HACIENDA LUISITA vs.
AGRARIAN REFORM COUNCIL AND COMPULSORY COVERAGE ARE TWO DIFFERENT MODALITIES WITH
VELASCO, JR., J.:
Before the Court are the Motion to Clarify and Reconsider Resolution of November
22, 2011 dated December 16, 2011 filed by petitioner Hacienda Luisita, Inc. (HLI)
and the Motion for Reconsideration/Clarification dated December 9, 2011 filed by
private respondents Noel Mallari, Julio Suniga, Supervisory Group of Hacienda
Luisita, Inc. and Windsor Andaya (collectively referred to as "Mallari, et al.").
In Our July 5, 2011 Decision2 in the above-captioned case, this Court denied the
petition for review filed by HLI and affirmed the assailed Presidential Agrarian
Reform Council (PARC) Resolution No. 2005-32-01 dated December 22, 2005 and
PARC Resolution No. 2006-34-01 dated May 3, 2006 with the modification that the
original 6,296 qualified farmworker-beneficiaries of Hacienda Luisita (FWBs) shall
have the option to remain as stockholders of HLI.
Upon separate motions of the parties for reconsideration, the Court, by
Resolution3 of November 22, 2011, recalled and set aside the option thus granted to
the original FWBs to remain as stockholders of HLI, while maintaining that all the
benefits and homelots received by all the FWBs shall be respected with no
obligation to refund or return them.
HLI invokes the following grounds in support of its instant Motion to Clarify and
Reconsider Resolution of November 22, 2011 dated December 16, 2011:
A WITH DUE RESPECT, THE HONORABLE COURT ERRED WHEN IT REVERSED ITS
WITH DUE RESPECT, THE HONORABLE COURT ERRED IN RULING THAT IN
DETERMINING THE JUST COMPENSATION, THE DATE OF "TAKING" IS NOVEMBER
21, 1989, WHEN PARC APPROVED HLI’s SDP [STOCK DISPTRIBUTION PLAN] "IN VIEW
OF THE FACT THAT THIS IS THE TIME THAT THE FWBs WERE CONSIDERED TO OWN
AND POSSESS THE AGRICULTURAL LANDS IN HACIENDA LUISITA" BECAUSE:
(1) THE SDP IS PRECISELY A MODALITY WHICH THE AGRARIAN LAW GIVES
THE LANDOWNER AS ALTERNATIVE TO COMPULSORY COVERAGE IN
WHICH CASE, THEREFORE, THE FWBs CANNOT BE CONSIDERED AS
OWNERS AND POSSESSORS OF THE AGRICULTURAL LANDS AT THE TIME
THE SDP WAS APPROVED BY PARC;
(2) THE APPROVAL OF THE SDP CANNOT BE AKIN TO A NOTICE OF
COVERAGE IN COMPULSORY COVERAGE OR ACQUISITION BECAUSE SDP
INDEPENDENT AND SEPARATE RULES AND MECHANISMS;
(3) THE NOTICE OF COVERAGE OF JANUARY 02, 2006 MAY, AT THE VERY
LEAST, BE CONSIDERED AS THE TIME WHEN THE FWBs CAN BE
CONSIDERED TO OWN AND POSSESS THE AGRICULTURAL LANDS OF
HACIENDA LUISITA BECAUSE THAT IS THE ONLY TIME WHEN HACIENDA
LUISITA WAS PLACED UNDER COMPULSORY ACQUISITION IN VIEW OF
FAILURE OF HLI TO PERFORM CERTAIN OBLIGATIONS OF THE SDP, OR
SDOA [STOCK DISTRIBUTION OPTION AGREEMENT];
(4) INDEED, THE IMMUTABLE RULE AND THE UNBENDING JURISPRUDENCE
IS THAT "TAKING" TAKES PLACE WHEN THE OWNER IS ACTUALLY DEPRIVED
OR DISPOSSESSED OF HIS PROPERTY;
(5) TO INSIST THAT THE "TAKING" IS WHEN THE SDP WAS APPROVED BY
PARC ON NOVEMBER 21, 1989 AND THAT THE SAME BE CONSIDERED AS
THE RECKONING PERIOD TO DETERMINE THE JUST COMPENSATION IS
DEPRIVATION OF LANDOWNER’S PROPERTY WITHOUT DUE PROCESS OF
LAW;
(6) HLI SHOULD BE ENTITLED TO PAYMENT OF INTEREST ON THE JUST
COMPENSATION.
B
DECISION GIVING THE FWBs THE OPTION TO REMAIN AS HLI STOCKHOLDERS OR
NOT, BECAUSE:
(1) IT IS AN EXERCISE OF A RIGHT OF THE FWB WHICH THE HONORABLE
COURT HAS DECLARED IN ITS DECISION AND EVEN IN ITS RESOLUTION AND
THAT HAS TO BE RESPECTED AND IMPLEMENTED;
(2) NEITHER THE CONSTITUTION NOR THE CARL [COMPREHENSIVE
AGRARIAN REFORM LAW] REQUIRES THAT THE FWBs SHOULD HAVE
CONTROL OVER THE AGRICULTURAL LANDS;
(3) THE OPTION HAS NOT BEEN SHOWN TO BE DETRIMENTAL BUT INSTEAD
BENEFICIAL TO THE FWBs AS FOUND BY THE HONORABLE COURT.
