount of PhP
1,330,511,500 (PhP 500,000,000 + PhP 750,000,000 + PhP 80,511,500 = PhP
1,330,511,500) shall be deducted the 3% of the proceeds of said transfers that were
paid to the FWBs, the taxes and expenses relating to the transfer of titles to the
transferees, and the expenditures incurred by HLI and Centennary Holdings, Inc.

for legitimate corporate purposes. For this purpose, DAR is ordered to engage the
services of a reputable accounting firm approved by the parties to audit the books
of HLI and Centennary Holdings, Inc. to determine if the PhP 1,330,511,500

proceeds of the sale of the three (3) aforementioned lots were actually used or
spent for legitimate corporate purposes. Any unspent or unused balance and any
disallowed expenditures as determined by the audit shall be distributed to the 6,296
original FWBs.
HLI is entitled to just compensation for the agricultural land that will be
transferred to DAR to be reckoned from November 21, 1989 which is the date of
issuance of PARC Resolution No. 89-12-2. DAR and LBP are ordered to
determine the compensation due to HLI.
DAR shall submit a compliance report after six (6) months from finality of
this judgment. It shall also submit, after submission of the compliance report,
quarterly reports on the execution of this judgment within the first 15 days after the
end of each quarter, until fully implemented.
The temporary restraining order is lifted.
SO ORDERED.

CITY OF ILOILO represented by

HON. JERRY P. TREAS,
City Mayor,
Petitioner,
- versus HON. LOLITA CONTRERASBESANA, Presiding Judge, Regional
Trial Court, Branch 32, and

G.R. No. 168967

Present:
CARPIO, J., Chairperson,
BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.

ELPIDIO JAVELLANA,
Promulgated:
Respondents.
February 12, 2010
x- -- -- --- -- -- --- -- -- -- --- -- -- --- -- -- --- -- -- --- -- -- --- -- -- -- --- -- --- x

DECIS ION
DEL CASTILLO, J.:
It is arbitrary and capricious for the government to initiate expropriation
proceedings, seize a persons property, allow the order of expropriation to become final,
but then fail to justly compensate the owner for over 25 years. This is government at its
most high-handed and irresponsible, and should be condemned in the strongest possible
terms. For its failure to properly compensate the landowner, the City of Iloilo is liable for
damages.

This Petition for Certiorari under Rule 65 of the Rules of Court with a prayer for
the issuance of a temporary restraining order seeks to overturn the three Orders issued by
Regional Trial Court (RTC) of Iloilo City, Branch 32 on the following dates: December
12, 2003 (the First Assailed Order),[1] June 15, 2004 (the Second Assailed Order),[2] and
March 9, 2005 (the Third Assailed Order) (the three aforementioned Orders are
collectively referred to as the Assailed Orders).[3]
Factual Antecedents
The essential facts are not in dispute.
On September 18, 1981, petitioner filed a Complaint[4] for eminent domain against
private respondent Elpidio T. Javellana (Javellana) and Southern Negros Development
Bank, the latter as mortgagee. The complaint sought to expropriate two parcels of land
known as Lot Nos. 3497-CC and 3497-DD registered in Javellanas name under Transfer
Certificate of Title (TCT) No. T-44894 (the Subject Property) to be used as a school site
for Lapaz High School.[5] Petitioner alleged that the Subject Property was declared for
tax purposes in Tax Declaration No. 40080 to have a value of P60.00 per square meter, or

a total value of P43,560.00. The case was docketed as Civil Case No. 14052 and raffled

to then Court of First Instance of Iloilo, Branch 7.

