DELA PAZ MASIKIP v.
PASIG IV
DECISION
SANDOVAL GUTIERREZ, J.:
Where the taking by the State of private property is done for the benefit of a small community which seeks to
have its own sports and recreational facility, notwithstanding that there is such a recreational facility only a
short distance away, such taking cannot be considered to be for public use. Its expropriation is not valid. In this
case, the Court defines what constitutes a genuine necessity for public use.
This petition for review on certiorari assails the Decision[1] of the Court of Appeals dated October 31, 1997 in
CA-G.R. SP No. 41860 affirming the Order[2] of the Regional Trial Court, Branch 165, Pasig City, dated May 7,
1996 in S.C.A. No. 873. Likewise assailed is the Resolution[3] of the same court dated November 20, 1998
denying petitioners Motion for Reconsideration.
The facts of the case are:
Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land with an area of 4,521 square
meters located at Pag-Asa, Caniogan, Pasig City, Metro Manila.
In a letter dated January 6, 1994, the then Municipality of Pasig, now City of Pasig, respondent, notified
petitioner of its intention to expropriate a 1,500 square meter portion of her property to be used for the sports
development and recreational activities of the residents of Barangay Caniogan. This was pursuant to Ordinance
No. 42, Series of 1993 enacted by the then Sangguniang Bayan of Pasig.
Again, on March 23, 1994, respondent wrote another letter to petitioner, but this time the purpose was
allegedly in line with the program of the Municipal Government to provide land opportunities to deserving poor
sectors of our community.
On May 2, 1994, petitioner sent a reply to respondent stating that the intended expropriation of her property is
unconstitutional, invalid, and oppressive, as the area of her lot is neither sufficient nor suitable to provide land
opportunities to deserving poor sectors of our community.
In its letter of December 20, 1994, respondent reiterated that the purpose of the expropriation of petitioners
property is to provide sports and recreational facilities to its poor residents.
Subsequently, on February 21, 1995, respondent filed with the trial court a complaint for expropriation,
docketed as SCA No. 873. Respondent prayed that the trial court, after due notice and hearing, issue an order
for the condemnation of the property; that commissioners be appointed for the purpose of determining the just
compensation; and that judgment be rendered based on the report of the commissioners.
On April 25, 1995, petitioner filed a Motion to Dismiss the complaint on the following grounds:
I COURT.
PLAINTIFF HAS NO CAUSE OF ACTION FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN, CONSIDERING
THAT:
(A) THERE IS NO GENUINE NECESSITY FOR THE TAKING OF THE PROPERTY SOUGHT TO BE EXPROPRIATED.
(B) PLAINTIFF HAS ARBITRARILY AND CAPRICIOUSLY CHOSEN THE PROPERTY SOUGHT TO BE EXPROPRIATED.
(C) EVEN ASSUMING ARGUENDO THAT DEFENDANTS PROPERTY MAY BE EXPROPRIATED BY PLAINTIFF, THE FAIR
MARKET VALUE OF THE PROPERTY TO BE EXPROPRIATED FAR EXCEEDS SEVENTY-EIGHT THOUSAND PESOS
(P78,000.00)
II
PLAINTIFFS COMPLAINT IS DEFECTIVE IN FORM AND SUBSTANCE, CONSIDERING THAT:
(A) PLAINTIFF FAILS TO ALLEGE WITH CERTAINTY THE PURPOSE OF THE EXPROPRIATION.
(B) PLAINTIFF HAS FAILED TO COMPLY WITH THE PREREQUISITES LAID DOWN IN SECTION 34, RULE VI OF THE
RULES AND REGULATIONS IMPLEMENTING THE LOCAL GOVERNMENT CODE; THUS, THE INSTANT
EXPROPRIATION PROCEEDING IS PREMATURE.
III
THE GRANTING OF THE EXPROPRIATION WOULD VIOLATE SECTION 261 (V) OF THE OMNIBUS ELECTION CODE.
PLAINTIFF CANNOT TAKE POSSESSION OF THE SUBJECT PROPERTY BY MERELY DEPOSITING AN AMOUNT EQUAL
TO FIFTEEN PERCENT (15%) OF THE VALUE OF THE PROPERTY BASED ON THE CURRENT TAX DECLARATION OF
THE SUBJECT PROPERTY.[4]
On May 7, 1996, the trial court issued an Order denying the Motion to Dismiss,[5] on the ground that there is a
genuine necessity to expropriate the property for the sports and recreational activities of the residents of
Pasig. As to the issue of just compensation, the trial court held that the same is to be determined in accordance
with the Revised Rules of Court.
Petitioner filed a motion for reconsideration but it was denied by the trial court in its Order of July 31, 1996.
Forthwith, it appointed the City Assessor and City Treasurer of Pasig City as commissioners to ascertain the just
compensation. This prompted petitioner to file with the Court of Appeals a special civil action for certiorari,
docketed as CA-G.R. SP No. 41860. On October 31, 1997, the Appellate Court dismissed the petition for lack of
merit. Petitioners Motion for Reconsideration was denied in a Resolution dated November 20, 1998.
Hence, this petition anchored on the following grounds:
THE QUESTIONED DECISION DATED 31 OCTOBER 1997 (ATTACHMENT A) AND RESOLUTION DATED 20
NOVEMBER 1998 (ATTACHMENT B) ARE CONTRARY TO LAW, THE RULES OF COURT AND JURISPRUDENCE
CONSIDERING THAT:
I
A. THERE IS NO EVIDENCE TO PROVE THAT THERE IS GENUINE NECESSITY FOR THE TAKING OF THE PETITIONERS
PROPERTY.
B. THERE IS NO EVIDENCE TO PROVE THAT THE PUBLIC USE REQUIREMENT FOR THE EXERCISE OF THE POWER
OF EMINENT DOMAIN HAS BEEN COMPLIED WITH.
C. THERE IS NO EVIDENCE TO PROVE THAT RESPONDENT CITY OF PASIG HAS COMPLIED WITH ALL CONDITIONS
PRECEDENT FOR THE EXERCISE OF THE POWER OF EMINENT DOMAIN.
THE COURT A QUOS ORDER DATED 07 MAY 1996 AND 31 JULY 1996, WHICH WERE AFFIRMED BY THE COURT OF
APPEALS, EFFECTIVELY AMOUNT TO THE TAKING OF PETITIONERS PROPERTY WITHOUT DUE PROCESS OF LAW:
II
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING OF RULE ON ACTIONABLE DOCUMENTS TO THE
DOCUMENTS ATTACHED TO RESPONDENT CITY OF PASIGSCOMPLAINT DATED 07 APRIL 1995 TO JUSTIFY THE
COURT A QUOS DENIAL OF PETITIONERS RESPONSIVE PLEADING TO THE COMPLAINT FOR EXPROPRIATION (THE
MOTION TO DISMISS DATED 21 APRIL 1995).
III
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE RULE ON HYPOTHETICAL ADMISSION OF FACTS
ALLEGED IN A COMPLAINT CONSIDERING THAT THE MOTION TO DISMISS FILED BY PETITIONER IN THE
EXPROPRIATION CASE BELOW WAS THE RESPONSIVE PLEADING REQUIRED TO BE FILED UNDER THE THEN RULE
67 OF THE RULES OF COURT AND NOT AN ORIDNARY MOTION TO DISMISS UNDER RULE 16 OF THE RULES OF
The foregoing arguments may be synthesized into two main issues one substantive and one procedural. We will
first address the procedural issue.
Petitioner filed her Motion to Dismiss the complaint for expropriation on April 25, 1995. It was denied by the
trial court on May 7, 1996. At that time, the rule on expropriation was governed by Section 3, Rule 67 of the
Revised Rules of Court which provides:
SEC. 3. Defenses and objections. Within the time specified in the summons, each defendant, in lieu of an
answer, shall present in a single motion to dismiss or for other appropriate relief, all his objections and defenses
to the right of the plaintiff to take his property for the use or purpose specified in the complaint. All such
objections and defenses not so presented are waived. A copy of the motion shall be served on the plaintiffs
attorney of record and filed with the court with proof of service.

The motion to dismiss contemplated in the above Rule clearly constitutes the responsive pleading which takes
the place of an answer to the complaint for expropriation. Such motion is the pleading that puts in issue the
right of the plaintiff to expropriate the defendants property for the use specified in the complaint. All that the
law requires is that a copy of the said motion be served on plaintiffs attorney of record. It is the court that at its
convenience will set the case for trial after the filing of the said pleading.[6]
The Court of Appeals therefore erred in holding that the motion to dismiss filed by petitioner hypothetically
admitted the truth of the facts alleged in the complaint, specifically that there is a genuine necessity to
expropriate petitioners property for public use. Pursuant to the above Rule, the motion is a responsive pleading
joining the issues. What the trial court should have done was to set the case for the reception of evidence to
determine whether there is indeed a genuine necessity for the taking of the property, instead of summarily
making a finding that the taking is for public use and appointing commissioners to fix just compensation. This is
especially so considering that the purpose of the expropriation was squarely challenged and put in issue by
petitioner in her motion to dismiss.
Significantly, the above Rule allowing a defendant in an expropriation case to file a motion to dismiss in lieu of
an answer was amended by the 1997 Rules of Civil Procedure, which took effect on July 1, 1997. Section 3, Rule
67 now expressly mandates that any objection or defense to the taking of the property of a defendant must be
set forth in an answer.
The fact that the Court of Appeals rendered its Decision in CA-G.R. SP No. 41860 on October 31, after the 1997
Rules of Civil Procedure took effect, is of no moment. It is only fair that the Rule at the time petitioner filed her
motion to dismiss should govern. The new provision cannot be applied retroactively to her prejudice.
We now proceed to address the substantive issue.
In the early case of US v. Toribio,[7] this Court defined the power of eminent domain as the right of a
government to take and appropriate private property to public use, whenever the public exigency requires it,
which can be done only on condition of providing a reasonable compensation therefor. It has also been
described as the power of the State or its instrumentalities to take private property for public use and is
inseparable from sovereignty and inherent in government.[8]
The power of eminent domain is lodged in the legislative branch of the government. It delegates the exercise
thereof to local government units, other public entities and public utility corporations,[9] subject only to
Constitutional limitations. Local governments have no inherent power of eminent domain and may exercise it
only when expressly authorized by statute.[10] Section 19 of the Local Government Code of 1991 (Republic Act
No. 7160) prescribes the delegation by Congress of the power of eminent domain to local government units and
lays down the parameters for its exercise, thus:
petitioner, there is already an established sports development and recreational activity center at Rainforest
Park in Pasig City, fully operational and being utilized by its residents, including those from Barangay Caniogan.
Respondent does not dispute this. Evidently, there is no genuine necessity to justify the expropriation.
The right to take private property for public purposes necessarily originates from the necessity and the taking
must be limited to such necessity. In City of Manila v. Chinese Community of Manila,[12] we held that the very
foundation of the right to exercise eminent domain is a genuine necessity and that necessity must be of a
public character. Moreover, the ascertainment of the necessity must precede or accompany and not follow, the
taking of the land. In City of Manila v. Arellano Law College,[13] we ruled that necessity within the rule that the
particular property to be expropriated must be necessary, does not mean an absolute but only a reasonable or
practical necessity, such as would combine the greatest benefit to the public with the least inconvenience and
expense to the condemning party and the property owner consistent with such benefit.
Applying this standard, we hold that respondent City of Pasig has failed to establish that there is a genuine
necessity to expropriate petitioners property. Our scrutiny of the records shows that the Certification[14] issued
by the Caniogan Barangay Council dated November 20, 1994, the basis for the passage of Ordinance No. 42 s.
1993 authorizing the expropriation, indicates that the intended beneficiary is the Melendres Compound
Homeowners Association, a private, non-profit organization, not the residents of Caniogan. It can be gleaned
that the members of the said Association are desirous of having their own private playground and recreational
facility. Petitioners lot is the nearest vacant space available. The purpose is, therefore, not clearly and
categorically public. The necessity has not been shown, especially considering that there exists an alternative
facility for sports development and community recreation in the area, which is the Rainforest Park, available to
all residents of Pasig City, including those of Caniogan.
The right to own and possess property is one of the most cherished rights of men. It is so fundamental that it
has been written into organic law of every nation where the rule of law prevails. Unless the requisite of genuine
necessity for the expropriation of ones property is clearly established, it shall be the duty of the courts to
protect the rights of individuals to their private property. Important as the power of eminent domain may be,
the inviolable sanctity which the Constitution attaches to the property of the individual requires not only that
the purpose for the taking of private property be specified. The genuine necessity for the taking, which must be
of a public character, must also be shown to exist.
WHEREFORE, the petition for review is GRANTED. The challenged Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 41860 are REVERSED. The complaint for expropriation filed before the trial court by
respondent City of Pasig, docketed as SCA No. 873, is ordered DISMISSED.
SO ORDERED.

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, 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 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 expropriated property shall be determined by
the proper court, based on the fair market value at the time of the taking of the property.

Judicial review of the exercise of eminent domain is limited to the following areas of concern: (a) the adequacy
of the compensation, (b) the necessity of the taking, and (c) the public use character of the purpose of the
taking.[11]

In this case, petitioner contends that respondent City of Pasig failed to establish a genuine necessity which
justifies the condemnation of her property. While she does not dispute the intended public purpose,
nonetheless, she insists that there must be a genuine necessity for the proposed use and purposes. According to
SPS YUSAY V. CA
RESOLUTION
BERSAMIN, J.:
The petitioners appeal the adverse decision promulgated on October 18, 2002[1] and resolution promulgated
on January 17, 2003,[2]whereby the Court of Appeals (CA) reversed and set aside the order issued in their favor
on February 19, 2002 by the Regional Trial Court, Branch 214, in Mandaluyong City (RTC).[3] Thereby, the CA
upheld Resolution No. 552, Series of 1997, adopted by the City of Mandaluyong (City) authorizing its then City
Mayor to take the necessary legal steps for the expropriation of the parcel of land registered in the names of
the petitioners.
We affirm the CA.
Antecedents
The petitioners owned a parcel of land with an area of 1,044 square meters situated between Nueve de Febrero
Street and Fernandez Street in Barangay Mauway, Mandaluyong City. Half of their land they used as their
residence, and the rest they rented out to nine other families. Allegedly, the land was their only property and
only source of income.
On October 2, 1997, the Sangguniang Panglungsod of Mandaluyong City adopted Resolution No. 552, Series of
1997, to authorize then City Mayor Benjamin S. Abalos, Sr. to take the necessary legal steps for the
expropriation of the land of the petitioners for the purpose of developing it for low cost housing for the less
privileged but deserving city inhabitants. The resolution reads as follows:
RESOLUTION NO. 552, S-1997[4]
RESOLUTION AUTHORIZING HON. BENJAMIN S. ABALOS TO TAKE THE NECESSARY LEGAL STEPS FOR THE
EXPROPRIATION OF A PARCEL OF LAND SITUATED ALONG DR.
JOSE FERNANDEZ STREET, BARANGAY MAUWAY, CITY OF MANDALUYONG, OWNED BY MR. ANTONIO YUSAY
WHEREAS, there is a parcel of land situated along Dr. Jose Fernandez Street, Barangay Mauway, City of
Mandaluyong, owned and registered in the name of MR. ANTONIO YUSAY;
WHEREAS, this piece of land have been occupied for about ten (10) years by many financially hard-up families
which the City Government of Mandaluyong desires, among other things, to provide modest and decent
dwelling;
WHEREAS, the said families have already negotiated to acquire this land but was refused by the above-named
owner in total disregard to the City Governments effort of providing land for the landless;
WHEREAS, the expropriation of said land would certainly benefit public interest, let alone, a step towards the
implementation of social justice and urban land reform in this City;
WHEREAS, under the present situation, the City Council deems it necessary to authorize Hon. Mayor BENJAMIN
S. ABALOS to institute expropriation proceedings to achieve the noble purpose of the City Government of
Mandaluyong.
NOW, THEREFORE, upon motion duly seconded, the City Council of Mandaluyong, in session assembled,
RESOLVED, as it hereby RESOLVES, to authorize, as it is hereby authorizing, Hon. Mayor BENJAMIN S. ABALOS,
to institute expropriation proceedings against the above-named registered owner of that parcel of land situated
along Dr. Jose Fernandez Street, Barangay Mauway, City of Mandaluyong, (f)or the purpose of developing it to a
low-cost housing project for the less privileged but deserving constituents of this City.
ADOPTED on this 2nd day of October 1997 at the City of Mandaluyong.
Sgd. Adventor R. Delos Santos
Acting Sanggunian Secretary
Attested: Approved:
Sgd. Roberto J. Francisco Sgd. Benjamin S. Abalos
City Councilor & Acting City Mayor
Presiding Officer
Notwithstanding that the enactment of Resolution No. 552 was but the initial step in the Citys exercise of its
power of eminent domain granted under Section 19 of the Local Government Code of 1991, the petitioners
became alarmed, and filed a petition for certiorari and prohibition in the RTC, praying for the annulment of
Resolution No. 552 due to its being unconstitutional, confiscatory, improper, and without force and effect.
The City countered that Resolution No. 552 was a mere authorization given to the City Mayor to initiate the
legal steps towards expropriation, which included making a definite offer to purchase the property of the
petitioners; hence, the suit of the petitioners was premature.
On January 31, 2001, the RTC ruled in favor of the City and dismissed the petition for lack of merit, opining
that certiorari did not lie against a legislative act of the City Government, because the special civil action
of certiorari was only available to assail judicial or quasi-judicial acts done without or in excess of jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction; that the special civil action of
prohibition did not also lie under the circumstances considering that the act of passing the resolution was not a
judicial, or quasi-judicial, or ministerial act; and that notwithstanding the issuance of Resolution No. 552, the
City had yet to commit acts of encroachment, excess, or usurpation, or had yet to act without or in excess of
jurisdiction or with grave abuse of discretion amounting lack or in excess of jurisdiction.
However, on February 19, 2002, the RTC, acting upon the petitioners motion for reconsideration, set aside its
decision and declared that Resolution No. 552 was null and void. The RTC held that the petition was not
premature because the passage of Resolution No. 552 would already pave the way for the City to deprive the
petitioners and their heirs of their only property; that there was no due process in the passage of Resolution No.
552 because the petitioners had not been invited to the subsequent hearings on the resolution to enable them
to ventilate their opposition; and that the purpose for the expropriation was not for public use and the
expropriation would not benefit the greater number of inhabitants.
Aggrieved, the City appealed to the CA.
In its decision promulgated on October 18, 2002, the CA concluded that the reversal of the January 31, 2001
decision by the RTC was not justified because Resolution No. 552 deserved to be accorded the benefit of the
presumption of regularity and validity absent any sufficient showing to the contrary; that notice to the
petitioners (Spouses Yusay) of the succeeding hearings conducted by the City was not a part of due process, for
it was enough that their views had been consulted and that they had been given the full opportunity to voice
their protest; that to rule otherwise would be to give every affected resident effective veto powers in law-
making by a local government unit; and that a public hearing, although necessary at times, was not
indispensable and merely aided in law-making.
The CA disposed as follows:
WHEREFORE, premises considered, the questioned order of the Regional Trial Court, Branch 214, Mandaluyong
City dated February 19, 2002 in SCA Case No. 15-MD, which declared Resolution No. 552, Series of 1997 of the
City of Mandaluyong null and void, is hereby REVERSED and SET ASIDE. No costs.
SO ORDERED.[5]
The petitioners moved for reconsideration, but the CA denied their motion. Thus, they appeal to the Court,
posing the following issues, namely:
1. Can the validity of Resolution No. 552 be assailed even before its implementation?
2. Must a citizen await the takeover and possession of his property by the local government before he can go
to court to nullify an unjust expropriation?
Before resolving these issues, however, the Court considers it necessary to first determine whether or not the
action for certiorari and prohibition commenced by the petitioners in the RTC was a proper recourse of the
petitioners.
Ruling
We deny the petition for review, and find that certiorari and prohibition were not available to the petitioners
under the circumstances. Thus, we sustain, albeit upon different grounds, the result announced by the CA, and
declare that the RTC gravely erred in giving due course to the petition for certiorari and prohibition.
1.
Certiorari does not lie to assail the issuance of
a resolution by the Sanggunian Panglungsod
The special civil action for certiorari is governed by Rule 65 of the 1997 Rules of Civil Procedure, whose Section 1
provides:
Section 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to
lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the
facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such
tribunal, board or officer, and granting such incidental reliefs as law and justice may require.
xxx
For certiorari to prosper, therefore, the petitioner must allege and establish the concurrence of the following
requisites, namely:
(a) The writ is directed against a tribunal, board, or officer exercising judicial or quasi-judicial functions;
(b) Such tribunal, board, or officer has acted without or in excess of jurisdiction, or with grave abuse of
discretionamounting to lack or excess of jurisdiction; and
(c) There is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law.[6]
It is further emphasized that a petition for certiorari seeks solely to correct defects in jurisdiction,[7] and does
not correct just any error or mistake committed by a court, board, or officer exercising judicial or quasi-judicial
functions unless such court, board, or officer thereby acts without jurisdiction or in excess of jurisdiction or with
such grave abuse of discretion amounting to lack of jurisdiction.[8]
The first requisite is that the respondent tribunal, board, or officer must be exercising judicial or quasi-judicial
functions. Judicial function, according to Bouvier,[9] is the exercise of the judicial faculty or office; it also means
the capacity to act in a specific way which appertains to the judicial power, as one of the powers of government.
The term, Bouvier continues,[10] is used to describe generally those modes of action which appertain to the
judiciary as a department of organized government, and through and by means of which it accomplishes its
purpose and exercises its peculiar powers.
Based on the foregoing, certiorari did not lie against the Sangguniang Panglungsod, which was not a part of the
Judiciary settling an actual controversy involving legally demandable and enforceable rights when it adopted
Resolution No. 552, but a legislative and policy-making body declaring its sentiment or opinion.
Nor did the Sangguniang Panglungsod abuse its discretion in adopting Resolution No. 552. To demonstrate the
absence of abuse of discretion, it is well to differentiate between a resolution and an ordinance. The first is
upon a specific matter of a temporary nature while the latter is a law that is permanent in character.[11] No
rights can be conferred by and be inferred from a resolution, which is nothing but an embodiment of what the
lawmaking body has to say in the light of attendant circumstances. In simply expressing its sentiment or opinion
through the resolution, therefore, the Sangguniang Panglungsod in no way abused its discretion, least of all
gravely, for its expression of sentiment or opinion was a constitutionally protected right.
Moreover, Republic Act No. 7160 (The Local Government Code) required the City to pass an ordinance, not
adopt a resolution, for the purpose of initiating an expropriation proceeding. In this regard, Section 19 of The
Local Government Code clearly provides,viz:
Section 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.
A resolution like Resolution No. 552 that merely expresses the sentiment of the Sangguniang Panglungsod is
not sufficient for the purpose of initiating an expropriation proceeding. Indeed, in Municipality of Paraaque v.
V.M. Realty Corporation,[12] a case in which the Municipality of Paraaque based its complaint for expropriation
on a resolution, not an ordinance, the Court ruled so:
The power of eminent domain is lodged in the legislative branch of government, which may delegate the
exercise thereof to LGUs, other public entities and public utilities. An LGU may therefore exercise the power to
expropriate private property only when authorized by Congress and subject to the latters control and restraints,
imposed through the law conferring the power or in other legislations. In this case, Section 19 of RA 7160, which
delegates to LGUs the power of eminent domain, also lays down the parameters for its exercise. It provides as
follows:
Section 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.(Emphasis
supplied)
Thus, the following essential requisites must concur before an LGU can exercise the power of eminent domain:
1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the
LGU, to exercise the power of eminent domain or pursue expropriation proceedings over a particular private
property.
2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor
and the landless.
3. There is payment of just compensation, as required under Section 9 Article III of the Constitution and other
pertinent laws.
4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated,
but said offer was not accepted.
In the case at bar, the local chief executive sought to exercise the power of eminent domain pursuant to a
resolution of the municipal council. Thus, there was no compliance with the first requisite that the mayor be
authorized through an ordinance. Petitioner cites Camarines Sur vs. Court of Appeals to show that a resolution
may suffice to support the exercise of eminent domain by an LGU. This case, however, is not in point because
the applicable law at that time was BP 337, the previous Local Government Code, which had provided that a
mere resolution would enable an LGU to exercise eminent domain. In contrast, RA 7160, the present Local
Government Code which was already in force when the Complaint for expropriation was filed, explicitly
required an ordinance for this purpose.
We are not convinced by petitioners insistence that the terms resolution and ordinance are synonymous. A
municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely a
declaration of the sentiment or opinion of a lawmaking body on a specific matter. An ordinance possesses a
general and permanent character, but a resolution is temporary in nature. Additionally, the two are enacted
differently -- a third reading is necessary for an ordinance, but not for a resolution, unless decided otherwise
by a majority of all the Sanggunian members.
If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it would have simply
adopted the language of the previous Local Government Code. But Congress did not. In a clear divergence from
the previous Local Government Code, Section 19 of RA 7160 categorically requires that the local chief executive
act pursuant to an ordinance. Indeed, [l]egislative intent is determined principally from the language of a
statute. Where the language of a statute is clear and unambiguous, the law is applied according to its express
terms, and interpretation would be resorted to only where a literal interpretation would be either impossible or
absurd or would lead to an injustice. In the instant case, there is no reason to depart from this rule, since the
law requiring an ordinance is not at all impossible, absurd, or unjust.
Moreover, the power of eminent domain necessarily involves a derogation of a fundamental or private right of
the people. Accordingly, the manifest change in the legislative language from resolution under BP 337 to
ordinance under RA 7160 demands a strict construction. No species of property is held by individuals with
greater tenacity, and is guarded by the Constitution and laws more sedulously, than the right to the freehold of
inhabitants. When the legislature interferes with that right and, for greater public purposes, appropriates the
land of an individual without his consent, the plain meaning of the law should not be enlarged by doubtful
interpretation.
xx
In its Brief filed before Respondent Court, petitioner argues that its Sangguniang Bayan passed an ordinance
on October 11, 1994 which reiterated its Resolution No. 93-35, Series of 1993, and ratified all the acts of its
mayor regarding the subject expropriation.
This argument is bereft of merit. In the first place, petitioner merely alleged the existence of such an ordinance,
but it did not present any certified true copy thereof. In the second place, petitioner did not raise this point
before this Court. In fact, it was mentioned by private respondent, and only in passing. In any event, this
allegation does not cure the inherent defect of petitioners Complaint for expropriation filed on September 23,
1993. It is hornbook doctrine that:
x x x in a motion to dismiss based on the ground that the complaint fails to state a cause of action, the question
submitted before the court for determination is the sufficiency of the allegations in the complaint
itself. Whether those allegations are true or not is beside the point, for their truth is hypothetically admitted by
the motion. The issue rather is: admitting them to be true, may the court render a valid judgment in accordance
with the prayer of the complaint?
The fact that there is no cause of action is evident from the face of the Complaint for expropriation which was
based on a mere resolution. The absence of an ordinance authorizing the same is equivalent to lack of cause
of action. Consequently, the Court of Appeals committed no reversible error in affirming the trial courts
Decision which dismissed the expropriation suit.[13] (Emphasis supplied)
In view of the absence of the proper expropriation ordinance authorizing and providing for the expropriation,
the petition for certiorari filed in the RTC was dismissible for lack of cause of action.
2.
Prohibition does not lie against expropriation
The special civil action for prohibition is governed also by Section 2 of Rule 65 of the 1997 Rules of Civil
Procedure, which states:
Section 2. Petition for prohibition. When the proceedings of any tribunal, corporation, board, officer or person,
whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal
or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may
file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be
rendered commanding the respondent to desist from further proceedings in the action or matter specified
therein, or otherwise granting such incidental reliefs as law and justice may require.
xxx
The function of prohibition is to prevent the unlawful and oppressive exercise of legal authority and to provide
for a fair and orderly administration of justice.[14] The writ of prohibition is directed against proceedings that are
done without or in excess of jurisdiction, or with grave abuse of discretion, there being no appeal or other plain,
speedy and adequate remedy in the ordinary course of law.[15] For grave abuse of discretion to be a ground for
prohibition, the petitioner must first demonstrate that the tribunal, corporation, board, officer, or person,
whether exercising judicial, quasi-judicial or ministerial functions, has exercised its or his power in an arbitrary
or despotic manner, by reason of passion or personal hostility, which must be so patent and gross as would
amount to an evasion, or to a virtual refusal to perform the duty enjoined or to act in contemplation of
law.[16] On the other hand, the term excess of jurisdiction signifies that the court, board, or officer has
jurisdiction over a case but has transcended such jurisdiction or acted without any authority.[17]
The petitioner must further allege in the petition and establish facts to show that any other existing remedy is
not speedy or adequate.[18] A remedy is plain, speedy and adequate if it will promptly relieve the petitioner
from the injurious effects of that judgment and the acts of the tribunal or inferior court.[19]
The rule and relevant jurisprudence indicate that prohibition was not available to the petitioners as a remedy
against the adoption of Resolution No. 552, for the Sangguniang Panglungsod, by such adoption, was not
exercising judicial, quasi-judicial or ministerial functions, but only expressing its collective sentiment or opinion.
Verily, there can be no prohibition against a procedure whereby the immediate possession of the land under
expropriation proceedings may be taken, provided always that due provision is made to secure the prompt
adjudication and payment of just compensation to the owner. [20] This bar against prohibition comes from the
nature of the power of eminent domain as necessitating the taking of private land intended for public
use,[21] and the interest of the affected landowner is thus made subordinate to the power of the State. Once the
State decides to exercise its power of eminent domain, the power of judicial review becomes limited in scope,
and the courts will be left to determine the appropriate amount of just compensation to be paid to the affected
landowners. Only when the landowners are not given their just compensation for the taking of their property or
when there has been no agreement on the amount of just compensation may the remedy of prohibition
become available.
Here, however, the remedy of prohibition was not called for, considering that only a resolution expressing the
desire of the Sangguniang Panglungsod to expropriate the petitioners property was issued. As of then, it was
premature for the petitioners to mount any judicial challenge, for the
power of eminent domain could be exercised by the City only through the filing of a verified complaint in the
proper court.[22] Before the City as the expropriating authority filed such verified complaint, no expropriation
proceeding could be said to exist. Until then, the petitioners as the owners could not also be deprived of their
property under the power of eminent domain.[23]
WHEREFORE, we affirm the decision promulgated on October 18, 2002 in CA-G.R. SP No. 70618. Costs to be
paid by the petitioners.
SO ORDERED.
FIRST DIVISION
G.R. No. 165354 January 12, 2015
REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL POWER CORPORATION, Petitioner,
vs.
HEIRS OF SATURNINO Q. BORBON, AND COURT OF APPEALS, Respondents.
DECISION
BERSAMIN, J.:
The expropriator who has taken possession of the property subject of expropriation is obliged to pay reasonable
compensation to the landowner for the period of such possession although the proceedings had been
discontinued on the ground that the public purpose for the expropriation had meanwhile ceased.
Antecedents
The National Power Corporation (NAPOCOR) is a government-owned and -controlled corporation vested with
authority under Republic Act No. 6395, as amended, to undertake the development of hydro-electric generation
of power, production of electricity from any and all sources, construction, operation and maintenance of power
plants, auxiliary plants, dams, reservoirs, pipes, main transmission lines, power stations and substations, and
other works for the purpose of developing hydraulic power from any river, lake, creek, spring and waterfalls in
the Philippines and to supply such power to the inhabitants thereof.1
In February 1993, NAPOCOR entered a property located in Barangay San Isidro, Batangas City in order to
construct and maintain transmission lines for the 230 KV Mahabang Parang-Pinamucan Power Transmission
Project.2 Respondents heirs of Saturnino Q. Borbon owned the property, with a total area of 14,257 square
meters, which was registered under Transfer Certificate of Title No. T-9696 of the Registry of Deeds of
Batangas.3
On May 26, 1995, NAPOCOR filed a complaint for expropriation in the Regional Trial Court in Batangas City
(RTC),4seeking the acquisition of an easement of right of way over a portion of the property involving an area of
only 6,326 square meters, more or less,5 alleging that it had negotiated with the respondents for the acquisition
of the easement but they had failed to reach any agreement; and that, nonetheless, it was willing to deposit the
amount of 9,790.00 representing the assessed value of the portion sought to be expropriated.6 It prayed for
the issuance of a writ of possession upon deposit to enable it to enter and take possession and control of the
affected portion of the property; to demolish all improvements existing thereon; and to commence
construction of the transmission line project. It likewise prayed for the appointment of three commissioners to
determine the just compensation to be paid.7
In their answer with motion to dismiss,8 the respondents staunchly maintained that NAPOCOR had not
negotiated with them before entering the property and that the entry was done without their consent in the
process, destroying some fruit trees without payment, and installing five transmission line posts and five
woodpoles for its project;9 that the area being expropriated only covered the portion directly affected by the
transmission lines; that the remaining portion of the property was also affected because the transmission line
passed through the center of the land, thereby dividing the land into three lots; that the presence of the high
tension transmission line had rendered the entire property inutile for any future use and capabilities;10 that,
nonetheless, they tendered no objection to NAPOCORs entry provided it would pay just compensation not only
for the portion sought to be expropriated but for the entire property whose potential was greatly diminished, if
not totally lost, due to the project;11 and that their property was classified as industrial land. Thus, they sought
the dismissal of the complaint, the payment of just compensation of 1,000.00/square meter, and attorneys
fees;12 and to be allowed to nominate their representative to the panel of commissioners to be appointed by
the trial court.13
In the pre-trial conference conducted on December 20, 1995, the parties stipulated on: (1) the location of the
property; (2) the number of the heirs of the late Saturnino Q. Borbon; (3) the names of the persons upon whom
title to the property was issued; and (4) the ownership and possession of the property.14 In its order of that
date, the RTC directed the parties to submit the names of their nominees to sit in the panel of commissioners
within 10 days from the date of the pre-trial.15
The RTC constituted the panel of three commissioners. Two commissioners submitted a joint report on April 8,
1999,16 in which they found that the property was classified as industrial land located within the Industrial 2
Zone;17that although the property used to be classified as agricultural (i.e., horticultural and pasture land), it
was reclassified to industrial land for appraisal or taxation purposes on June 30, 1994; and that the
reclassification was made on the basis of a certification issued by the Zoning Administrator pursuant to Section
3.10 (d) of the Amended Zoning Ordinance (1989) of the City of Batangas.18 The two commissioners appraised
the value at 550.00/square meter.19However, the third commissioner filed a separate report dated March 16,
1999,20 whereby he recommended the payment of "an easement fee of at least ten percent (10%) of the
assessed value indicated in the tax declaration21plus cost of damages in the course of the construction,
improvements affected and tower occupancy fee."22
The parties then submitted their respective objections to the reports. On their part, the respondents
maintained that NAPOCOR should compensate them for the entire property at the rate of 550.00/square
meter because the property was already classified as industrial land at the time NAPOCOR entered it.23 In
contrast, NAPOCOR objected to the joint report, insisting that the property was classified as agricultural land at
the time of its taking in March 1993; and clarifying that it was only seeking an easement of right of way over a
portion of the property, not the entire area thereof, so that it should pay only 10% of the assessed value of the
portion thus occupied.24
In the judgment dated November 27, 2000,25 the RTC adopted the recommendation contained in the joint
report, and ruled thusly:
The price to be paid for an expropriated land is its value at the time of taking, which is the date when the
plaintiff actually entered the property or the date of the filing of the complaint for expropriation. In this case,
there is no evidence as to when the plaintiff actually entered the property in question, so the reference point
should be the date of filing of the complaint, which is May 5, 1995.
On this date, the property in question was already classified as industrial. So, the Joint Report (Exhibit "1") is
credible on this point. The two Commissioners who submitted the Joint Report are government officials who
were not shown to be biased. So, that their report should be given more weight than the minority report
submitted by a private lawyer representing the plaintiff. In view of these, the Court adopts the Joint Report and
rejects the minority report. The former fixed the just compensation at 550.00 per square meter for the whole
lot of 14,257 square meters.26
Accordingly, the RTC ordered NAPOCOR to pay the respondents: (1) just compensation for the whole area of
14,257 square meters at the rate of 550.00/square meter; (2) legal rate of interest from May 5, 1995 until full
payment; and (3) the costs of suit.27
NAPOCOR appealed (CA-G.R. No. 72069).
On April 29, 2004,28 the CA promulgated its decision, viz:
WHEREFORE, premises considered, the Decision dated November 27, 2000 of Branch I of the Regional Trial
Court of Batangas City, is hereby AFFIRMED with the MODIFICATION that plaintiff-appellant shall pay only for
the occupied 6,326 square meters of the subject real property at the rate of 550.00 per square meter and to
pay legal interest therefrom until fully paid.
SO ORDERED.29
Hence, this appeal by NAPOCOR.
Issue
On December 3, 2012, during the pendency of the appeal, NAPOCOR filed a Motion to Defer Proceedings
stating that negotiations between the parties were going on with a view to the amicable settlement of the
case.30
On January 3, 2014, NAPOCOR filed a Manifestation and Motion to Discontinue Expropriation
Proceedings,31informing that the parties failed to reach an amicable agreement; that the property sought to be
expropriated was no longer necessary for public purpose because of the intervening retirement of the
transmission lines installed on the respondents property;32 that because the public purpose for which such
property would be used thereby ceased to exist, the proceedings for expropriation should no longer continue,
and the State was now duty-bound to return the property to its owners; and that the dismissal or
discontinuance of the expropriation proceedings was in accordance with Section 4, Rule 67 of the Rules of
Court. Hence, NAPOCOR prayed that the proceedings be discontinued "under such terms as the court deems
just and equitable,"33 and that the compensation to be awarded the respondents be reduced by the equivalent
of the benefit they received from the land during the time of its occupation, for which purpose the case could
be remanded to the trial court for the determination of reasonable compensation to be paid to them.34
In light of its Manifestation and Motion to Discontinue Expropriation Proceedings, NAPOCOR contends that the
expropriation has become without basis for lack of public purpose as a result of the retirement of the
transmission lines; that if expropriation still proceeds, the Government will be unduly burdened by payment of
just compensation for property it no longer requires; and that there is legal basis in dismissing the proceedings,
citing Metropolitan Water District v. De los Angeles35 where the Court granted petitioners prayer for the
quashal of expropriation proceedings and the eventual dismissal of the proceedings on the ground that the land
sought to be expropriated was no longer "indispensably necessary" in the maintenance and operation of
petitioner's waterworks system.
The issue to be considered and resolved is whether or not the expropriation proceedings should be
discontinued or dismissed pending appeal.
Ruling of the Court
The dismissal of the proceedings for expropriation at the instance of NAPOCOR is proper, but, conformably with
Section 4,36 Rule 67 of the Rules of Court, the dismissal or discontinuance of the proceedings must be upon such
terms as the court deems just and equitable.
Before anything more, we remind the parties about the nature of the power of eminent domain. The right of
eminent domain is "the ultimate right of the sovereign power to appropriate, not only the public but the private
property of all citizens within the territorial sovereignty, to public purpose."37 But the exercise of such right is
not unlimited, for two mandatory requirements should underlie the Governments exercise of the power of
eminent domain, namely: (1) that it is for a particular public purpose; and (2) that just compensation be paid to
the property owner.38 These requirements partake the nature of implied conditions that should be complied
with to enable the condemnor to keep the property expropriated.39
Public use, in common acceptation, means "use by the public." However, the concept has expanded to include
utility, advantage or productivity for the benefit of the public.40 In Asia's Emerging Dragon Corporation v.