On December 9, 1981, Javellana filed his Answer[6] where he admitted ownership
of the Subject Property but denied the petitioners avowed public purpose of the soughtfor expropriation, since the City of Iloilo already had an existing school site for Lapaz
High School. Javellana also claimed that the true fair market value of his property was
no less than P220.00 per square meter. [7]
On May 11, 1982, petitioner filed a Motion for Issuance of Writ of
Possession, alleging that it had deposited the amount of P40,000.00 with the Philippine
National Bank-Iloilo Branch. Petitioner claimed that it was entitled to the
immediate
possession of the Subject Property, citing Section 1 of Presidential Decree No.
1533,[8] after it had deposited an amount equivalent to 10% of the amount of
compensation. Petitioner attached to its motion a Certification issued by Estefanio C.
Libutan, then Officer-in-Charge of the Iloilo City Treasurers Office, stating that said
deposit was made.[9]
Javellana filed an Opposition to the Motion for the Issuance of Writ of
Possession[10] citing the same grounds he raised in his Answer that the city already had
a vast tract of land where its existing school site was located, and the deposit of a mere
10% of the Subject Propertys tax valuation was grossly inadequate.
On May 17, 1983, the trial court issued an Order[11] which granted
petitioners Motion for Issuance of Writ of Possession and authorized the petitioner to
take immediate possession of the Subject Property. The court ruled:
PREMISES CONSIDERED, the Motion for the Issuance of a Writ
of Possession dated May 10, 1982, filed by plaintiff is hereby granted. Plaintiff
is hereby allowed to take immediate possession, control and disposition of the
properties known as Lot Nos. 3497-CC and 3497-DD x x x.[12]

Thereafter, a Writ of Possession[13] was issued in petitioners favor, and petitioner

was able to take physical possession of the properties sometime in the middle of
1985. At no time has Javellana ever denied that the Subject Property was actually used

as the site of Lapaz National High School. Aside from the filing by the priv
ate
respondent of his Amended Answer on April 21, 1984,[14] the expropriation proceedings
remained dormant.

Sixteen years later, on April 17, 2000, Javellana filed an Ex Parte

Motion/Manifestation, where he alleged that when he finally sought to withdraw
the P40,000.00 allegedly deposited by the petitioner, he discovered that no such deposit
was ever made. In support of this contention, private respondent presented a Certification
from the Philippine National Bank stating that no deposit was ever made for the
expropriation of the Subject Property.[15] Private respondent thus demanded his just
compensation as well as interest. Attempts at an amicable resolution and a negotiated
sale were unsuccessful. It bears emphasis that petitioner could not present any evidence
whether documentary or testimonial to prove that any payment was actually made to
private respondent.
Thereafter, on April 2, 2003, private respondent filed a Complaint[16] against
petitioner for Recovery of Possession, Fixing and Recovery of Rental and Damages. The
case was docketed as Civil Case No. 03-27571, and raffled to Branch 28 of the Iloilo City
Regional Trial Court. Private respondent alleged that since he had not been compensated
for the Subject Property, petitioners possession was illegal, and he was entitled to
recovery of possession of his lots. He prayed that petitioner be ordered to vacate the
Subject Property and pay rentals amounting to P15,000.00 per month together with
moral, exemplary, and actual damages, as well as attorneys fees.
On May 15, 2003, petitioner filed its Answer,[17] arguing that Javellana could no
longer bring an action for recovery since the Subject Property was already taken for
public use. Rather, private respondent could only demand for the payment of just
compensation. Petitioner also maintained that the legality or illegality of petitioner
s
possession of the property should be determined in the eminent domain case and not in a
separate action for recovery of possession.
Both parties jointly moved to consolidate the expropriation case (Civil Case No.
14052) and the case for recovery of possession (Civil Case No. 03-27571),[18] which
motion was granted by the trial court in an Order dated August 26, 2003.[19] On
November 14, 2003, a commission was created to determine the just compensation due
to Javellana.[20]

On November 20, 2003, private respondent filed a Motion/Manifestation dated

November 19, 2003 claiming that before a commission is created, the trial court should
first order the condemnation of the property, in accordance with the Rules of
Court. Javellana likewise insisted that the fair market value of the Subject Propert
y
should be reckoned from the date when the court orders the condemnation of the