Department of Transportation and Communications,41 Justice Corona, in his dissenting opinion said that:
To be valid, the taking must be for public use. The meaning of the term "public use" has evolved over time in
response to changing public needs and exigencies. Public use which was traditionally understood as strictly
limited to actual "use by the public" has already been abandoned. "Public use" has now been held to be
synonymous with "public interest," "public benefit," and "public convenience."
It is essential that the element of public use of the property be maintained throughout the proceedings for
expropriation. The effects of abandoning the public purpose were explained in Mactan-Cebu International
Airport Authority v. Lozada, Sr.,42 to wit:
More particularly, with respect to the element of public use, the expropriator should commit to use the
property pursuant to the purpose stated in the petition for expropriation filed, failing which, it should file
another petition for the new purpose. If not, it is then incumbent upon the expropriator to return the said
property to its private owner, if the latter desires to reacquire the same. Otherwise, the judgment of
expropriation suffers an intrinsic flaw, as it would lack one indispensable element for the proper exercise of the
power of eminent domain, namely, the particular public purpose for which the property will be devoted.
Accordingly, the private property owner would be denied due process of law, and the judgment would violate
the property owner's right to justice, fairness and equity.43
A review reveals that Metropolitan Water District v. De los Angeles44 is an appropriate precedent herein. There,
the Metropolitan Water District passed a board resolution requesting the Attorney-General to file a petition in
the Court of First Instance of the Province of Rizal praying that it be permitted to discontinue the condemnation
proceedings it had initiated for the expropriation of a parcel of land in Montalban, Rizal to be used in the
construction of the Angat Waterworks System. It claimed that the land was no longer indispensably necessary in
the maintenance and operation of its waterworks system, and that the expropriation complaint should then be
dismissed. The Court, expounding on the power of the State to exercise the right of eminent domain, then
pronounced:
There is no question raised concerning the right of the plaintiff here to acquire the land under the power of
eminent domain.1wphi1 That power was expressly granted it by its charter. The power of eminent domain is a
right reserved to the people or Government to take property for public use. It is the right of the state, through
its regular organization, to reassert either temporarily or permanently its dominion over any portion of the soil
of the state on account of public necessity and for the public good. The right of eminent domain is the right
which the Government or the people retains over the estates of individuals to resume them for public use. It is
the right of the people, or the sovereign, to dispose, in case of public necessity and for the public safety, of all
the wealth contained in the state.45
Indeed, public use is the fundamental basis for the action for expropriation; hence, NAPOCORs motion to
discontinue the proceedings is warranted and should be granted. The Court has observed in Metropolitan
Water District v. De los Angeles:
It is not denied that the purpose of the plaintiff was to acquire the land in question for public use. The
fundamental basis then of all actions brought for the expropriation of lands, under the power of eminent
domain, is public use. That being true, the very moment that it appears at any stage of the proceedings that the
expropriation is not for a public use, the action must necessarily fail and should be dismissed, for the reason
that the action cannot be maintained at all except when the expropriation is for some public use. That must be
true even during the pendency of the appeal or at any other stage of the proceedings. If, for example, during
the trial in the lower court, it should be made to appear to the satisfaction of the court that the expropriation is
not for some public use, it would be the duty and the obligation of the trial court to dismiss the action. And
even during the pendency of the appeal, if it should be made to appear to the satisfaction of the appellate court
that the expropriation is not for public use, then it would become the duty and the obligation of the appellate
court to dismiss it.
In the present case the petitioner admits that the expropriation of the land in question is no longer necessary
for public use. Had that admission been made in the trial court the case should have been dismissed there. It
now appearing positively, by resolution of the plaintiff, that the expropriation is not necessary for public use,
the action should be dismissed even without a motion on the part of the plaintiff. The moment it appears in
whatever stage of the proceedings that the expropriation is not for a public use the complaint should be
dismissed and all the parties thereto should be relieved from further annoyance or litigation.46 (underscoring
and emphasis supplied)
It is notable that the dismissal of the expropriation proceedings in Metropolitan Water District v. De los Angeles
was made subject to several conditions in order to address the dispossession of the defendants of their land,
and the inconvenience, annoyance and damages suffered by the defendants on account of the proceedings.
Accordingly, the Court remanded the case to the trial court for the issuance of a writ of possession ordering
Metropolitan Water District to immediately return possession of the land to the defendants, and for the
determination of damages in favor of the defendants, the claims for which must be presented within 30 days
from the return of the record to the court of origin and notice thereof.47
Here, NAPOCOR seeks to discontinue the expropriation proceedings on the ground that the transmission lines
constructed on the respondents property had already been retired. Considering that the Court has consistently
upheld the primordial importance of public use in expropriation proceedings, NAPOCORs reliance on
Metropolitan Water District v. De los Angeles was apt and correct. Verily, the retirement of the transmission
lines necessarily stripped the expropriation proceedings of the element of public use. To continue with the
expropriation proceedings despite the definite cessation of the public purpose of the project would result in the
rendition of an invalid judgment in favor of the expropriator due to the absence of the essential element of
public use.
Unlike in Metropolitan Water District v. De los Angeles where the request to discontinue the expropriation
proceedings was made upon the authority appearing in the board resolution issued on July 14, 1930,48 counsel
for NAPOCOR has not presented herein any document to show that NAPOCOR had decided, as a corporate
body, to discontinue the expropriation proceedings. Nonetheless, the Court points to the Memorandum dated
December 13, 201249 and the Certificate of Inspection/Accomplishment dated February 5, 200550 attached to
NAPOCORs motion attesting to the retirement of the transmission lines. Also, Metropolitan Water District v. De
los Angeles emphasized that it became the duty and the obligation of the court, regardless of the stage of the
proceedings, to dismiss the action "if it should be made to appear to the satisfaction of the court that the
expropriation is not for some public use."51 Despite the lack of the board resolution, therefore, the Court now
considers the documents attached to NAPOCORs Manifestation and Motion to Discontinue Expropriation
Proceedings to be sufficient to establish that the expropriation sought is no longer for some public purpose.
Accordingly, the Court grants the motion to discontinue the proceedings subject to the conditions to be shortly
mentioned hereunder, and requires the return of the property to the respondents. Having said that, we must
point out that NAPOCOR entered the property without the owners consent and without paying just
compensation to the respondents. Neither did it deposit any amount as required by law prior to its entry. The
Constitution is explicit in obliging the Government and its entities to pay just compensation before depriving
any person of his or her property for public use.52 Considering that in the process of installing transmission lines,
NAPOCOR destroyed some fruit trees and plants without payment, and the installation of the transmission lines
went through the middle of the land as to divide the property into three lots, thereby effectively rendering the
entire property inutile for any future use, it would be unfair for NAPOCOR not to be made liable to the
respondents for the disturbance of their property rights from the time of entry until the time of restoration of
the possession of the property. There should be no question about the taking. In several rulings, notably
National Power Corporation v. Zabala,53 Republic v. Libunao,54 National Power Corporation v. Tuazon,55 and
National Power Corporation v. Saludares,56 this Court has already declared that "since the high-tension electric
current passing through the transmission lines will perpetually deprive the property owners of the normal use
of their land, it is only just and proper to require Napocor to recompense them for the full market value of their
property."
There is a sufficient showing that NAPOCOR entered into and took possession of the respondents property as
early as in March 1993 without the benefit of first filing a petition for eminent domain. For all intents and
purposes, therefore, March 1993 is the reckoning point of NAPOCORs taking of the property, instead of May 5,
1995, the time NAPOCOR filed the petition for expropriation. The reckoning conforms to the pronouncement in
Ansaldo v. Tantuico, Jr.,57 to wit:
Normally, of course, where the institution of an expropriation action precedes the taking of the property subject
thereof, the just compensation is fixed as of the time of the filing of the complaint. This is so provided by the
Rules of Court, the assumption of possession by the expropriator ordinarily being conditioned on its deposits
with the National or Provincial Treasurer of the value of the property as provisionally ascertained by the court
having jurisdiction of the proceedings.
There are instances, however, where the expropriating agency takes over the property prior to the
expropriation suit, as in this case although, to repeat, the case at bar is quite extraordinary in that possession
was taken by the expropriator more than 40 years prior to suit. In these instances, this Court has ruled that the
just compensation shall be determined as of the time of taking, not as of the time of filing of the action of
eminent domain.
In the context of the State's inherent power of eminent domain, there is a "taking" when the owner is actually
deprived or dispossessed of his property; when there is a practical destruction or a material impairment of the
value of his property or when he is deprived of the ordinary use thereof. There is a "taking" in this sense when
the expropriator enters private property not only for a momentary period but for a more permanent duration,
for the purpose of devoting the property to a public use in such a manner as to oust the owner and deprive him
of all beneficial enjoyment thereof. For ownership, after all, "is nothing without the inherent rights of
possession, control and enjoyment. Where the owner is deprived of the ordinary and beneficial use of his
property or of its value by its being diverted to public use, there is taking within the Constitutional sense." x x
x.58
In view of the discontinuance of the proceedings and the eventual return of the property to the respondents,
there is no need to pay "just compensation" to them because their property would not be taken by NAPOCOR.
Instead of full market value of the property, therefore, NAPOCOR should compensate the respondents for the
disturbance of their property rights from the time of entry in March 1993 until the time of restoration of the
possession by paying to them actual or other compensatory damages. This conforms with the following
pronouncement in Mactan-Cebu International Airport Authority v. Lozada, Sr.:59
In light of these premises, we now expressly hold that the taking of private property, consequent to the
Governments exercise of its power of eminent domain, is always subject to the condition that the property be
devoted to the specific public purpose for which it was taken. Corollarily, if this particular purpose or intent is
not initiated or not at all pursued, and is peremptorily abandoned, then the former owners, if they so desire,
may seek the reversion of the property, subject to the return of the amount of just compensation received. In
such a case, the exercise of the power of eminent domain has become improper for lack of the required factual
justification.60
This should mean that the compensation must be based on what they actually lost as a result and by reason of
their dispossession of the property and of its use, including the value of the fruit trees, plants and crops
destroyed by NAPOCORs construction of the transmission lines. Considering that the dismissal of the
expropriation proceedings is a development occurring during the appeal, the Court now treats the dismissal of
the expropriation proceedings as producing the effect of converting the case into an action for damages. For
that purpose, the Court remands the case to the court of origin for further proceedings, with instruction to the
court of origin to enable the parties to fully litigate the action for damages by giving them the opportunity to re-
define the factual and legal issues by the submission of the proper pleadings on the extent of the taking, the
value of the compensation to be paid to the respondents by NAPOCOR, and other relevant matters as they
deem fit. Trial shall be limited to matters the evidence upon which had not been heretofore heard or adduced.
The assessment and payment of the correct amount of filing fees due from the respondents shall be made in
the judgment, and such amount shall constitute a first lien on the recovery. Subject to these conditions, the
court of origin shall treat the case as if originally filed as an action for damages.
WHEREFORE, the Court DISMISSES the expropriation proceedings due to the intervening cessation of the need
for public use; REMANDS the records to the Regional Trial Court, Branch 1, in Batangas City as the court of origin
for further proceedings to be conducted in accordance with the foregoing instructions; and ORDERS said trial
court to try and decide the issues with dispatch.
SO ORDERED.
REPUBLIC V. RURAL BANK OF KABACAN
DECISION
SERENO, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking the reversal
of the 12 August 2008 Court of Appeals (CA) Decision and 22 October 2008 Resolution in CA-G.R. CV No. 65196.
The assailed issuances affirmed with modification the 31 August 1999 Judgment promulgated by the Regional
Trial Court (RTC), Branch 22, Judicial Region, Kabacan, Cotabato. The RTC had fixed the just compensation for
the value of the land and improvements thereon that were expropriated by petitioner, but excluded the value
of the excavated soil. Petitioner Republic of the Philippines is represented in this case by the National Irrigation
Authority (NIA).
The Facts
NIA is a government-owned-and-controlled corporation created under Republic Act No. (R.A.) 3601 on 22 June
1963. It is primarily responsible for irrigation development and management in the country. Its charter was
amended by Presidential Decree (P.D.) 552 on 11 September 1974 and P.D. 1702 on 17 July 1980. To carry out
its purpose, NIA was specifically authorized under P.D. 552 to exercise the power of eminent domain.[1]
NIA needed some parcels of land for the purpose of constructing the Malitubog-Marigadao Irrigation Project.
On 08 September 1994, it filed with the RTC of Kabacan, Cotabato a Complaint for the expropriation of a
portion of three (3) parcels of land covering a total of 14,497.91 square meters.[2] The case was docketed as
Special Civil Case No. 61 and was assigned to RTC-Branch 22. The affected parcels of land were the following:
1) Lot No. 3080 covered by Transfer Certificate of Title (TCT) No. T-61963 and registered under the Rural Bank
of Kabacan
2) Lot No. 455 covered by TCT No. T-74516 and registered under the names of RG May, Ronald and Rolando,
all surnamed Lao
3) Lot No. 3039 registered under the name of Littie Sarah Agdeppa[3]
On 11 July 1995, NIA filed an Amended Complaint to include Leosa Nanette A. Agdeppa and Marcelino Viernes
as registered owners of Lot No. 3039.[4]
On 25 September 1995, NIA filed a Second Amended Complaint to allege properly the area sought to be
expropriated, the exact address of the expropriated properties and the owners thereof. NIA further prayed that
it be authorized to take immediate possession of the properties after depositing with the Philippine National
Bank the amount of 19,246.58 representing the provisional value thereof.[5]
On 31 October 1995, respondents filed their Answer with Affirmative and Special Defenses and
Counterclaim.[6] They alleged, inter alia, that NIA had no authority to expropriate portions of their land, because
it was not a sovereign political entity; that it was not necessary to expropriate their properties, because there
was an abandoned government property adjacent to theirs, where the project could pass through; that Lot No.
3080 was no longer owned by the Rural Bank of Kabacan; that NIAs valuation of their expropriated properties
was inaccurate because of the improvements on the land that should have placed its value at 5 million; and
that NIA never negotiated with the landowners before taking their properties for the project, causing
permanent and irreparable damages to their properties valued at 250,000.[7]
On 11 September 1996, the RTC issued an Order forming a committee tasked to determine the fair market
value of the expropriated
properties to establish the just compensation to be paid to the owners. The committee was composed of the
Clerk of Court of RTC Branch 22 as chairperson and two (2) members of the parties to the case.[8]
On 20 September 1996, in response to the expropriation Complaint, respondents-intervenors Margarita
Tabaoda, Portia Charisma Ruth Ortiz, Lina Erlinda Ortiz, Mario Ortiz, Juan Mamac and Gloria Matas filed their
Answer-in-Intervention with Affirmative and Special Defenses and Counter-Claim. They essentially adopted the
allegations in the Answer of the other respondents and pointed out that Margarita Tabaoda and Portia
Charisma Ruth Ortiz were the new owners of Lot No. 3080, which the two acquired from the Rural Bank of
Kabacan. They further alleged that the four other respondents-intervenors were joint tenants-cultivators of Lot
Nos. 3080 and 3039.[9]
On 10 October 1996, the lower court issued an Order stating it would issue a writ of possession in favor of NIA
upon the determination of the fair market value of the properties, subject of the expropriation
proceedings.[10] The lower court later amended its ruling and, on 21 October 1996, issued a Writ of Possession in
favor of NIA.[11]
On 15 October 1996, the committee submitted a Commissioners Report[12] to the RTC stating the following
observations:
In the process of ocular inspection, the following were jointly observed:
1) The area that was already occupied is 6x200 meters which is equivalent to 1,200 square meters;
2) The area which is to be occupied is 18,930 square meters, more or less;
3) That the area to be occupied is fully planted by gmelina trees with a spacing of 1x1 meters;
4) That the gmelina tress found in the area already occupied and used for [the] road is planted with gmelina
with spacing of 2x2 and more or less one (1) year old;
5) That the gmelina trees found in the area to be occupied are already four (4) years old;
6) That the number of banana clumps (is) two hundred twenty (220);
7) That the number of coco trees found (is) fifteen (15).[13]
The report, however, stated that the committee members could not agree on the market value of the subject
properties and recommended the appointment of new independent commissioners to replace the ones coming
from the parties only.[14] On 22 October 1996, the RTC issued an Order[15] revoking the appointments of Atty.
Agdeppa and Engr. Mabang as members of the committee and, in their stead, appointed Renato Sambrano,
Assistant Provincial Assessor of the Province of Cotabato; and Jack Tumacmol, Division Chief of the Land Bank of
the PhilippinesKidapawan Branch.[16]
On 25 November 1996, the new committee submitted its Commissioners Report to the lower court. The
committee had agreed that the fair market value of the land to be expropriated should be 65 per square meter
based on the zonal valuation of the Bureau of Internal Revenue (BIR). As regards the improvement on the
properties, the report recommended the following compensation:
a. 200 for each gmelina tree that are more than four (4) years old
b. 150 for each gmelina tree that are more than one (1) year old
c. 164 for each coco tree
d. 270 for each banana clump[17]
On 03 December 1997, the committee submitted to the RTC another report, which had adopted the first
Committee Report, as well as the formers 25 November 1996 report. However, the committee added to its
computation the value of the earthfill excavated from portions of Lot Nos. 3039 and 3080.[18] Petitioner
objected to the inclusion of the value of the excavated soil in the computation of the value of the land.[19]
The Ruling of the Trial Court
On 31 August 1999, the RTC promulgated its Judgment,[20] the dispositive portion of which reads:
WHEREFORE, IN VIEW of all the foregoing considerations, the court finds and so holds that the commissioners
have arrived at and were able to determine the fair market value of the properties. The court adopts their
findings, and orders:
1. That 18,930 square meters of the lands owned by the defendants is hereby expropriated in favor of the
Republic of the Philippines through the National Irrigation Administration;
2. That the NIA shall pay to the defendants the amount of 1,230,450 for the 18,930 square meters
expropriated in proportion to the areas so expropriated;
3. That the NIA shall pay to the defendant-intervenors, owners of Lot No. 3080, the sum of 5,128,375.50,
representing removed earthfill;
4. That the NIA shall pay to the defendants, owners of Lot No. 3039, the sum of P1,929,611.30 representing
earthfill;
5. To pay to the defendants the sum of 60,000 for the destroyed G-melina trees (1 year old);
6. To pay to the defendants the sum of 3,786,000.00 for the 4-year old G-melina trees;
7. That NIA shall pay to the defendants the sum of 2,460.00 for the coconut trees;
8. That all payments intended for the defendant Rural Bank of Kabacan shall be given to the defendants and
intervenors who have already acquired ownership over the land titled in the name of the Bank.[21]
NIA, through the Office of the Solicitor General (OSG), appealed the Decision of the RTC to the CA, which
docketed the case as CA-G.R. CV No. 65196. NIA assailed the trial courts adoption of the Commissioners Report,
which had determined the just compensation to be awarded to the owners of the lands expropriated. NIA also
impugned as error the RTCs inclusion for compensation of the excavated soil from the expropriated properties.
Finally, it disputed the trial courts Order to deliver the payment intended for the Rural Bank of Kabacan to
defendants-intervenors, who allegedly acquired ownership of the land still titled in the name of the said rural
bank.[22]
The Ruling of the Court of Appeals
On 12 August 2008, the CA through its Twenty-First (21st) Division, promulgated a Decision[23] affirming with
modification the RTC Decision. It ruled that the committee tasked to determine the fair market value of the
properties and improvements for the purpose of arriving at the just compensation, properly performed its
function. The appellate court noted that the committee members had conducted ocular inspections of the area
surrounding the expropriated properties and made their recommendations based on official documents from
the BIR with regard to the zonal valuations of the affected properties.[24] The CA observed that, as far as the
valuation of the improvements on the properties was concerned, the committee members took into
consideration the provincial assessors appraisal of the age of the trees, their productivity and the inputs
made.[25] The appellate court further noted that despite the Manifestation of NIA that it be allowed to present
evidence to rebut the recommendation of the committee on the valuations of the expropriated properties, NIA
failed to do so.[26]
The assailed CA Decision, however, deleted the inclusion of the value of the soil excavated from the properties
in the just compensation. It ruled that the property owner was entitled to compensation only for the value of
the property at the time of the taking.[27] In the construction of irrigation projects, excavations are necessary to
build the canals, and the excavated soil cannot be valued separately from the land expropriated. Thus, it
concluded that NIA, as the new owner of the affected properties, had the right to enjoy and make use of the
property, including the excavated soil, pursuant to the latters objectives.[28]
Finally, the CA affirmed the trial courts ruling that recognized defendants-intervenors Margarita Tabaoda and
Portia Charisma Ruth Ortiz as the new owners of Lot No. 3080 and held that they were thus entitled to just
compensation. The appellate court based its conclusion on the non-participation by the Rural Bank of Kabacan
in the expropriation proceedings and the latters Manifestation that it no longer owned Lot No. 3080.[29]
On 11 September 2008, the NIA through the OSG filed a Motion for Reconsideration of the 12 August 2008
Decision, but that motion was denied.[30]
Aggrieved by the appellate courts Decision, NIA now comes to this Court via a Petition for Review on Certiorari
under Rule 45.
The Issues
The following are the issues proffered by petitioner:
THE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE TRIAL COURTS FINDING OF JUST COMPENSATION
OF THE LAND AND THE IMPROVEMENTS THEREON BASED ON THE REPORT OF THE COMMISSIONERS.
THE COURT OF APPEALS ERRED IN RULING THAT THE PAYMENT OF JUST COMPENSATION FOR LOT NO. 3080
SHOULD BE MADE TO RESPONDENTS MARGARITA TABOADA AND PORTIA CHARISMA RUTH ORTIZ. [31]
The Courts Ruling
On the first issue, the Petition is not meritorious.
In expropriation proceedings, just compensation is defined as the full and fair equivalent of the property taken
from its owner by the expropriator. The measure is not the taker's gain, but the owner's loss. The word just is
used to intensify the meaning of the word compensation and to convey thereby the idea that the equivalent to
be rendered for the property to be taken shall be real, substantial, full and ample.[32] The constitutional
limitation of just compensation is considered to be a sum equivalent to the market value of the property,
broadly defined as the price fixed by the seller in open market in the usual and ordinary course of legal action
and competition; or the fair value of the property; as between one who receives and one who desires to sell it,
fixed at the time of the actual taking by the government.[33]
In the instant case, we affirm the appellate courts ruling that the commissioners properly determined the just
compensation to be awarded to the landowners whose properties were expropriated by petitioner.
The records show that the trial court dutifully followed the procedure under Rule 67 of the 1997 Rules of Civil
Procedure when it formed a committee that was tasked to determine the just compensation for the
expropriated properties. The first set of committee members made an ocular inspection of the properties,
subject of the expropriation. They also determined the exact areas affected, as well as the kinds and the
number of improvements on the properties.[34] When the members were unable to agree on the valuation of
the land and the improvements thereon, the trial court selected another batch of disinterested members to
carry out the task of determining the value of the land and the improvements.
The new committee members even made a second ocular inspection of the expropriated areas. They also
obtained data from the BIR to determine the zonal valuation of the expropriated properties, interviewed the
adjacent property owners, and considered other factors such as distance from the highway and the nearby
town center.[35] Further, the committee members also considered Provincial Ordinance No. 173, which was
promulgated by the Province of Cotabato on 15 June 1999, and which provide for the value of the properties
and the improvements for taxation purposes.[36]
We can readily deduce from these established facts that the committee members endeavored a rigorous
process to determine the just compensation to be awarded to the owners of the expropriated properties. We
cannot, as petitioner would want us to, oversimplify the process undertaken by the committee in arriving at its
recommendations, because these were not based on mere conjectures and unreliable data.
In National Power Corporation v. Diato-Bernal,[37] this Court emphasized that the just-ness of the compensation
could only be attained by using reliable and actual data as bases for fixing the value of the condemned property.
The reliable and actual data we referred to in that case were the sworn declarations of realtors in the area, as
well as tax declarations and zonal valuation from the BIR. In disregarding the Committee Report assailed by the
National Power Corporation in the said case, we ruled thus:
It is evident that the above conclusions are highly speculative and devoid of any actual and reliable basis. First,
the market values of the subject propertys neighboring lots were mere estimates and unsupported by any
corroborative documents, such as sworn declarations of realtors in the area concerned, tax declarations or
zonal valuation from the Bureau of Internal Revenue for the contiguous residential dwellings and commercial
establishments. The report also failed to elaborate on how and by how much the community centers and
convenience facilities enhanced the value of respondents property. Finally, the market sales data and price
listings alluded to in the report were not even appended thereto.
As correctly invoked by NAPOCOR, a commissioners report of land prices which is not based on any
documentary evidence is manifestly hearsay and should be disregarded by the court.
The trial court adopted the flawed findings of the commissioners hook, line, and sinker. It did not even bother
to require the submission of the alleged market sales data and price listings. Further, the RTC overlooked the
fact that the recommended just compensation was gauged as of September 10, 1999 or more than two years
after the complaint was filed on January 8, 1997. It is settled that just compensation is to be ascertained as of
the time of the taking, which usually coincides with the commencement of the expropriation proceedings.
Where the institution of the action precedes entry into the property, the just compensation is to be ascertained
as of the time of the filing of the complaint. Clearly, the recommended just compensation in the commissioners
report is unacceptable.[38]
In the instant case, the committee members based their recommendations on reliable data and, as aptly noted
by the appellate court, considered various factors that affected the value of the land and the improvements.[39]
Petitioner, however, strongly objects to the CAs affirmation of the trial courts adoption of Provincial Ordinance
No. 173. The OSG, on behalf of petitioner, strongly argues that the recommendations of the committee formed
by the trial court were inaccurate. The OSG contends that the ordinance reflects the 1999 market values of real
properties in the Province of Cotabato, while the actual taking was made in 1996.[40]
We are not persuaded.
We note that petitioner had ample opportunity to rebut the testimonial, as well as documentary evidence
presented by respondents when the case was still on trial. It failed to do so, however. The issue raised
by petitioner was adequately addresses by the CAs assailed Decision in this wise:
A thorough scrutiny of the records reveals that the second set of Commissioners, with Atty. Marasigan still
being the Chairperson and Mr. Zambrano and Mr. Tomacmol as members, was not arbitrary and capricious in
performing the task assigned to them. We note that these Commissioners were competent and disinterested
persons who were handpicked by the court a quo due to their expertise in appraising the value of the land and
the improvements thereon in the province of Cotabato. They made a careful study of the area affected by the
expropriation, mindful of the fact that the value of the land and its may be affected by many factors. The duly
appointed Commissioners made a second ocular inspection of the subject area on 4 September 1997; went to
the BIR office in order to get the BIR zonal valuation of the properties located in Carmen, Cotabato; interviewed
adjacent property owners; and took into consideration various factors such as the location of the land which is
just less than a kilometer away from the Poblacion and half a kilometer away from the highway and the fact
that it is near a military reservation. With regard to the improvements, the Commissioners took into
consideration the valuation of the Provincial Assessor, the age of the trees, and the inputs and their
productivity.
Thus, it could not be said that the schedule of market values in Ordinance No. 173 was the sole basis of the
Commissioners in arriving at their valuation. Said ordinance merely gave credence to their valuation which is
comparable to the current price at that time. Besides, Mr. Zambrano testified that the date used as bases for
Ordinance No. 173 were taken from 1995 to 1996.[41]
Moreover, factual findings of the CA are generally binding on this Court. The rule admits of exceptions, though,
such as when the factual findings of the appellate court and the trial court are contradictory, or when the
findings are not supported by the evidence on record.[42] These exceptions, however, are not present in the
instant case.
Thus, in the absence of contrary evidence, we affirm the findings of the CA, which sustained the trial courts
Decision adopting the committees recommendations on the just compensation to be awarded to herein
respondents.
We also uphold the CA ruling, which deleted the inclusion of the value of the excavated soil in the payment for
just compensation. There is no legal basis to separate the value of the excavated soil from that of the
expropriated properties, contrary to what the trial court did. In the context of expropriation proceedings, the
soil has no value separate from that of the expropriated land. Just compensation ordinarily refers to the value of
the land to compensate for what the owner actually loses. Such value could only be that which prevailed at the
time of the taking.
In National Power Corporation v. Ibrahim, et al.,[43] we held that rights over lands are indivisible, viz:
[C]onsequently, the CAs findings which upheld those of the trial court that respondents owned and possessed
the property and that its substrata was possessed by petitioner since 1978 for the underground tunnels, cannot
be disturbed. Moreover, the Court sustains the finding of the lower courts that the sub-terrain portion of the
property similarly belongs to respondents. This conclusion is drawn from Article 437 of the Civil Code which
provides:
ART. 437. The owner of a parcel of land is the owner of its surface and of everything under it, and he can
construct thereon any works or make any plantations and excavations which he may deem proper, without
detriment to servitudes and subject to special laws and ordinances. He cannot complain of the reasonable
requirements of aerial navigation.
Thus, the ownership of land extends to the surface as well as to the subsoil under it.
xxx xxx xxx
Registered landowners may even be ousted of ownership and possession of their properties in the event the
latter are reclassified as mineral lands because real properties are characteristically indivisible. For the loss
sustained by such owners, they are entitled to just compensation under the Mining Laws or in appropriate
expropriation proceedings.
Moreover, petitioners argument that the landowners right extends to the sub-soil insofar as necessary for their
practical interests serves only to further weaken its case. The theory would limit the right to the sub-soil upon
the economic utility which such area offers to the surface owners.Presumably, the landowners right extends to
such height or depth where it is possible for them to obtain some benefit or enjoyment, and it is extinguished
beyond such limit as there would be no more interest protected by law.
Hence, the CA correctly modified the trial courts Decision when it ruled thus:
We agree with the OSG that NIA, in the construction of irrigation projects, must necessarily make excavations in
order to build the canals. Indeed it is preposterous that NIA will be made to pay not only for the value of the
land but also for the soil excavated from such land when such excavation is a necessary phase in the building of
irrigation projects. That NIA will make use of the excavated soil is of no moment and is of no concern to the
landowner who has been paid the fair market value of his land. As pointed out by the OSG, the law does not
limit the use of the expropriated land to the surface area only. Further, NIA, now being the owner of the
expropriated property, has the right to enjoy and make use of the property in accordance with its mandate and
objectives as provided by law. To sanction the payment of the excavated soil is to allow the landowners to
recover more than the value of the land at the time when it was taken, which is the true measure of the
damages, or just compensation, and would discourage the construction of important public improvements.[44]
On the second issue, the Petition is meritorious.
The CA affirmed the ruling of the trial court, which had awarded the payment of just compensation intended for
Lot No. 3080 registered in the name of the Rural Bank of Kabacan to the defendants-intervenors on the basis of
the non-participation of the rural bank in the proceedings and the latters subsequent Manifestation that it was
no longer the owner of that lot. The appellate court erred on this matter.
It should be noted that eminent domain cases involve the expenditure of public funds.[45] In this kind of
proceeding, we require trial courts to be more circumspect in their evaluation of the just compensation to be
awarded to the owner of the expropriated property.[46] Thus, it was imprudent for the appellate court to rely on
the Rural Bank of Kabacans mere declaration of non-ownership and non-participation in the expropriation
proceeding to validate defendants-intervenors claim of entitlement to that payment.
The law imposes certain legal requirements in order for a conveyance of real property to be valid. It should be
noted that Lot No. 3080 is a registered parcel of land covered by TCT No. T-61963. In order for the
reconveyance of real property to be valid, the conveyance must be embodied in a public document[47] and
registered in the office of the Register of Deeds where the property is situated.[48]
We have scrupulously examined the records of the case and found no proof of conveyance or evidence of
transfer of ownership of Lot No. 3080 from its registered owner, the Rural Bank of Kabacan, to defendants-
intervenors. As it is, the TCT is still registered in the name of the said rural bank. It is not disputed that the bank
did not participate in the expropriation proceedings, and that it manifested that it no longer owned Lot No.
3080. The trial court should have nevertheless required the rural bank and the defendants-intervenors to show
proof or evidence pertaining to the conveyance of the subject lot. The court cannot rely on mere inference,
considering that the payment of just compensation is intended to be awarded solely owner based on the latters
proof of ownership.
The trial court should have been guided by Rule 67, Section 9 of the 1997 Rules of Court, which provides thus:
SEC. 9. Uncertain ownership; conflicting claims. If the ownership of the property taken is uncertain, or there are
conflicting claims to any part thereof, the court may order any sum or sums awarded as compensation for the
property to be paid to the court for the benefit of the person adjudged in the same proceeding to be entitled
thereto. But the judgment shall require the payment of the sum or sums awarded to either the defendant or
the court before the plaintiff can enter upon the property, or retain it for the public use or purpose if entry has
already been made.
Hence, the appellate court erred in affirming the trial courts Order to award payment of just compensation to
the defendants-intervenors. There is doubt as to the real owner of Lot No. 3080. Despite the fact that the
lot was covered by TCT No. T-61963 and was registered under its name, the Rural Bank of Kabacan manifested
that the owner of the lot was no longer the bank, but the defendants-intervenors; however, it presented no
proof as to the conveyance thereof. In this regard, we deem it proper to remand this case to the trial court for
the reception of evidence to establish the present owner of Lot No. 3080 who will be entitled to receive the
payment of just compensation.
WHEREFORE, the Petition is PARTLY GRANTED. The 12 August 2008 CA Decision in CA-G.R. CV No. 65196,
awarding just compensation to the defendants as owners of the expropriated properties and deleting the
inclusion of the value of the excavated soil, is hereby AFFIRMED with MODIFICATION. The case is
hereby REMANDED to the trial court for the reception of evidence to establish the present owner of Lot No.
3080. No pronouncements as to cost.
SO ORDERED.
G.R. No. 179334 July 1, 2013
SECRETARY OF THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS and DISTRICT ENGINEER CELESTINO R.
CONTRERAS, Petitioners,
vs.
SPOUSES HERACLEO and RAMONA TECSON, Respondents.
DECISION
PERALTA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Court of Appeals (CA)
Decision1 dated July 31, 2007 in CA-G.R. CV No. 77997. The assailed decision affirmed with modification the
Regional Trial Court (RTC)2 Decision3 dated March 22, 2002 in Civil Case No. 208-M-95.
The case stemmed from the following factual and procedural antecedents:
Respondent spouses Heracleo and Ramona Tecson (respondents) are co-owners of a parcel of land with an area
of 7,268 square meters located in San Pablo, Malolos, Bulacan and covered by Transfer Certificate of Title (TCT)
No. T-430064 of the Register of Deeds of Bulacan. Said parcel of land was among the properties taken by the
government sometime in 1940 without the owners consent and without the necessary expropriation
proceedings and used for the construction of the MacArthur Highway.5
In a letter6 dated December 15, 1994, respondents demanded the payment of the fair market value of the
subject parcel of land. Petitioner Celestino R. Contreras (petitioner Contreras), then District Engineer of the First
Bulacan Engineering District of petitioner Department of Public Works and Highways (DPWH), offered to pay
the subject land at the rate of 0.70 per square meter per Resolution of the Provincial Appraisal Committee
(PAC) of Bulacan.7Unsatisfied with the offer, respondents demanded for the return of their property or the
payment of compensation at the current fair market value.8
As their demand remained unheeded, respondents filed a Complaint9 for recovery of possession with damages
against petitioners, praying that they be restored to the possession of the subject parcel of land and that they
be paid attorneys fees.10 Respondents claimed that the subject parcel of land was assessed at 2,543,800.00.11
Instead of filing their Answer, petitioners moved for the dismissal of the complaint on the following grounds: (1)
that the suit is against the State which may not be sued without its consent; (2) that the case has already
prescribed; (3) that respondents have no cause of action for failure to exhaust administrative remedies; and (4)
if respondents are entitled to compensation, they should be paid only the value of the property in 1940 or
1941.12
On June 28, 1995, the RTC issued an Order13 granting respondents motion to dismiss based on the doctrine of
state immunity from suit. As respondents claim includes the recovery of damages, there is no doubt that the
suit is against the State for which prior waiver of immunity is required. When elevated to the CA,14 the appellate
court did not agree with the RTC and found instead that the doctrine of state immunity from suit is not
applicable, because the recovery of compensation is the only relief available to the landowner. To deny such
relief would undeniably cause injustice to the landowner. Besides, petitioner Contreras, in fact, had earlier
offered the payment of compensation although at a lower rate.Thus, the CA reversed and set aside the
dismissal of the complaint and, consequently, remanded the case to the trial court for the purpose of
determining the just compensation to which respondents are entitled to recover from the government.15 With
the finality of the aforesaid decision, trial proceeded in the RTC.
The Branch Clerk of Court was initially appointed as the Commissioner and designated as the Chairman of the
Committee that would determine just compensation,16 but the case was later referred to the PAC for the
submission of a recommendation report on the value of the subject property.17 In PAC Resolution No. 99-
007,18 the PAC recommended the amount of 1,500.00 per square meter as the just compensation for the
subject property.
On March 22, 2002, the RTC rendered a Decision,19 the dispositive portion of which reads:
WHEREFORE, premises considered, the Department of Public Works and Highways or its duly assigned agencies
are hereby directed to pay said Complainants/Appellants the amount of One Thousand Five Hundred Pesos
(1,500.00) per square meter for the lot subject matter of this case in accordance with the Resolution of the
Provincial Appraisal Committee dated December 19, 2001.
SO ORDERED.20
On appeal, the CA affirmed the above decision with the modification that the just compensation stated above
should earn interest of six percent (6%) per annum computed from the filing of the action on March 17, 1995
until full payment.21
In its appeal before the CA, petitioners raised the issues of prescription and laches, which the CA brushed aside
on two grounds: first, that the issue had already been raised by petitioners when the case was elevated before
the CA in CA-G.R. CV No. 51454. Although it was not squarely ruled upon by the appellate court as it did not find
any reason to delve further on such issues, petitioners did not assail said decision barring them now from raising
exactly the same issues; and second, the issues proper for resolution had been laid down in the pre-trial order
which did not include the issues of prescription and laches. Thus, the same can no longer be further considered.
As to the propriety of the propertys valuation as determined by the PAC and adopted by the RTC, while
recognizing the rule that the just compensation should be the reasonable value at the time of taking which is
1940, the CA found it necessary to deviate from the general rule. It opined that it would be obviously unjust and
inequitable if respondents would be compensated based on the value of the property in 1940 which is 0.70
per sq m, but the compensation would be paid only today. Thus, the appellate court found it just to award
compensation based on the value of the property at the time of payment. It, therefore, adopted the RTCs
determination of just compensation of 1,500.00 per sq m as recommended by the PAC. The CA further
ordered the payment of interest at the rate of six percent (6%) per annum reckoned from the time of taking,
which is the filing of the complaint on March 17, 1995.
Aggrieved, petitioners come before the Court assailing the CA decision based on the following grounds:
I.
THE COURT OF APPEALS GRAVELY ERRED IN GRANTING JUST COMPENSATION TO RESPONDENTS CONSIDERING
THE HIGHLY DUBIOUS AND QUESTIONABLE CIRCUMSTANCES OF THEIR ALLEGED OWNERSHIP OF THE SUBJECT
PROPERTY.
II.