property, and not the date of actual taking, since petitioners possession of the property
was questionable.[21] Before petitioner could file its Comment, the RTC issued an Order
dated November 21, 2003 denying the Motion.[22]
Undeterred, Javellana filed on November 25, 2003, an Omnibus Motion to
Declare Null and Void the Order of May 17, 1983 and to Require Plaintiff to Deposit
10% or P254,000.00. Javellana claimed that the amount is equivalent to the 10% of the
fair market value of the Subject Property, as determined by the Iloilo City Appraisal
Committee in 2001, at the time when the parties were trying to negotiate a settlement.[23]
First Assailed Order
On December 12, 2003, the RTC issued the First Assailed Order, which nullified
the Order dated May 17, 1983 (concerning the issuance of a writ of possession over the
Subject Property). The trial court ruled:
x x x the Order dated May 17, 1983 is hereby declared null and void and the
plaintiff [is] hereby ordered to immediately deposit with the PNB the 10% of
the just compensation after the Commission shall have rendered its report
and have determined the value of the property not at the time it was
condemned but at the time the complaint was filed in court.[24] (Emphasis
ours)

Second Assailed Order

Neither party sought reconsideration of this Order.[25] Nonetheless, about six
months later, the RTC issued the Second Assailed Order, which it denominated as an
Amended Order. The Second Assailed Order was identical to the first, except that the
reckoning point for just compensation was now the time this order was issued, which
is June 15, 2004.

x x x the Order dated May 17, 1983 is hereby declared null and void and the
plaintiff [is] hereby ordered to immediately deposit with the PNB the 10% of
the just compensation after the Commission shall have rendered its report and
have determined the value of the property not at the time it was condemned
but at the time this order was issued. (Underscoring in original text)

This time, petitioner filed a Motion for Reconsideration claiming that there was no
legal basis for the issuance of the Second Assailed Order.[26] Javellana opposed, arguing
that since the May 17, 1983 Order and the Second Assailed Order were interlocutory in
character, they were always subject to modification and revision by the court anytime.[27]

Third Assailed Order

After the parties were able to fully ventilate their respective positions,[28] the public
respondent issued the Third Assailed Order, denying the Motion for Reconsideration, and
ruling as follows:
The Order dated June 15, 2004 among other things stated that
parties and counsels must be bound by the Commissioners Report regarding
the value of the property not at the time it was condemned but at the time
this order was issued.
This is true inasmuch as there was no deposit at the PNB and their
taking was illegal.
The plaintiff thru [sic] Atty. Laurea alleged that this Court had a
change of heart and issued an Amended Order with the same wordings as the
order Point
of December
12,square
2003 Fair
butMarket
this Value
time stated not Basis
at the time it was
Reckoning
Value per
meter
condemned but at the time the order was issued. Naturally, this Court in the
1981 - interest
at the time
th
P110.00/sqm
P79,860.00
based
on deposit
three byor m
of justice,
can amend its order
because there
was no
e
ore
plaintiff.
complaint was filed

recorded sales of similar ty

pes the just compensation must
The jurisprudence cited by plaintiff that
of land in
vicinityNegr
in
1981 at the time the
P686.81/sqm
P498,625.22
Appraisal
by the
Southern
be
determined
as
of
the
date
of
the
filing
of
the
complaint
is
true
if
there
was a
os
complaint was filed
deposit. Because there was none the filing was
not in accordance
with law,
Development
Bank based
hence, must be at the time the order was issued. on
market
value,
zonal v
alue,
appraised value
2002
P3,500.00/sqm
P2,541,000.00
Appraisal
by of other
the ba
City
Appraisal
Committee,
O
ffice
The 2004
allegation of P4,200.00/sqm
defendant thru
[sic] counselPrivate
that Appraisal
the orders
PhP3,049,200.00
Report (At
ty.
attacked by plaintiff thru [sic] counsel saying it has become final and
Roberto
Calof Catolico
da until
executory are interlocutory orders subject to the
control
the Judge
ted
final judgment is correct. Furthermore, it is in the interes[t] of justice to

correct errors.[29]

In the meantime, on April 15, 2004, the Commission submitted its Report,
providing the following estimates of value, but without making a proper
recommendation:[30]

Hence, the present petition.

Petitioners Arguments
Petitioner is before us claiming that (1) the trial court gravely abused its discretion
amounting to lack or excess of jurisdiction in overturning the Order dated May 17, 1983,
which was already a final order; and (2) just compensation for the expropriation should
be based on the Subject Propertys fair market value either at the time of taking or filing
of the complaint.

Private