THE COURT OF APPEALS GRAVELY ERRED IN AWARDING JUST COMPENSATION TO RESPONDENTS BECAUSE
THEIR COMPLAINT FOR RECOVERY OF POSSESSION AND DAMAGES IS ALREADY BARRED BY PRESCRIPTION AND
LACHES.
III.
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURTS DECISION ORDERING THE
PAYMENT OF JUST COMPENSATION BASED ON THE CURRENT MARKET VALUE OF THE ALLEGED PROPERTY OF
RESPONDENTS.22
Petitioners insist that the action is barred by prescription having been filed fifty-four (54) years after the accrual
of the action in 1940. They explain that the court can motu proprio dismiss the complaint if it shows on its face
that the action had already prescribed. Petitioners likewise aver that respondents slept on their rights for more
than fifty years; hence, they are guilty of laches. Lastly, petitioners claim that the just compensation should be
based on the value of the property at the time of taking in 1940 and not at the time of payment.23
The petition is partly meritorious.
The instant case stemmed from an action for recovery of possession with damages filed by respondents against
petitioners. It, however, revolves around the taking of the subject lot by petitioners for the construction of the
MacArthur Highway. There is taking when the expropriator enters private property not only for a momentary
period but for a permanent duration, or for the purpose of devoting the property to public use in such a manner
as to oust the owner and deprive him of all beneficial enjoyment thereof.24
It is undisputed that the subject property was taken by petitioners without the benefit of expropriation
proceedings for the construction of the MacArthur Highway. After the lapse of more than fifty years, the
property owners sought recovery of the possession of their property. Is the action barred by prescription or
laches? If not, are the property owners entitled to recover possession or just compensation?
As aptly noted by the CA, the issues of prescription and laches are not proper issues for resolution as they were
not included in the pre-trial order. We quote with approval the CAs ratiocination in this wise:
Procedurally, too, prescription and laches are no longer proper issues in this appeal. In the pre-trial order issued
on May 17, 2001, the RTC summarized the issues raised by the defendants, to wit: (a) whether or not the
plaintiffs were entitled to just compensation; (b) whether or not the valuation would be based on the
corresponding value at the time of the taking or at the time of the filing of the action; and (c) whether or not
the plaintiffs were entitled to damages. Nowhere did the pre-trial order indicate that prescription and laches
were to be considered in the adjudication of the RTC.25
To be sure, the pre-trial order explicitly defines and limits the issues to be tried and controls the subsequent
course of the action unless modified before trial to prevent manifest injustice.26
Even if we squarely deal with the issues of laches and prescription, the same must still fail. Laches is principally a
doctrine of equity which is applied to avoid recognizing a right when to do so would result in a clearly
inequitable situation or in an injustice.27 This doctrine finds no application in this case, since there is nothing
inequitable in giving due course to respondents claim. Both equity and the law direct that a property owner
should be compensated if his property is taken for public use.28 Neither shall prescription bar respondents
claim following the long-standing rule "that where private property is taken by the Government for public use
without first acquiring title thereto either through expropriation or negotiated sale, the owners action to
recover the land or the value thereof does not prescribe."29
When a property is taken by the government for public use, jurisprudence clearly provides for the remedies respondents as they would be receiving such outdated valuation after a very long period, it is equally true that
available to a landowner. The owner may recover his property if its return is feasible or, if it is not, the aggrieved they too are remiss in guarding against the cruel effects of belated claim. The concept of just compensation
owner may demand payment of just compensation for the land taken.30 For failure of respondents to question does not imply fairness to the property owner alone. Compensation must be just not only to the property
the lack of expropriation proceedings for a long period of time, they are deemed to have waived and are owner, but also to the public which ultimately bears the cost of expropriation.41
estopped from assailing the power of the government to expropriate or the public use for which the power was Clearly, petitioners had been occupying the subject property for more than fifty years without the benefit of
exercised. What is left to respondents is the right of compensation.31 The trial and appellate courts found that expropriation proceedings. In taking respondents property without the benefit of expropriation proceedings
respondents are entitled to compensation. The only issue left for determination is the propriety of the amount and without payment of just compensation, petitioners clearly acted in utter disregard of respondents
awarded to respondents. proprietary rights which cannot be countenanced by the Court.42 For said illegal taking, respondents are entitled
Just compensation is "the fair value of the property as between one who receives, and one who desires to sell, x to adequate compensation in the form of actual or compensatory damages which in this case should be the
x x fixed at the time of the actual taking by the government." This rule holds true when the property is taken legal interest of six percent (6%) per annum on the value of the land at the time of taking in 1940 until full
before the filing of an expropriation suit, and even if it is the property owner who brings the action for payment.43 This is based on the principle that interest runs as a matter of law and follows from the right of the
compensation.32 landowner to be placed in as good position as money can accomplish, as of the date of taking.44
The issue in this case is not novel. WHEREFORE, premises considered, the pet1t10n is PARTIALLY GRANTED. The Court of Appeals Decision dated
In Forfom Development Corporation [Forfom] v. Philippine National Railways [PNR],33 PNR entered the property July 31, 2007 in CAG.R. CV No. 77997 is MODIFIED, in that the valuation of the subject property owned by
of Forfom in January 1973 for public use, that is, for railroad tracks, facilities and appurtenances for use of the respondents shall be F0.70 instead of 1,500.00 per square meter, with interest at six percent ( 6o/o) per
Carmona Commuter Service without initiating expropriation proceedings.34 In 1990, Forfom filed a complaint annum from the date of taking in 1940 instead of March 17, 1995, until full payment.
for recovery of possession of real property and/or damages against PNR. In Eusebio v. Luis,35 respondents SO ORDERED.
parcel of land was taken in 1980 by the City of Pasig and used as a municipal road now known as A. Sandoval
Avenue in Pasig City without the appropriate expropriation proceedings. In 1994, respondent demanded
payment of the value of the property, but they could not agree on its valuation prompting respondent to file a
complaint for reconveyance and/or damages against the city government and the mayor. In Manila
International Airport Authority v. Rodriguez,36in the early 1970s, petitioner implemented expansion programs
for its runway necessitating the acquisition and occupation of some of the properties surrounding its premises.
As to respondents property, no expropriation proceedings were initiated.1wphi1 In 1997, respondent
demanded the payment of the value of the property, but the demand remained unheeded prompting him to
institute a case for accion reivindicatoria with damages against petitioner. In Republic v. Sarabia,37 sometime in
1956, the Air Transportation Office (ATO) took possession and control of a portion of a lot situated in Aklan,
registered in the name of respondent, without initiating expropriation proceedings. Several structures were
erected thereon including the control tower, the Kalibo crash fire rescue station, the Kalibo airport terminal and
the headquarters of the PNP Aviation Security Group. In 1995, several stores and restaurants were constructed
on the remaining portion of the lot. In 1997, respondent filed a complaint for recovery of possession with
damages against the storeowners where ATO intervened claiming that the storeowners were its lessees.
The Court in the above-mentioned cases was confronted with common factual circumstances where the
government took control and possession of the subject properties for public use without initiating expropriation
proceedings and without payment of just compensation, while the landowners failed for a long period of time
to question such government act and later instituted actions for recovery of possession with damages. The
Court thus determined the landowners right to the payment of just compensation and, more importantly, the
amount of just compensation. The Court has uniformly ruled that just compensation is the value of the property
at the time of taking that is controlling for purposes of compensation. In Forfom, the payment of just
compensation was reckoned from the time of taking in 1973; in Eusebio, the Court fixed the just compensation
by determining the value of the property at the time of taking in 1980; in MIAA, the value of the lot at the time
of taking in 1972 served as basis for the award of compensation to the owner; and in Republic, the Court was
convinced that the taking occurred in 1956 and was thus the basis in fixing just compensation. As in said cases,
just compensation due respondents in this case should, therefore, be fixed not as of the time of payment but at
the time of taking, that is, in 1940.
The reason for the rule has been clearly explained in Republic v. Lara, et al.,38 and repeatedly held by the Court
in recent cases, thus:
x x x "The value of the property should be fixed as of the date when it was taken and not the date of the filing of
the proceedings." For where property is taken ahead of the filing of the condemnation proceedings, the value
thereof may be enhanced by the public purpose for which it is taken; the entry by the plaintiff upon the
property may have depreciated its value thereby; or, there may have been a natural increase in the value of the
property from the time it is taken to the time the complaint is filed, due to general economic conditions. The
owner of private property should be compensated only for what he actually loses; it is not intended that his
compensation shall extend beyond his loss or injury. And what he loses is only the actual value of his property at
the time it is taken x x x.39
Both the RTC and the CA recognized that the fair market value of the subject property in 1940 was 0.70/sq
m.40Hence, it should, therefore, be used in determining the amount due respondents instead of the higher
value which is 1,500.00. While disparity in the above amounts is obvious and may appear inequitable to
NPC V. HEIRS OF MAKABANGKCIT
DECISION
BERSAMIN, J.:
Private property shall not be taken for public use without just compensation.
Section 9, Article III, 1987 Constitution
The application of this provision of the Constitution is the focus of this appeal.
Petitioner National Power Corporation (NPC) seeks the review on certiorari of the decision promulgated on
October 5, 2004,[1]whereby the Court of Appeals (CA) affirmed the decision dated August 13, 1999 and the
supplemental decision dated August 18, 1999, ordering NPC to pay just compensation to the respondents, both
rendered by the Regional Trial Court, Branch 1, in Iligan City (RTC).
Antecedents
Pursuant to its legal mandate under Republic Act No. 6395 (An Act Revising the Charter of the National Power
Corporation), NPC undertook the Agus River Hydroelectric Power Plant Project in the 1970s to generate
electricity for Mindanao. The project included the construction of several underground tunnels to be used in
diverting the water flow from the Agus River to the hydroelectric plants.[2]
On November 21, 1997, the respondents, namely: Cebu, Bangowa-an, Sayana, Nasser, Manta, Edgar, Putri,
Mongkoy and Amir, all surnamed Macabangkit (Heirs of Macabangkit), as the owners of land with an area
of 221,573 square meters situated in Ditucalan, Iligan City, sued NPC in the RTC for the recovery of damages and
of the property, with the alternative prayer for the payment of just compensation.[3] They alleged that they had
belatedly discovered that one of the underground tunnels of NPC that diverted the water flow of the Agus River
for the operation of the Hydroelectric Project in Agus V, Agus VI and Agus VII traversed their land; that their
discovery had occurred in 1995 after Atty. Saidali C. Gandamra, President of the Federation of Arabic Madaris
School, had rejected their offer to sell the land because of the danger the underground tunnel might pose to the
proposed Arabic Language Training Center and Muslims Skills Development Center; that such rejection had
been followed by the withdrawal by Global Asia Management and Resource Corporation from developing the
land into a housing project for the same reason; that Al-Amanah Islamic Investment Bank of the Philippines had
also refused to accept their land as collateral because of the presence of the underground tunnel; that the
underground tunnel had been constructed without their knowledge and consent; that the presence of the
tunnel deprived them of the agricultural, commercial, industrial and residential value of their land; and that
their land had also become an unsafe place for habitation because of the loud sound of the water rushing
through the tunnel and the constant shaking of the ground, forcing them and their workers to relocate to safer
grounds.
In its answer with counterclaim,[4] NPC countered that the Heirs of Macabangkit had no right to compensation
under section 3(f) of Republic Act No. 6395, under which a mere legal easement on their land was established;
that their cause of action, should they be entitled to compensation, already prescribed due to the tunnel having
been constructed in 1979; and that by reason of the tunnel being an apparent and continuous easement, any
action arising from such easement prescribed in five years.
Ruling of the RTC
On July 23, 1998, an ocular inspection of the land that was conducted by RTC Judge Mamindiara P. Mangotara
and the representatives of the parties resulted in the following observations and findings:
a. That a concrete post which is about two feet in length from the ground which according to the claimants is
the middle point of the tunnel.
b. That at least three fruit bearing durian trees were uprooted and as a result of the construction by the
defendant of the tunnel and about one hundred coconuts planted died.
c. That underground tunnel was constructed therein.[5]
After trial, the RTC ruled in favor of the plaintiffs (Heirs of Macabangkit),[6] decreeing:
WHEREFORE, premises considered:
1. The prayer for the removal or dismantling of defendants tunnel is denied. However, defendant is hereby
directed and ordered:
a)To pay plaintiffs land with a total area of 227,065 square meters, at the rate of FIVE HUNDRED (P500.00)
PESOS per square meter, or a total of ONE HUNDRED THIRTEEN MILLION FIVE HUNDRED THIRTY TWO
THOUSAND AND FIVE HUNDRED (P113,532,500.00), PESOS, plus interest, as actual damages or just
compensation;
b) To pay plaintiff a monthly rental of their land in the amount of THIRTY THOUSAND (P30,000.00) PESOS
from 1979 up to July 1999 with 12% interest per annum;
c)To pay plaintiffs the sum of TWO HUNDRED THOUSAND (P200,000.00) PESOS, as moral damages;
d) To pay plaintiffs, the sum of TWO HUNDRED THOUSAND (P200,000.00) PESOS, as exemplary damages;
e)To pay plaintiffs, the sum equivalent to 15% of the total amount awarded, as attorneys fees, and to pay the
cost.
SO ORDERED.
The RTC found that NPC had concealed the construction of the tunnel in 1979 from the Heirs of Macabangkit,
and had since continuously denied its existence; that NPC had acted in bad faith by taking possession of the
subterranean portion of their land to construct the tunnel without their knowledge and prior consent; that the
existence of the tunnel had affected the entire expanse of the land, and had restricted their right to excavate or
to construct a motorized deep well; and that they, as owners, had lost the agricultural, commercial, industrial
and residential value of the land.
The RTC fixed the just compensation at P500.00/square meter based on the testimony of Dionisio Banawan,
OIC-City Assessor of Iligan City, to the effect that the appraised value of the adjoining properties ranged
from P700.00 to P750.00, while the appraised value of their affected land ranged from P400.00 to P500.00. The
RTC also required NPC to pay rentals from 1979 due to its bad faith in concealing the construction of the tunnel
from the Heirs of Macabangkit.
On August 18, 1999, the RTC issued a supplemental decision,[7] viz:
Upon a careful review of the original decision dated August 13, 1999, a sentence should be added to paragraph
1(a) of the dispositive portion thereof, to bolster, harmonize, and conform to the findings of the Court, which is
quoted hereunder, to wit:
Consequently, plaintiffs land or properties are hereby condemned in favor of defendant National Power
Corporation, upon payment of the aforesaid sum.
Therefore, paragraph 1(a) of the dispositive portion of the original decision should read, as follows:
a) To pay plaintiffs land with a total area of 227,065 square meters, at the rate of FIVE HUNDRED (P500.00)
PESOS per square meter, or a total of ONE HUNDRED THIRTEEN MILLION FIVE HUNDRED THIRTY TWO
THOUSAND AND FIVE HUNDRED (P113,532,500.00) PESOS, plus interest, as actual damages or just
compensation; Consequently, plaintiffs land or properties are hereby condemned in favor of defendant National
Power Corporation, upon payment of the aforesaid sum;
This supplemental decision shall be considered as part of paragraph 1(a) of the dispositive portion of the
original decision.

Furnish copy of this supplemental decision to all parties immediately.
SO ORDERED.
On its part, NPC appealed to the CA on August 25, 1999.[8]
Earlier, on August 18, 1999, the Heirs of Macabangkit filed an urgent motion for execution of judgment pending
appeal.[9] The RTC granted the motion and issued a writ of execution,[10] prompting NPC to assail the writ by
petition for certiorari in the CA. On September 15, 1999, the CA issued a temporary restraining order (TRO) to
enjoin the RTC from implementing its decision. The Heirs of Macabangkit elevated the ruling of the CA (G.R. No.
141447), but the Court upheld the CA on May 4, 2006.[11]
Ruling of the CA
NPC raised only two errors in the CA, namely:
I Republic Act No. 6395, or, alternatively, under Article 620 and Article 646 of the Civil Code.
THE COURT A QUO SERIOUSLY ERRED IN RULING THAT NAPOCORS UNDERGROUND TUNNEL IN ITS AGUS RIVER
HYDRO-ELECTRIC PLANT PROJECT TRAVERSED AND/OR AFFECTED APPELLEES PROPERTY AS THERE IS NO CLEAR
EVIDENCE INDUBITABLY ESTABLISHING THE SAME
II
THE COURT A QUO SERIOUSLY ERRED IN GRANTING APPELLEES CLAIMS IN THEIR ENTIRETY FOR GRANTING
ARGUENDO THAT NAPOCORS UNDERGROUND TUNNEL INDEED TRAVERSED APPELLEES PROPERTY, THEIR
CAUSE OF ACTION HAD ALREADY BEEN BARRED BY PRESCRIPTION, ESTOPPEL AND LACHES
On October 5, 2004, the CA affirmed the decision of the RTC, holding that the testimonies of NPCs witness
Gregorio Enterone and of the respondents witness Engr. Pete Sacedon, the topographic survey map, the sketch
map, and the ocular inspection report sufficiently established the existence of the underground tunnel
traversing the land of the Heirs of Macabangkit; that NPC did not substantiate its defense that prescription
already barred the claim of the Heirs of Macabangkit; and that Section 3(i) of R.A. No. 6395, being silent about
tunnels, did not apply, viz:
As regard Section 3(i) of R.A. No. 6395 (An Act Revising the Charter of the National Power Corporation), it is
submitted that the same provision is not applicable. There is nothing in Section 3(i) of said law governing claims
involving tunnels. The same provision is applicable to those projects or facilities on the surface of the land, that
can easily be discovered, without any mention about the claims involving tunnels, particularly those
surreptitiously constructed beneath the surface of the land, as in the instant case.
Now, while it is true that Republic Act No. 6395 authorizes NAPOCOR to take water from any public stream,
river, creek, lake, spring or waterfall in the Philippines for the realization of the purposes specified therein for its
creation; to intercept and divert the flow of waters from lands of riparian owners (in this case, the Heirs), and
from persons owning or interested in water which are or may be necessary to said purposes, the same Act
expressly mandates the payment of just compensation.
WHEREFORE, premises considered, the instant appeal is hereby DENIED for lack of merit. Accordingly, the
appealed Decision dated August 13, 1999, and the supplemental Decision dated August 18, 1999, are hereby
AFFIRMED in toto.
SO ORDERED.[12]
Issue
NPC has come to the Court, assigning the lone error that:
THE APPELLATE COURT ERRED ON A QUESTION OF LAW WHEN IT AFFIRMED THE DECISION AND
SUPPLEMENTAL DECISION OF THE COURT A QUO DIRECTING AND ORDERING PETITIONER TO PAY JUST
COMPENSATION TO RESPONDENTS.
NPC reiterates that witnesses Enterone and Sacedon lacked personal knowledge about the construction and
existence of the tunnel and were for that reason not entitled to credence; and that the topographic and
relocation maps prepared by Sacedon should not be a basis to prove the existence and location of the tunnel
due to being self-serving.
NPC contends that the CA should have applied Section 3(i) of Republic Act No. 6395, which provided a period of
only five years from the date of the construction within which the affected landowner could bring a claim
against it; and that even if Republic Act No. 6395 should be inapplicable, the action of the Heirs of Macabangkit
had already prescribed due to the underground tunnel being susceptible to acquisitive prescription after the
lapse of 10 years pursuant to Article 620 of the Civil Code due to its being a continuous and apparent legal
easement under Article 634 of the Civil Code.
The issues for resolution are, therefore, as follows:
(1) Whether the CA and the RTC erred in holding that there was an underground tunnel traversing the Heirs of
Macabangkits land constructed by NPC; and
(2) Whether the Heirs of Macabangkits right to claim just compensation had prescribed under section 3(i) of
Ruling
We uphold the liability of NPC for payment of just compensation.
1.
Factual findings of the RTC,
when affirmed by the CA, are binding
The existence of the tunnel underneath the land of the Heirs of Macabangkit, being a factual matter, cannot
now be properly reviewed by the Court, for questions of fact are beyond the pale of a petition for review
on certiorari. Moreover, the factual findings and determinations by the RTC as the trial court are generally
binding on the Court, particularly after the CA affirmed them.[13] Bearing these doctrines in mind, the Court
should rightly dismiss NPCs appeal.
NPC argues, however, that this appeal should not be dismissed because the Heirs of Macabangkit essentially
failed to prove the existence of the underground tunnel. It insists that the topographic survey map and the
right-of-way map presented by the Heirs of Macabangkit did not at all establish the presence of any
underground tunnel.
NPC still fails to convince.
Even assuming, for now, that the Court may review the factual findings of the CA and the RTC, for NPC to insist
that the evidence on the existence of the tunnel was not adequate and incompetent remains futile. On the
contrary, the evidence on the tunnel was substantial, for the significance of the topographic survey map and the
sketch map (as indicative of the extent and presence of the tunnel construction) to the question on the
existence of the tunnel was strong, as the CA correctly projected in its assailed decision, viz:
Among the pieces of documentary evidence presented showing the existence of the said tunnel beneath the
subject property is the topographic survey map. The topographic survey map is one conducted to know about
the location and elevation of the land and all existing structures above and underneath it. Another is the Sketch
Map which shows the location and extent of the land traversed or affected by the said tunnel. These two (2)
pieces of documentary evidence readily point the extent and presence of the tunnel construction coming
from the power cavern near the small man-made lake which is the inlet and approach tunnel, or at a distance
of about two (2) kilometers away from the land of the plaintiffs-appellees, and then traversing the entire and
the whole length of the plaintiffs-appellees property, and the outlet channel of the tunnel is another small
man-made lake. This is a sub-terrain construction, and considering that both inlet and outlet are bodies of
water, the tunnel can hardly be noticed. All constructions done were beneath the surface of the plaintiffs-
appellees property. This explains why they could never obtain any knowledge of the existence of such tunnel
during the period that the same was constructed and installed beneath their property.[14]
The power cavern and the inlet and outlet channels established the presence of the underground tunnel, based
on the declaration in the RTC by Sacedon, a former employee of the NPC.[15] It is worthy to note that NPC did
not deny the existence of the power cavern, and of the inlet and outlet channels adverted to and as depicted in
the topographic survey map and the sketch map. The CA cannot be faulted for crediting the testimony of
Sacedon despite the effort of NPC to discount his credit due to his not being an expert witness, simply because
Sacedon had personal knowledge based on his being NPCs principal engineer and supervisor tasked at one time
to lay out the tunnels and transmission lines specifically for the hydroelectric projects,[16] and to supervise the
construction of the Agus 1 Hydroelectric Plant itself[17] from 1978 until his retirement from NPC.[18] Besides, he
declared that he personally experienced the vibrations caused by the rushing currents in the tunnel, particularly
near the outlet channel.[19] Under any circumstances, Sacedon was a credible and competent witness.
The ocular inspection actually confirmed the existence of the tunnel underneath the land of the Heirs of
Macabangkit. Thus, the CA observed:
More so, the Ocular inspection conducted on July 23, 1998 further bolstered such claim of the existence and
extent of such tunnel. This was conducted by a team composed of the Honorable Presiding Judge of the
Regional Trial Court, Branch 01, Lanao del Norte, herself and the respective lawyers of both of the parties
and found that, among others, said underground tunnel was constructed beneath the subject property.[20]
It bears noting that NPC did not raise any issue against or tender any contrary comment on the ocular
inspection report.
2.
Five-year prescriptive period under Section 3(i) of Republic Act No. 6395 does not apply to claims for just
compensation
The CA held that Section 3(i) of Republic Act No. 6395 had no application to this action because it covered
facilities that could be easily discovered, not tunnels that were inconspicuously constructed beneath the surface
of the land.[21]
NPC disagrees, and argues that because Article 635[22] of the Civil Code directs the application of special laws
when an easement, such as the underground tunnel, was intended for public use, the law applicable was
Section 3(i) of Republic Act No. 6395, as amended, which limits the action for recovery of compensation to five
years from the date of construction. It posits that the five-year prescriptive period already set in due to the
construction of the underground tunnel having been completed in 1979 yet.
Without necessarily adopting the reasoning of the CA, we uphold its conclusion that prescription did not bar the
present action to recover just compensation.
Section 3 (i) of Republic Act No. 6395, the cited law, relevantly provides:
Section 3. Powers and General Functions of the Corporation. The powers, functions, rights and activities of the
Corporation shall be the following:
xxx
(i) To construct works across, or otherwise, any stream, watercourse, canal, ditch, flume, street, avenue,
highway or railway of private and public ownership, as the location of said works may require:Provided, That
said works be constructed in such a manner as not to endanger life or property; And provided, further, That the
stream, watercourse, canal ditch, flume, street, avenue, highway or railway so crossed or intersected be
restored as near as possible to their former state, or in a manner not to impair unnecessarily their usefulness.
Every person or entity whose right of way or property is lawfully crossed or intersected by said works shall not
obstruct any such crossings or intersection and shall grant the Board or its representative, the proper authority
for the execution of such work. The Corporation is hereby given the right of way to locate, construct and
maintain such works over and throughout the lands owned by the Republic of the Philippines or any of its
branches and political subdivisions. The Corporation or its representative may also enter upon private property
in the lawful performance or prosecution of its business and purposes, including the construction of the
transmission lines thereon; Provided, that the owner of such property shall be indemnified for any actual
damage caused thereby;Provided, further, That said action for damages is filed within five years after the
rights of way, transmission lines, substations, plants or other facilities shall have been established; Provided,
finally, That after said period, no suit shall be brought to question the said rights of way, transmission lines,
substations, plants or other facilities;
A cursory reading shows that Section 3(i) covers the construction of works across, or otherwise, any stream,
watercourse, canal, ditch, flume, street, avenue, highway or railway of private and public ownership, as the
location of said works may require. It is notable that Section 3(i) includes no limitation except those
enumerated after the term works. Accordingly, we consider the term works as embracing all kinds of
constructions, facilities, and other developments that can enable or help NPC to meet its objectives of
developing hydraulic power expressly provided under paragraph (g) of Section 3.[23] The CAs restrictive construal
of Section 3(i) as exclusive of tunnels was obviously unwarranted, for the provision applies not only to
development works easily discoverable or on the surface of the earth but also to subterranean works like
tunnels. Such interpretation accords with the fundamental guideline in statutory construction that when the
law does not distinguish, so must we not.[24] Moreover, when the language of the statute is plain and free from
ambiguity, and expresses a single, definite, and sensible meaning, that meaning is conclusively presumed to be
the meaning that the Congress intended to convey.[25]
Even so, we still cannot side with NPC.
We rule that the prescriptive period provided under Section 3(i) of Republic Act No. 6395 is applicable only to
an action for damages, and does not extend to an action to recover just compensation like this case.
Consequently, NPC cannot thereby bar the right of the Heirs of Macabangkit to recover just compensation for
their land.
The action to recover just compensation from the State or its expropriating agency differs from the action for
damages. The former, also known as inverse condemnation, has the objective to recover the value of property
taken in fact by the governmental defendant, even though no formal exercise of the power of eminent domain
has been attempted by the taking agency.[26] Just compensation is the full and fair equivalent of the property
taken from its owner by the expropriator. The measure is not the takers gain, but the owners loss. The
word just is used to intensify the meaning of the word compensation in order to convey the idea that the
equivalent to be rendered for the property to be taken shall be real, substantial, full, and ample.[27] On the other
hand, the latter action seeks to vindicate a legal wrong through damages, which may be actual, moral, nominal,
temperate, liquidated, or exemplary. When a right is exercised in a manner not conformable with the norms
enshrined in Article 19[28] and like provisions on human relations in the Civil Code, and the exercise results to the
damage of another, a legal wrong is committed and the wrongdoer is held responsible.[29]
The two actions are radically different in nature and purpose. The action to recover just compensation is based
on the Constitution[30] while the action for damages is predicated on statutory enactments. Indeed, the
former arises from the exercise by the State of its power of eminent domain against private property for public
use, but the latter emanates from the transgression of a right. The fact that the owner rather than the
expropriator brings the former does not change the essential nature of the suit as an inverse
condemnation,[31] for the suit is not based on tort, but on the constitutional prohibition against the taking of
property without just compensation.[32] It would very well be contrary to the clear language of the Constitution
to bar the recovery of just compensation for private property taken for a public use solely on the basis of
statutory prescription.
Due to the need to construct the underground tunnel, NPC should have first moved to acquire the land from the
Heirs of Macabangkit either by voluntary tender to purchase or through formal expropriation proceedings. In
either case, NPC would have been liable to pay to the owners the fair market value of the land, for Section 3(h)
of Republic Act No. 6395 expressly requires NPC to pay the fair market value of such property at the time of the
taking, thusly:
(h) To acquire, promote, hold, transfer, sell, lease, rent, mortgage, encumber and otherwise dispose of property
incident to, or necessary, convenient or proper to carry out the purposes for which the Corporation was
created: Provided, That in case a right of way is necessary for its transmission lines, easement of right of way
shall only be sought: Provided, however, That in case the property itself shall be acquired by purchase, the cost
thereof shall be the fair market value at the time of the taking of such property.
This was what NPC was ordered to do in National Power Corporation v. Ibrahim,[33] where NPC had denied the
right of the owners to be paid just compensation despite their land being traversed by the underground tunnels
for siphoning water from Lake Lanao needed in the operation of Agus II, Agus III, Agus IV, Agus VI and Agus VII
Hydroelectric Projects in Saguiran, Lanao del Sur, in Nangca and Balo-I in Lanao del Norte and in Ditucalan and
Fuentes in Iligan City. There, NPC similarly argued that the underground tunnels constituted a mere easement
that did not involve any loss of title or possession on the part of the property owners, but the Court resolved
against NPC, to wit:
Petitioner contends that the underground tunnels in this case constitute an easement upon the property of the
respondents which does not involve any loss of title or possession. The manner in which the easement was
created by petitioner, however, violates the due process rights of respondents as it was without notice and
indemnity to them and did not go through proper expropriation proceedings. Petitioner could have, at any time,
validly exercised the power of eminent domain to acquire the easement over respondents property as this
power encompasses not only the taking or appropriation of title to and possession of the expropriated property
but likewise covers even the imposition of a mere burden upon the owner of the condemned property.
Significantly, though, landowners cannot be deprived of their right over their land until expropriation
proceedings are instituted in court. The court must then see to it that the taking is for public use, that there is
payment of just compensation and that there is due process of law.[34]
3.
NPCs construction of the tunnel
constituted taking of the land, and
entitled owners to just compensation
The Court held in National Power Corporation v. Ibrahim that NPC was liable to pay not merely an easement fee
but rather the full compensation for land traversed by the underground tunnels, viz:
In disregarding this procedure and failing to recognize respondents ownership of the sub-terrain portion,
petitioner took a risk and exposed itself to greater liability with the passage of time. It must be emphasized that
the acquisition of the easement is not without expense. The underground tunnels impose limitations on
respondents use of the property for an indefinite period and deprive them of its ordinary use. Based upon the
foregoing, respondents are clearly entitled to the payment of just compensation. Notwithstanding the fact that
petitioner only occupies the sub-terrain portion, it is liable to pay not merely an easement fee but rather the
full compensation for land. This is so because in this case, the nature of the easement practically deprives the
owners of its normal beneficial use. Respondents, as the owner of the property thus expropriated, are
entitled to a just compensation which should be neither more nor less, whenever it is possible to make the
assessment, than the money equivalent of said property.[35]
Here, like in National Power Corporation v. Ibrahim, NPC constructed a tunnel underneath the land of the Heirs
of Macabangkit without going through formal expropriation proceedings and without procuring their consent or
at least informing them beforehand of the construction. NPCs construction adversely affected the owners rights
and interests because the subterranean intervention by NPC prevented them from introducing any
developments on the surface, and from disposing of the land or any portion of it, either by sale or mortgage.
Did such consequence constitute taking of the land as to entitle the owners to just compensation?
We agree with both the RTC and the CA that there was a full taking on the part of NPC, notwithstanding that the
owners were not completely and actually dispossessed. It is settled that the taking of private property for public
use, to be compensable, need not be an actual physical taking or appropriation.[36] Indeed, the expropriators
action may be short of acquisition of title, physical possession, or occupancy but may still amount to a
taking.[37] Compensable taking includes destruction, restriction, diminution, or interruption of the rights of
ownership or of the common and necessary use and enjoyment of the property in a lawful manner, lessening or
destroying its value.[38] It is neither necessary that the owner be wholly deprived of the use of his
property,[39] nor material whether the property is removed from the possession of the owner, or in any respect
changes hands.[40]
As a result, NPC should pay just compensation for the entire land. In that regard, the RTC pegged just
compensation at P500.00/square meter based on its finding on what the prevailing market value of the
property was at the time of the filing of the complaint, and the CA upheld the RTC.
We affirm the CA, considering that NPC did not assail the valuation in the CA and in this Court. NPCs silence was
probably due to the correctness of the RTCs valuation after careful consideration and weighing of the parties
evidence, as follows:
The matter of what is just compensation for these parcels of land is a matter of evidence. These parcels of land
is (sic) located in the City of Iligan, the Industrial City of the South. Witness Dionisio Banawan, OIC- City
Assessors Office, testified, Within that area, that area is classified as industrial and residential. That plaintiffs
land is adjacent to many subdivisions and that is within the industrial classification. He testified and identified
Exhibit AA and AA-1, a Certification, dated April 4, 1997, showing that the appraised value of plaintiffs land
ranges from P400.00 to P500.00 per square meter (see, TSN, testimony of Dionisio Banawan, pp. 51, 57, and 71,
February 9, 1999). Also, witness Banawan, testified and identified Two (2) Deeds of Sale, marked as Exhibit AA-2
and AA-3,[] showing that the appraised value of the land adjoining or adjacent to plaintiff land ranges
from P700.00 to P750.00 per square meter. As between the much lower price of the land as testified by
defendants witness Gregorio Enterone, and that of the City Assessor of Iligan City, the latter is more credible.
Considering however, that the appraised value of the land in the area as determined by the City Assessors Office
is not uniform, this Court, is of the opinion that the reasonable amount of just compensation of plaintiffs land
should be fixed at FIVE HUNDRED (500.00) PESOS, per square meter. xxx.[41]
The RTC based its fixing of just compensation ostensibly on the prevailing market value at the time of the filing
of the complaint, instead of reckoning from the time of the taking pursuant to Section 3(h) of Republic Act No.
6395. The CA did not dwell on the reckoning time, possibly because NPC did not assign that as an error on the
part of the RTC.
We rule that the reckoning value is the value at the time of the filing of the complaint, as the RTC provided in its
decision. Compensation that is reckoned on the market value prevailing at the time either when NPC entered or
when it completed the tunnel, as NPC submits, would not be just, for it would compound the gross unfairness
already caused to the owners by NPCs entering without the intention of formally expropriating the land, and
without the prior knowledge and consent of the Heirs of Macabangkit. NPCs entry denied elementary due
process of law to the owners since then until the owners commenced the inverse condemnation proceedings.
The Court is more concerned with the necessity to prevent NPC from unjustly profiting from its deliberate acts
of denying due process of law to the owners. As a measure of simple justice and ordinary fairness to them,
therefore, reckoning just compensation on the value at the time the owners commenced these inverse
condemnation proceedings is entirely warranted.
In National Power Corporation v. Court of Appeals,[42] a case that involved the similar construction of an
underground tunnel by NPC without the prior consent and knowledge of the owners, and in which we held that
the basis in fixing just compensation when the initiation of the action preceded the entry into the property was
the time of the filing of the complaint, not the time of taking,[43]we pointed out that there was no taking when
the entry by NPC was made without intent to expropriate or was not made under warrant or color of legal
authority.
4.
Awards for rentals, moral damages, exemplary
damages, and attorneys fees are deleted
for insufficiency of factual and legal bases
The CA upheld the RTCs granting to the Heirs of Macabangkit of rentals of P 30,000.00/month from 1979 up to
July 1999 with 12% interest per annum by finding NPC guilty of bad faith in taking possession of the land to
construct the tunnel without their knowledge and consent.
Granting rentals is legally and factually bereft of justification, in light of the taking of the land being already
justly compensated. Conformably with the ruling in Manila International Airport Authority v. Rodriguez,[44] in
which the award of interest was held to render the grant of back rentals unwarranted, we delete the award of
back rentals and in its place prescribe interest of 12% interest per annum from November 21, 1997, the date of
the filing of the complaint, until the full liability is paid by NPC. The imposition of interest of 12% interest per
annum follows a long line of pertinent jurisprudence,[45] whereby the Court has fixed the rate of interest on just
compensation at 12% per annum whenever the expropriator has not immediately paid just compensation.
The RTC did not state any factual and legal justifications for awarding to the Heirs of Macabangkit moral and
exemplary damages each in the amount of P200,000.00. The awards just appeared in the fallo of its decision.
Neither did the CA proffer any justifications for sustaining the RTC on the awards. We consider the omissions of
the lower courts as pure legal error that we feel bound to correct even if NPC did not submit that for our
consideration. There was, to begin with, no factual and legal bases mentioned for the awards. It is never trite to
remind that moral and exemplary damages, not by any means liquidated or assessed as a matter of routine,
always require evidence that establish the circumstances under which the claimant is entitled to them.
Moreover, the failure of both the RTC and the CA to render the factual and legal justifications for the moral and
exemplary damages in the body of their decisions immediately demands the striking out of the awards for being
in violation of the fundamental rule that the decision must clearly state the facts and the law on which it is
based. Without the factual and legal justifications, the awards are exposed as the product of conjecture and
speculation, which have no place in fair judicial adjudication.
We also reverse and set aside the decree of the RTC for NPC to pay to the Heirs of Macabangkit the sum
equivalent to 15% of the total amount awarded, as attorneys fees, and to pay the cost. The body of the decision
did not state the factual and legal reasons why NPC was liable for attorneys fees. The terse statement found at
the end of the body of the RTCs decision, stating: xxx The contingent attorneys fee is hereby reduced from 20%
to only 15% of the total amount of the claim that may be awarded to plaintiffs, without more, did not indicate
or explain why and how the substantial liability of NPC for attorneys fees could have arisen
and been determined.
In assessing attorneys fees against NPC and in favor of the respondents, the RTC casually disregarded
the fundamental distinction between the two concepts of attorneys fees the ordinary and the
extraordinary. These concepts were aptly distinguished in Traders Royal Bank Employees Union-Independent v.
NLRC,[46] thuswise:
There are two commonly accepted concepts of attorneys fees, the so-called ordinary and extraordinary. In its
ordinary concept, an attorneys fee is the reasonable compensation paid to a lawyer by his client for the legal
services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his
agreement with the client.
In its extraordinary concept, an attorneys fee is an indemnity for damages ordered by the court to be paid by
the losing party in a litigation. The basis of this is any of the cases provided by law where such award can be
made, such as those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client,
unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part
thereof.
By referring to the award as contingency fees, and reducing the award from 20% to 15%, the RTC was really
referring to asupposed agreement on attorneys fees between the Heirs of Macabangkit and their counsel. As
such, the concept of attorneys fees involved was the ordinary. Yet, the inclusion of the attorneys fees in the
judgment among the liabilities of NPC converted the fees to extraordinary. We have to disagree with the RTC
thereon, and we express our discomfort that the CA did not do anything to excise the clearly erroneous and
unfounded grant.
An award of attorneys fees has always been the exception rather than the rule. To start with, attorneys fees are
not awarded every time a party prevails in a suit.[47] Nor should an adverse decision ipso facto justify an award
of attorneys fees to the winning party.[48] The policy of the Court is that no premium should be placed on the
right to litigate.[49] Too, such fees, as part of damages, are assessed only in the instances specified in Art.
2208, Civil Code.[50] Indeed, attorneys fees are in the nature of actual damages.[51]But even when a claimant is
compelled to litigate with third persons or to incur expenses to protect his rights, attorneys fees may still be
withheld where no sufficient showing of bad faith could be reflected in a partys persistence in a suit other than
an erroneous conviction of the righteousness of his cause.[52] And, lastly, the trial court must
make express findings of fact and law that bring the suit within the exception. What this demands is that
the factual, legal or equitable justifications for the award must be set forth
not only in the fallo but also in the text of the decision, or else, the award should be thrown out for being
speculative and conjectural.[53]
Sound policy dictates that even if the NPC failed to raise the issue of attorneys fees, we are not precluded from
correcting the lower courts patently erroneous application of the law.[54] Indeed, the Court, in supervising the
lower courts, possesses the ample authority to review legal matters like this one even if not specifically raised or
assigned as error by the parties.
5.
Attorneys fees under quantum meruit principle
are fixed at 10% of the judgment award
Based on the pending motions of Atty. Macarupung Dibaratun and Atty. Manuel D. Ballelos to assert their
respective rights to attorneys fees, both contending that they represented the Heirs of Macabangkit in this case,
a conflict would ensue from the finality of the judgment against NPC.
A look at the history of the legal representation of the Heirs of Macabangkit herein provides a helpful predicate
for resolving the conflict.
Atty. Dibaratun was the original counsel of the Heirs of Macabangkit. When the appeal was submitted for
decision in the CA,[55]Atty. Ballelos filed his entry of appearance,[56] and a motion for early decision.[57] Atty.
Ballelos subsequently filed also a manifestation,[58] supplemental manifestation,[59]
reply,[60] and ex parte motion reiterating the motion for early decision.[61] It appears that a copy of the CAs
decision was furnished solely to Atty. Ballelos. However, shortly before the rendition of the decision, Atty.
Dibaratun filed in the CA a motion to register attorneys lien,[62] alleging that he had not withdrawn his
appearance and had not been aware of the entry of appearance by Atty. Ballelos. A similar motion was also
received by the Court from Atty. Dibaratun a few days after the petition for review was filed.[63]Thus, on
February 14, 2005,[64] the Court directed Atty. Dibaratun to enter his appearance herein. He complied upon
filing the comment.[65]
Amir Macabangkit confirmed Atty. Dibaratuns representation through an ex parte manifestation that he filed in
his own behalf and on behalf of his siblings Mongkoy and Putri.[66] Amir reiterated his manifestation on March 6,
2006,[67] and further imputed malpractice to Atty. Ballelos for having filed an entry of appearance bearing Amirs
forged signature and for plagiarism, i.e., copying verbatim the arguments contained in the pleadings previously
filed by Atty. Dibaratun.[68]
On September 11, 2008, Atty. Ballelos submitted two motions, to wit: (a) a manifestation and motion
authorizing a certain Abdulmajeed Djamla to receive his attorneys fees equivalent of 15% of the judgment
award,[69] and (b) a motion to register his attorneys lien that he claimed was contingent.[70]
Both Atty. Dibaratun and Atty. Ballelos posited that their entitlement to attorneys fees was contingent. Yet, a
contract for a contingent fees is an agreement in writing by which the fees, usually a fixed percentage of what
may be recovered in the action, are made to depend upon the success in the effort to enforce or defend a
supposed right. Contingent fees depend upon an express contract, without which the attorney can only recover
on the basis of quantum meruit.[71] With neither Atty. Dibaratun nor Atty. Ballelos presenting a written
agreement bearing upon their supposed contingent fees, the only way to determine their right to appropriate
attorneys fees is to apply the principle of quantum meruit.
Quantum meruit literally meaning as much as he deserves is used as basis for determining an attorneys
professional fees in the absence of an express agreement.[72] The recovery of attorneys fees on the basis
of quantum meruit is a device that prevents an unscrupulous client from running away with the fruits of the
legal services of counsel without paying for it and also avoids unjust enrichment on the part of the attorney
himself.[73] An attorney must show that he is entitled to reasonable compensation for the effort in pursuing the
clients cause, taking into account certain factors in fixing the amount of legal fees.[74]
Rule 20.01 of the Code of Professional Responsibility lists the guidelines for determining the proper amount of
attorney fees, to wit:
Rule 20.1 A lawyer shall be guided by the following factors in determining his fees:
a) The time spent and the extent of the services rendered or required;
b) The novelty and difficult of the questions involved;
c) The important of the subject matter;
d) The skill demanded;
e) The probability of losing other employment as a result of acceptance of the proffered case;
f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he
belongs;
g) The amount involved in the controversy and the benefits resulting to the client from the service;
h) The contingency or certainty of compensation;
i) The character of the employment, whether occasional or established; and
j) The professional standing of the lawyer.
In the event of a dispute as to the amount of fees between the attorney and his client, and the intervention of
the courts is sought, the determination requires that there be evidence to prove the amount of fees and the
extent and value of the services rendered, taking into account the facts determinative thereof.[75] Ordinarily,
therefore, the determination of the attorneys fees on quantum meruit is remanded to the lower court for the
purpose. However, it will be just and equitable to now assess and fix the attorneys fees of both attorneys in
order that the resolution of a comparatively simple controversy, as Justice Regalado put it in Traders Royal Bank
Employees Union-Independent v. NLRC,[76] would not be needlessly prolonged, by taking into due consideration
the accepted guidelines and so much of the pertinent data as are extant in the records.
Atty. Dibaratun and Atty. Ballelos each claimed attorneys fees equivalent to 15% of the principal award
of P113,532,500.00, which was the amount granted by the RTC in its decision. Considering that the attorneys
fees will be defrayed by the Heirs of Macabangkit out of their actual recovery from NPC, giving to each of the
two attorneys 15% of the principal award as attorneys fees would be excessive and unconscionable from the
point of view of the clients. Thus, the Court, which holds and exercises the power to fix attorneys fees on
a quantum meruit basis in the absence of an express written agreement between the attorney and the client,
now fixes attorneys fees at 10% of the principal award of P113,532,500.00.
Whether it is Atty. Dibaratun or Atty. Ballelos, or both, who should receive attorneys fees from the Heirs of
Macabangkit is a question that the Court must next determine and settle by considering the amount and quality
of the work each performed and the results each obtained.
Atty. Dibaratun, the attorney from the outset, unquestionably carried the bulk of the legal demands of the case.
He diligently prepared and timely filed in behalf of the Heirs of Macabangkit every pleading and paper necessary
in the full resolution of the dispute, starting from the complaint until the very last motion filed in this Court. He
consistently appeared during the trial, and examined and cross-examined all the witnesses presented at that
stage of the proceedings. The nature, character, and substance of each pleading and the motions he prepared
for the Heirs of Macabangkit indicated that he devoted substantial time and energy in researching and
preparing the case for the trial. He even advanced P250,000.00 out of his own pocket to defray expenses from
the time of the filing of the motion to execute pending appeal until the case reached the Court.[77] His
representation of all the Heirs of Macabangkit was not denied by any of them.
We note that Atty. Dibaratun possessed some standing in the legal profession and in his local community. He
formerly served as a member of the Board of Director of the Integrated Bar of the Philippines (IBP), Lanao del
Norte-Iligan City Chapter, and was an IBP national awardee as Best Legal Aid Committee Chairman. He taught at
Mindanao State University College of Law Extension. He was a Municipal Mayor of Matungao, Lanao del Norte,
and was enthroned Sultan a Gaus.
In contrast, not much about the character and standing of Atty. Ballelos, as well as the nature and quality of the
legal services he rendered for the Heirs of Macabangkit are in the records. The motions he filed in the
Court and in the CA lacked enlightening research and were insignificant to the success of the clients cause. His
legal service, if it can be called that, manifested no depth or assiduousness, judging from the quality of the
pleadings from him. His written submissions in the case appeared either to have been lifted verbatim from the
pleadings previously filed by Atty. Dibaratun, or to have been merely quoted from the decisions and resolutions
of the RTC and the CA. Of the Heirs of Macabangkit, only Cebu, Batowa-an, Sayana, Nasser, Manta,
Mongkoy[78] and Edgar gave their consent to Atty. Ballelos to appear in their behalf in the CA, which he did
despite Atty. Dibaratun not having yet filed any withdrawal of his appearance. The Court did not receive any
notice of appearance for the Heirs of Macabangkit from Atty. Ballelos, but that capacity has meanwhile become
doubtful in the face of Amirs strong denial of having retained him.
In fairness and justice, the Court accords full recognition to Atty. Dibaratun as the counsel de parte of the Heirs
of Macabangkit who discharged his responsibility in the prosecution of the clients cause to its successful end. It
is he, not Atty. Ballelos, who was entitled to the full amount of attorneys fees that the clients ought to pay to
their attorney. Given the amount and quality of his legal work, his diligence and the time he expended in
ensuring the success of his prosecution of the clients cause, he deserves the recognition, notwithstanding that
some of the clients might appear to have retained Atty. Ballelos after the rendition of a favorable judgment.[79]
Atty. Ballelos may claim only from Cebu, Batowa-an, Sayana, Nasser, Manta and Edgar, the only parties who
engaged him. The Court considers his work in the case as very minimal. His compensation under the quantum
meruit principle is fixed at P5,000.00, and only the Heirs of Macabangkit earlier named are liable to him.
WHEREFORE, the Court AFFIRMS the decision promulgated on October 5, 2004 by the Court of Appeals, subject
to the following MODIFICATIONS, to wit:
(a) Interest at the rate of 12% per annum is IMPOSED on the principal amount of P113,532,500.00 as just
compensation, reckoned from the filing of the complaint on November 21, 1997 until the full liability is paid;
(b) The awards of P30,000.00 as rental fee, P200,000.00 as moral damages, and P200,000.00 as exemplary
damages are DELETED; and
(c) The award of 15% attorneys fees decreed to be paid by National Power Corporation to the Heirs of
Macabangkit is DELETED.
The Court PARTLY GRANTS the motion to register attorneys lien filed by Atty. Macarupung Dibaratun,
and FIXES Atty. Dibaratuns attorneys fees on the basis of quantum meruit at 10% of the principal award
of P113,532,500.00.
The motion to register attorneys lien of Atty. Manuel D. Ballelos is PARTLY GRANTED, and Atty. Ballelos
is DECLARED ENTITLED TO RECOVER from Cebu, Batowa-an, Sayana, Nasser, Manta and Edgar, all surnamed
Macabangkit, the amount of P5,000.00 as attorneys fees on the basis of quantum meruit.
Costs of suit to be paid by the petitioner.
SO ORDERED.
SECOND DIVISION
G.R. No. 168967 February 12, 2010
CITY OF ILOILO represented by HON. JERRY P. TREAS, City Mayor, Petitioner,
vs.
HON. LOLITA CONTRERAS-BESANA, Presiding Judge, Regional Trial Court, Branch 32, and ELPIDIO
JAVELLANA, Respondents.
DECISION
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),2and 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 Complaint4 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 60.00 per square meter, or a total value of 43,560.00. 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 Answer6 where he admitted ownership of the Subject Property but
denied the petitioners avowed public purpose of the sought-for 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 220.00 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 40,000.00 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 Possession10 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 Order11 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 Possession13 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 private
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 40,000.00 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.15Private 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 Complaint16 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 15,000.00 per month together with moral, exemplary, and actual damages, as well as attorneys
fees.1avvphi1
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
petitioners 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 Property
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 254,000.00. 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 of December 12, 2003 but this time stated not at the time it was
condemned but at the time the order was issued. Naturally, this Court in the interest of justice, can amend its
order because there was no deposit by plaintiff.
The jurisprudence cited by plaintiff that the just compensation must be determined as of the date of the filing of longer subject to review. On the first question, therefore, we rule that the trial court gravely erred in nullifying
the complaint is true if there was a deposit. Because there was none the filing was not in accordance with law, the May 17, 1983 Order.
hence, must be at the time the order was issued. We now turn to the reckoning date for the determination of just compensation. Petitioner claims that the
The allegation of defendant thru [sic] counsel that the orders attacked by plaintiff thru [sic] counsel saying it has computation should be made as of September 18, 1981, the date when the expropriation complaint was filed.
become final and executory are interlocutory orders subject to the control of the Judge until final judgment is We agree.
correct. Furthermore, it is in the interes[t] of justice to correct errors.29 In a long line of cases, we have constantly affirmed that:
In the meantime, on April 15, 2004, the Commission submitted its Report, providing the following estimates of x x x just compensation is to be ascertained as of the time of the taking, which usually coincides with the
value, but without making a proper recommendation:30 commencement of the expropriation proceedings. Where the institution of the action precedes entry into the
property, the just compensation is to be ascertained as of the time of the filing of the complaint.38
Reckoning Point Value per square meter Fair Market Value Basis When the taking of the property sought to be expropriated coincides with the commencement of the
expropriation proceedings, or takes place subsequent to the filing of the complaint for eminent domain, the just
based on three or more compensation should be determined as of the date of the filing of the complaint.39 Even under Sec. 4, Rule 67 of
1981 - at the time the recorded sales of similar the 1964 Rules of Procedure, under which the complaint for expropriation was filed, just compensation is to be
110.00/sqm 79,860.00
complaint was filed types of land in the determined "as of the date of the filing of the complaint." Here, there is no reason to depart from the general
vicinity in the same year rule that the point of reference for assessing the value of the Subject Property is the time of the filing of the
complaint for expropriation.40
Appraisal by Southern Private respondent claims that the reckoning date should be in 2004 because of the "clear injustice to the
Negros Development private respondent who all these years has been deprived of the beneficial use of his properties."
Bank based on market We commiserate with the private respondent. The school was constructed and has been in operation since
1981 at the time the 1985. Petitioner and the residents of Iloilo City have long reaped the benefits of the property. However, non-
686.81/sqm 498,625.22 value, zonal value,
complaint was filed payment of just compensation does not entitle the private landowners to recover possession of their
appraised value of other
banks, recent selling price expropriated lot.41
of neighboring lots Concededly, Javellana also slept on his rights for over 18 years and did not bother to check with the PNB if a
deposit was actually made by the petitioner. Evidently, from his inaction in failing to withdraw or even verify the
amounts purportedly deposited, private respondent not only accepted the valuation made by the petitioner,
Appraisal by the City
but also was not interested enough to pursue the expropriation case until the end. As such, private respondent
2002 3,500.00/sqm 2,541,000.00 Appraisal Committee,
may not recover possession of the Subject Property, but is entitled to just compensation.42 It is high time that
Office of the City Assessor
private respondent be paid what was due him after almost 30 years.
We stress, however, that the City of Iloilo should be held liable for damages for taking private respondents
Private Appraisal Report property without payment of just compensation. In Manila International Airport Authority v. Rodriguez,43 the
(Atty. Roberto Cal Court held that a government agencys prolonged occupation of private property without the benefit of
2004 4,200.00/sqm hP3,049,200.00
Catolico dated April 6, expropriation proceedings undoubtedly entitled the landowner to damages:
2004) Such pecuniary loss entitles him to adequate compensation in the form of actual or compensatory damages,
which in this case should be the legal interest (6%) on the value of the land at the time of taking, from said
Hence, the present petition.
point up to full payment by the MIAA. This is based on the principle that interest "runs as a matter of law and
Petitioners Arguments
follows from the right of the landowner to be placed in as good position as money can accomplish, as of the
Petitioner is before us claiming that (1) the trial court gravely abused its discretion amounting to lack or excess
date of the taking x x x.
of jurisdiction in overturning the Order dated May 17, 1983, which was already a final order; and (2) just
xxxx
compensation for the expropriation should be based on the Subject Propertys fair market value either at the
For more than twenty (20) years, the MIAA occupied the subject lot without the benefit of expropriation
time of taking or filing of the complaint.
proceedings and without the MIAA exerting efforts to ascertain ownership of the lot and negotiating with any of
Private Respondents Arguments
the owners of the property. To our mind, these are wanton and irresponsible acts which should be suppressed
Private respondent filed his Comment on October 3, 2005,31 arguing that (1) there was no error of jurisdiction
and corrected. Hence, the award of exemplary damages and attorneys fees is in order. x x x.44 (Emphasis
correctible by certiorari; and (2) that the Assailed Orders were interlocutory orders that were subject to
supplied)
amendment and nullification at the discretion of the court.
WHEREFORE, the petition is GRANTED. The Orders of the Regional Trial Court of Iloilo City, Branch 32 in Civil
Issues
Case No. 14052 and Civil Case No. 03-27571 dated December 12, 2003, June 15, 2004, and March 9, 2005 are
There are only two questions we need answer, and they are not at all novel. First, does an order of
hereby ANNULLED and SET ASIDE.
expropriation become final? Second, what is the correct reckoning point for the determination of just
The Regional Trial Court of Iloilo City, Branch 32 is DIRECTED to immediately determine the just compensation
compensation?
due to private respondent Elpidio T. Javellana based on the fair market value of the Subject Property at the time
Our Ruling
Civil Case No. 14052 was filed, or on September 18, 1981 with interest at the legal rate of six percent (6%) per
Expropriation proceedings have two stages. The first phase ends with an order of dismissal, or a determination
annum from the time of filing until full payment is made.
that the property is to be acquired for a public purpose.32 Either order will be a final order that may be appealed
The City of Iloilo is ORDERED to pay private respondent the amount of 200,000.00 as exemplary damages.
by the aggrieved party.33 The second phase consists of the determination of just compensation. 34 It ends with
SO ORDERED.
an order fixing the amount to be paid to the landowner. Both orders, being final, are appealable.35
An order of condemnation or dismissal is final, resolving the question of whether or not the plaintiff has
properly and legally exercised its power of eminent domain.36 Once the first order becomes final and no appeal
thereto is taken, the authority to expropriate and its public use can no longer be questioned.371avvphi1
Javellana did not bother to file an appeal from the May 17, 1983 Order which granted petitioners Motion for
Issuance of Writ of Possession and which authorized petitioner to take immediate possession of the Subject
Property. Thus, it has become final, and the petitioners right to expropriate the property for a public use is no
THIRD DIVISION
G.R. No. 211666, February 25, 2015
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND
HIGHWAYS, Petitioners, v. ARLENE R. SORIANO, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review under Rule 45 of the Rules of Court assailing the Decision1 dated
November 15, 2013 and Order2 dated March 10, 2014 of the Regional Trial Court (RTC), Valenzuela City, Branch
270, in Civil Case No. 140-V-10.
The antecedent facts are as follows:
On October 20, 2010, petitioner Republic of the Philippines, represented by the Department of Public Works
and Highways (DPWH), filed a Complaint3 for expropriation against respondent Arlene R. Soriano, the registered
owner of a parcel of land consisting of an area of 200 square meters, situated at Gen. T. De Leon, Valenzuela
City, and covered by Transfer Certificate of Title (TCT) No. V-13790.4 In its Complaint, petitioner averred that
pursuant to Republic Act (RA) No. 8974, otherwise known as An Act to Facilitate the Acquisition of Right-Of-
Way, Site or Location for National Government Infrastructure Projects and for other Purposes, the property
sought to be expropriated shall be used in implementing the construction of the North Luzon Expressway
(NLEX)- Harbor Link Project (Segment 9) from NLEX to MacArthur Highway, Valenzuela City.5cralawred
Petitioner duly deposited to the Acting Branch Clerk of Court the amount of P420,000.00 representing 100% of
the zonal value of the subject property. Consequently, in an Order6 dated May 27, 2011, the RTC ordered the
issuance of a Writ of Possession and a Writ of Expropriation for failure of respondent, or any of her
representatives, to appear despite notice during the hearing called for the purpose.
In another Order7 dated June 21, 2011, the RTC appointed the following members of the Board of
Commissioners for the determination of just compensation: (1) Ms. Eunice O. Josue, Officer-in-Charge, RTC,
Branch 270, Valenzuela City; (2) Atty. Cecilynne R. Andrade, Acting Valenzuela City Assessor, City Assessors
Office, Valenzuela City; and (3) Engr. Restituto Bautista, of Brgy. Bisig, Valenzuela City. However, the trial court
subsequently revoked the appointment of the Board for their failure to submit a report as to the fair market
value of the property to assist the court in the determination of just compensation and directed the parties to
submit their respective position papers.8 Thereafter, the case was set for hearing giving the parties the
opportunity to present and identify all evidence in support of their arguments therein.
According to the RTC, the records of the case reveal that petitioner adduced evidence to show that the total
amount deposited is just, fair, and equitable. Specifically, in its Position Paper, petitioner alleged that pursuant
to a Certification issued by the Bureau of Internal Revenue (BIR), Revenue Region No. 5, the zonal value of the
subject property in the amount of P2,100.00 per square meter is reasonable, fair, and just to compensate the
defendant for the taking of her property in the total area of 200 square meters.9In fact, Tax Declaration No. C-
018-07994, dated November 13, 2009 submitted by petitioner, shows that the value of the subject property is
at a lower rate of P400.00 per square meter. Moreover, as testified to by Associate Solicitor III Julie P. Mercurio,
and as affirmed by the photographs submitted, the subject property is poorly maintained, covered by shrubs
and weeds, and not concretely-paved. It is located far from commercial or industrial developments in an area
without a proper drainage system, can only be accessed through a narrow dirt road, and is surrounded by
adjacent dwellings of sub-standard materials.
Accordingly, the RTC considered respondent to have waived her right to adduce evidence and to object to the
evidence submitted by petitioner for her continued absence despite being given several notices to do so.
On November 15, 2013, the RTC rendered its Decision, the dispositive portion of which reads:
WHEREFORE, with the foregoing determination of just compensation, judgment is hereby rendered:
1) Declaring plaintiff to have lawful right to acquire possession of and title to 200 square meters of
defendant Arlene R. Sorianos parcel of land covered by TCT V-13790 necessary for the construction of the
NLEX Harbor Link Project (Segment 9) from NLEX to MacArthur Highway Valenzuela City;
2) Condemning portion to the extent of 200 square meters of the above-described parcel of land including
improvements thereon, if there be any, free from all liens and encumbrances;
3) Ordering the plaintiff to pay defendant Arlene R. Soriano Php2,100.00 per square meter or the sum of
Four Hundred Twenty Thousand Pesos (Php420,000.00) for the 200 square meters as fair, equitable, and
just compensation with legal interest at 12% per annum from the taking of the possession of the property,
subject to the payment of all unpaid real property taxes and other relevant taxes, if there be any;
4) Plaintiff is likewise ordered to pay the defendant consequential damages which shall include the value of
the transfer tax necessary for the transfer of the subject property from the name of the defendant to that
of the plaintiff;
5) The Office of the Register of Deeds of Valenzuela City, Metro Manila is directed to annotate this Decision
in Transfer Certificate of Title No. V-13790 registered under the name of Arlene R. Soriano.
Let a certified true copy of this decision be recorded in the Registry of Deeds of Valenzuela City.
Records of this case show that the Land Bank Managers Check Nos. 0000016913 dated January 21, 2011 in the
amount of Php400,000.00 and 0000017263 dated April 28, 2011 in the amount of Php20,000.00 issued by the
Department of Public Works and Highways (DPWH) are already stale. Thus, the said Office is hereby directed to
issue another Managers Check in the total amount Php420,000.00 under the name of the Office of the Clerk of
Court, Regional Trial Court, Valenzuela City earmarked for the instant case.10
Petitioner filed a Motion for Reconsideration maintaining that pursuant to Bangko Sentral ng Pilipinas (BSP)
Circular No. 799, Series of 2013, which took effect on July 1, 2013, the interest rate imposed by the RTC on just
compensation should be lowered to 6% for the instant case falls under a loan or forbearance of money.11 In its
Order12 dated March 10, 2014, the RTC reduced the interest rate to 6% per annum not on the basis of the
aforementioned Circular, but on Article 2209 of the Civil Code, viz.:
However, the case of National Power Corporation v. Honorable Zain B. Angas is instructive.
In the aforementioned case law, which is similar to the instant case, the Supreme Court had the occasion to rule
that it is well-settled that the aforequoted provision of Bangko Sentral ng Pilipinas Circular applies only to a loan
or forbearance of money, goods or credits. However, the term judgments as used in Section 1 of the Usury
Law and the previous Central Bank Circular No. 416, should be interpreted to mean only judgments involving
loan or forbearance of money, goods or credits, following the principle of ejusdem generis. And applying said
rule on statutory construction, the general term judgments can refer only to judgments in cases involving
loans or forbearance of any money, goods, or credits. Thus, the High Court held that, Art. 2209 of the Civil Code,
and not the Central Bank Circular, is the law applicable.
Art. 2009 of the Civil Code reads:
If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for
damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in
the absence of stipulation, the legal interest, which is six per cent per annum.
Further in that case, the Supreme Court explained that the transaction involved is clearly not a loan or
forbearance of money, goods or credits but expropriation of certain parcels of land for a public purpose, the
payment of which is without stipulation regarding interest, and the interest adjudged by the trial court is in the
nature of indemnity for damages. The legal interest required to be paid on the amount of just compensation for
the properties expropriated is manifestly in the form of indemnity for damages for the delay in the payment
thereof. It ultimately held that Art. 2209 of the Civil Code shall apply.13
On May 12, 2014, petitioner filed the instant petition invoking the following arguments:
I.
RESPONDENT IS NOT ENTITLED TO THE LEGAL INTEREST OF 6% PER ANNUM ON THE AMOUNT OF JUST
COMPENSATION OF THE SUBJECT PROPERTY AS THERE WAS NO DELAY ON THE PART OF PETITIONER.
II.
BASED ON THE NATIONAL INTERNAL REVENUE CODE OF 1997 AND THE LOCAL GOVERNMENT CODE, IT IS
RESPONDENTS OBLIGATION TO PAY THE TRANSFER TAXES.
Petitioner maintains that if property is taken for public use before compensation is deposited with the court
having jurisdiction over the case, the final compensation must include interests on its just value computed from
the time the property is taken up to the time when compensation is actually paid or deposited with the
court.14 Thus, legal interest applies only when the property was taken prior to the deposit of payment with the
court and only to the extent that there is delay in payment. In the instant case, petitioner posits that since it
was able to deposit with the court the amount representing the zonal value of the property before its taking, it
cannot be said to be in delay, and thus, there can be no interest due on the payment of just
compensation.15 Moreover, petitioner alleges that since the entire subject property was expropriated and not
merely a portion thereof, it did not suffer an impairment or decrease in value, rendering the award of
consequential damages nugatory. Furthermore, petitioner claims that contrary to the RTCs instruction, transfer
taxes, in the nature of Capital Gains Tax and Documentary Stamp Tax, necessary for the transfer of the subject
property from the name of the respondent to that of the petitioner are liabilities of respondent and not
petitioner.
The petition is partly meritorious.
At the outset, it must be noted that the RTCs reliance on National Power Corporation v. Angas is misplaced for
the same has already been overturned by our more recent ruling in Republic v. Court of Appeals,16 wherein we
held that the payment of just compensation for the expropriated property amounts to an effective forbearance
on the part of the State, to wit:
Aside from this ruling, Republic notably overturned the Courts previous ruling in National Power Corporation
v. Angas which held that just compensation due for expropriated properties is not a loan or forbearance of
money but indemnity for damages for the delay in payment; since the interest involved is in the nature of
damages rather than earnings from loans, then Art. 2209 of the Civil Code, which fixes legal interest at 6%,
shall apply.
In Republic, the Court recognized that the just compensation due to the landowners for their expropriated
property amounted to an effective forbearance on the part of the State. Applying the Eastern Shipping
Lines ruling, the Court fixed the applicable interest rate at 12% per annum, computed from the time the
property was taken until the full amount of just compensation was paid, in order to eliminate the issue of the
constant fluctuation and inflation of the value of the currency over time. In the Courts own words:
The Bulacan trial court, in its 1979 decision, was correct in imposing interest[s] on the zonal value of the
property to be computed from the time petitioner instituted condemnation proceedings and "took" the
property in September 1969. This allowance of interest on the amount found to be the value of the property as
of the time of the taking computed, being an effective forbearance, at 12% per annum should help eliminate
the issue of the constant fluctuation and inflation of the value of the currency over time.
We subsequently upheld Republics 12% per annum interest rate on the unpaid expropriation compensation in
the following cases: Reyes v. National Housing Authority, Land Bank of the Philippines v. Wycoco, Republic v.
Court of Appeals, Land Bank of the Philippines v. Imperial, Philippine Ports Authority v. Rosales-Bondoc, and
Curata v. Philippine Ports Authority.17
Effectively, therefore, the debt incurred by the government on account of the taking of the property subject of
an expropriation constitutes a forbearance18 which runs contrary to the trial courts opinion that the same is in
the nature of indemnity for damages calling for the application of Article 2209 of the Civil Code. Nevertheless, in
line with the recent circular of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP-MB) No. 799, Series
of 2013, effective July 1, 2013, the prevailing rate of interest for loans or forbearance of money is six percent
(6%) per annum, in the absence of an express contract as to such rate of interest.
Notwithstanding the foregoing, We find that the imposition of interest in this case is unwarranted in view of the
fact that as evidenced by the acknowledgment receipt19 signed by the Branch Clerk of Court, petitioner was able
to deposit with the trial court the amount representing the zonal value of the property before its taking. As
often ruled by this Court, the award of interest is imposed in the nature of damages for delay in payment which,
in effect, makes the obligation on the part of the government one of forbearance to ensure prompt payment of
the value of the land and limit the opportunity loss of the owner.20 However, when there is no delay in the
payment of just compensation, We have not hesitated in deleting the imposition of interest thereon for the
same is justified only in cases where delay has been sufficiently established.21cralawred
The records of this case reveal that petitioner did not delay in its payment of just compensation as it had
deposited the pertinent amount in full due to respondent on January 24, 2011, or four (4) months before the
taking thereof, which was when the RTC ordered the issuance of a Writ of Possession and a Writ of
Expropriation on May 27, 2011. The amount deposited was deemed by the trial court to be just, fair, and
equitable, taking into account the well-established factors in assessing the value of land, such as its size,
condition, location, tax declaration, and zonal valuation as determined by the BIR. Considering, therefore, the
prompt payment by the petitioner of the full amount of just compensation as determined by the RTC, We find
that the imposition of interest thereon is unjustified and should be deleted.
Similarly, the award of consequential damages should likewise be deleted in view of the fact that the entire area
of the subject property is being expropriated, and not merely a portion thereof, wherein such remaining portion
suffers an impairment or decrease in value, as enunciated in Republic of the Philippines v. Bank of the Philippine
Islands,22 thus:
x x x The general rule is that the just compensation to which the owner of the condemned property is entitled
to is the market value. Market value is that sum of money which a person desirous but not compelled to buy,
and an owner willing but not compelled to sell, would agree on as a price to be paid by the buyer and received
by the seller. The general rule, however, is modified where only a part of a certain property is expropriated. In
such a case, the owner is not restricted to compensation for the portion actually taken, he is also entitled to
recover the consequential damage, if any, to the remaining part of the property.
xxxx
No actual taking of the building is necessary to grant consequential damages. Consequential damages are
awarded if as a result of the expropriation, the remaining property of the owner suffers from an impairment
or decrease in value. The rules on expropriation clearly provide a legal basis for the award of consequential
damages. Section 6 of Rule 67 of the Rules of Court provides:
x x x The commissioners shall assess the consequential damages to the property not taken and deduct from
such consequential damages the consequential benefits to be derived by the owner from the public use or
public purpose of the property taken, the operation of its franchise by the corporation or the carrying on of the
business of the corporation or person taking the property. But in no case shall the consequential benefits
assessed exceed the consequential damages assessed, or the owner be deprived of the actual value of his
property so taken.
In B.H. Berkenkotter & Co. v. Court of Appeals, we held that:
To determine just compensation, the trial court should first ascertain the market value of the property, to which
should be added the consequential damages after deducting therefrom the consequential benefits which may
arise from the expropriation. If the consequential benefits exceed the consequential damages, these items
should be disregarded altogether as the basic value of the property should be paid in every case.23cralawred
Considering that the subject property is being expropriated in its entirety, there is no remaining portion which
may suffer an impairment or decrease in value as a result of the expropriation. Hence, the award of
consequential damages is improper.
Anent petitioners contention that it cannot be made to pay the value of the transfer taxes in the nature of
capital gains tax and documentary stamp tax, which are necessary for the transfer of the subject property from
the name of the respondent to that of the petitioner, the same is partly meritorious.
With respect to the capital gains tax, We find merit in petitioners posture that pursuant to Sections 24(D) and
56(A)(3) of the 1997 National Internal Revenue Code (NIRC), capital gains tax due on the sale of real property is
a liability for the account of the seller, to wit:
Section 24. Income Tax Rates
xxxx
(D) Capital Gains from Sale of Real Property.
(1) In General. The provisions of Section 39(B) notwithstanding, a final tax of six percent (6%) based on the
gross selling price or current fair market value as determined in accordance with Section 6(E) of this Code,
whichever is higher, is hereby imposed upon capital gains presumed to have been realized from the sale,
exchange, or other disposition of real property located in the Philippines, classified as capital assets, including
pacto de retro sales and other forms of conditional sales, by individuals, including estates and trusts: Provided,
That the tax liability, if any, on gains from sales or other disposition of real property to the government or any of
its political subdivisions or agencies or to government-owned or controlled corporations shall be determined
either under Section 24(A)or under this Subsection, at the option of the taxpayer.chanrobleslaw
xxxx
Section 56. Payment and Assessment of Income Tax for Individuals and Corporations.
(A) Payment of Tax
evidencing the aforesaid transactions. Thus, in general, it may be imposed on the transaction itself or upon
the document underlying such act. Any of the parties thereto shall be liable for the full amount of the tax
due: Provided, however, that as between themselves, the said parties may agree on who shall be liable or how
they may share on the cost of the tax.
(b) Exception. - Whenever one of the parties to the taxable transaction is exempt from the tax imposed under
Title VII of the Code, the other party thereto who is not exempt shall be the one directly liable for the tax.27

xxxx
(3) Payment of Capital Gains Tax. - The total amount of tax imposed and prescribed under Section 24 (c), 24(D),
27(E)(2), 28(A)(8)(c) and 28(B)(5)(c) shall be paid on the date the return prescribed therefor is filed by the
person liable thereto: Provided, That if the seller submits proof of his intention to avail himself of the benefit of
exemption of capital gains under existing special laws, no such payments shall be required : Provided, further,
That in case of failure to qualify for exemption under such special laws and implementing rules and regulations,
the tax due on the gains realized from the original transaction shall immediately become due and payable,
subject to the penalties prescribed under applicable provisions of this Code: Provided, finally, That if the seller,
having paid the tax, submits such proof of intent within six (6) months from the registration of the document
transferring the real property, he shall be entitled to a refund of such tax upon verification of his compliance
with the requirements for such exemption.
Thus, it has been held that since capital gains is a tax on passive income, it is the seller, not the buyer, who
generally would shoulder the tax.24 Accordingly, the BIR, in its BIR Ruling No. 476-2013, dated December 18,
2013, constituted the DPWH as a withholding agent to withhold the six percent (6%) final withholding tax in the
expropriation of real property for infrastructure projects. As far as the government is concerned, therefore, the
capital gains tax remains a liability of the seller since it is a tax on the seller's gain from the sale of the real
estate.25cralawred
As to the documentary stamp tax, however, this Court finds inconsistent petitioners denial of liability to the
same. Petitioner cites Section 196 of the 1997 NIRC as its basis in saying that the documentary stamp tax is the
liability of the seller, viz.:
SECTION 196. Stamp Tax on Deeds of Sale and Conveyances of Real Property. - On all conveyances, deeds,
instruments, or writings, other than grants, patents or original certificates of adjudication issued by the
Government, whereby any land, tenement or other realty sold shall be granted, assigned, transferred or
otherwise conveyed to the purchaser, or purchasers, or to any other person or persons designated by such
purchaser or purchasers, there shall be collected a documentary stamp tax, at the rates herein below
prescribed, based on the consideration contracted to be paid for such realty or on its fair market value
determined in accordance with Section 6(E) of this Code, whichever is higher: Provided, That when one of the
contracting parties is the Government, the tax herein imposed shall be based on the actual consideration:
(a) When the consideration, or value received or contracted to be paid for such realty, after making proper
allowance of any encumbrance, does not exceed One thousand pesos (P1,000), Fifteen pesos (P15.00).
As a general rule, therefore, any of the parties to a transaction shall be liable for the full amount of the
documentary stamp tax due, unless they agree among themselves on who shall be liable for the same.
In this case, there is no agreement as to the party liable for the documentary stamp tax due on the sale of the
land to be expropriated. But while petitioner rejects any liability for the same, this Court must take note of
petitioners Citizens Charter,28 which functions as a guide for the procedure to be taken by the DPWH in
acquiring real property through expropriation under RA 8974. The Citizens Charter, issued by petitioner
DPWH itself on December 4, 2013, explicitly provides that the documentary stamp tax, transfer tax, and
registration fee due on the transfer of the title of land in the name of the Republic shall be shouldered by the
implementing agency of the DPWH, while the capital gains tax shall be paid by the affected property
owner.29 Thus, while there is no specific agreement between petitioner and respondent, petitioners issuance of
the Citizens Charter serves as its notice to the public as to the procedure it shall generally take in cases of
expropriation under RA 8974. Accordingly, it will be rather unjust for this Court to blindly accede to petitioners
vague rejection of liability in the face of its issuance of the Citizens Charter, which contains a clear and
unequivocal assumption of accountability for the documentary stamp tax. Had petitioner provided this Court
with more convincing basis, apart from a mere citation of an indefinite provision of the 1997 NIRC, showing that
it should be respondent-seller who shall be liable for the documentary stamp tax due on the sale of the subject
property, its rejection of the payment of the same could have been sustained.
WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED. The Decision and Order, dated
November 15, 2013 and March 10, 2014, respectively, of the Regional Trial Court, Valenzuela City, Branch 270,
in Civil Case No. 140-V-10 are hereby MODIFIED, in that the imposition of interest on the payment of just
compensation as well as the award of consequential damages are deleted. In addition, respondent Arlene R.
Soriano is ORDERED to pay for the capital gains tax due on the transfer of the expropriated property, while the
documentary stamp tax, transfer tax, and registration fee shall be for the account of petitioner.
SO ORDERED.

(b) For each additional One thousand pesos (P1,000), or fractional part thereof in excess of One thousand pesos
(P1,000) of such consideration or value, Fifteen pesos (P15.00).
When it appears that the amount of the documentary stamp tax payable hereunder has been reduced by an
incorrect statement of the consideration in any conveyance, deed, instrument or writing subject to such tax the
Commissioner, provincial or city Treasurer, or other revenue officer shall, from the assessment rolls or other
reliable source of information, assess the property of its true market value and collect the proper tax thereon.

Yet, a perusal of the provision cited above does not explicitly impute the obligation to pay the documentary
stamp tax on the seller. In fact, according to the BIR, all the parties to a transaction are primarily liable for the
documentary stamp tax, as provided by Section 2 of BIR Revenue Regulations No. 9-2000, which
reads:26cralawred
SEC. 2. Nature of the Documentary Stamp Tax and Persons Liable for the Tax.

(a) In General. - The documentary stamp taxes under Title VII of the Code is a tax on certain transactions. It is
imposed against "the person making, signing, issuing, accepting, or transferring" the document or facility