C
WITH DUE RESPECT, THE HONORABLE COURT ERRED IN RULING THAT THE
PROCEEDS FROM THE SALES OF THE 500-HECTARE CONVERTED LOT AND THE 80.51-
HECTARE SCTEX CANNOT BE RETAINED BY HLI BUT RETURNED TO THE FWBs AS BY
SUCH MANNER; HLI IS USING THE CORPORATION CODE TO AVOID ITS LIABILITY TO
THE FWBs FOR THE PRICE IT RECEIVED FROM THE SALES, BECAUSE:
(1) THE PROCEEDS OF THE SALES BELONG TO THE CORPORATION AND NOT
TO EITHER HLI/TADECO OR THE FWBs, BOTH OF WHICH ARE
STOCKHOLDERS ENTITLED TO THE EARNINGS OF THE CORPORATION AND
TO THE NET ASSETS UPON LIQUIDATION;
(2) TO ALLOW THE RETURN OF THE PROCEEDS OF THE SALES TO FWBs IS
TO IMPOSE ALL LIABILITIES OF THE CORPORATION ON HLI/TADECO WHICH
IS UNFAIR AND VIOLATIVE OF THE CORPORATION CODE.
Mallari, et al. similarly put forth the following issues in its Motion for
Reconsideration/Clarification dated December 9, 2011:
I and of the 80.51-hectare Subic-Clark-Tarlac Expressway (SCTEX ) land; and (4) just
REPUBLIC ACT NO. 6657 [RA 6657] OR THE COMPREHENSIVE AGRARIAN REFORM
LAW [CARL] DOES NOT PROVIDE THAT THE FWBs WHO OPT FOR STOCK
DISTRIBUTION OPTION SHOULD RETAIN MAJORITY SHAREHOLDING OF THE
COMPANY TO WHICH THE AGRICULTURAL LAND WAS GIVEN.
II
IF THE NOVEMBER 22, 2011 DECISION OF THIS HONORABLE COURT ORDERING
LAND DISTRIBUTION WOULD BE FOLLOWED, THIS WOULD CAUSE MORE HARM
THAN GOOD TO THE LIVES OF THOSE PEOPLE LIVING IN THE HACIENDA, AND MORE
PARTICULARLY TO THE WELFARE OF THE FWBs.
III
ON THE CONCLUSION BY THIS HONORABLE COURT THAT THE OPERATIVE FACT
DOCTRINE IS APPLICABLE TO THE CASE AT BAR, THEN FWBs WHO MERELY RELIED
ON THE PARC APPROVAL SHOULD NOT BE PREJUDICED BY ITS SUBSEQUENT
NULLIFICATION.
IV
THOSE WHO CHOOSE LAND SHOULD RETURN WHATEVER THEY GOT FROM THE
SDOA [STOCK DISTRIBUTION OPTION AGREEMENT] AND TURN OVER THE SAME TO
HLI FOR USE IN THE OPERATIONS OF THE COMPANY, WHICH IN TURN WILL
REDOUND TO THE BENEFIT OF THOSE WHO WILL OPT TO STAY WITH THE SDO.
V
FOR THOSE WHO CHOOSE LAND, THE TIME OF TAKING FOR PURPOSES OF JUST
COMPENSATION SHOULD BE AT THE TIME HLI WAS DISPOSSESSED OF CONTROL
OVER THE PROPERTY, AND THAT PAYMENT BY [THE GOVERNMENT] OF THE LAND
SHOULD BE TURNED OVER TO HLI FOR THE BENEFIT AND USE OF THE COMPANY’S
OPERATIONS THAT WILL, IN TURN, REDOUND TO THE BENEFIT OF FWBs WHO WILL
OPT TO STAY WITH THE COMPANY.
Basically, the issues raised by HLI and Mallari, et al. boil down to the following: (1)
determination of the date of "taking"; (2) propriety of the revocation of the option
on the part of the original FWBs to remain as stockholders of HLI; (3) propriety of
distributing to the qualified FWBs the proceeds from the sale of the converted land
compensation for the homelots given to the FWBs.
Payment of just compensation
HLI contends that since the SDP is a modality which the agrarian reform law gives
the landowner as alternative to compulsory coverage, then the FWBs cannot be
considered as owners and possessors of the agricultural lands of Hacienda Luisita at
the time the SDP was approved by PARC.4 It further claims that the approval of the
SDP is not akin to a Notice of Coverage in compulsory coverage situations because
stock distribution option and compulsory acquisition are two (2) different
modalities with independent and separate rules and mechanisms. Concomitantly,
HLI maintains that the Notice of Coverage issued on January 2, 2006 may, at the
very least, be considered as the date of "taking" as this was the only time that the
agricultural lands of Hacienda Luisita were placed under compulsory acquisition in
view of its failure to perform certain obligations under the SDP.5
Mallari, et al. are of a similar view. They contend that Tarlac Development
Corporation (Tadeco), having as it were majority control over HLI, was never
deprived of the use and benefit of the agricultural lands of Hacienda Luisita. Upon
this premise, Mallari, et al. claim the "date of taking" could not be at the time of the
approval of the SDP.6
A view has also been advanced that the date of the "taking" should be left to the
determination of the Department of Agrarian Reform (DAR) in conjunction with its
authority to preliminarily determine the just compensation for the land made
subject of CARP.
Alyansa ng mga Manggagawang Bukid sa Hacienda Luisita (AMBALA), in its
Comment/Opposition (to the Motion to Clarify and Reconsider Resolution of
November 22, 2011) dated January 30, 2012, on the other hand, alleges that HLI
should not be paid just compensation altogether. 7 It argues that when the Court of
Appeals (CA) dismissed the case8 the government of then President Ferdinand E.
Marcos initially instituted and won against Tadeco, the CA allegedly imposed as a
condition for its dismissal of the action that should the stock distribution program
fail, the lands should be distributed to the FWBs, with Tadeco receiving by way of
compensation only the amount of PhP 3,988,000.9
AMBALA further contends that if HLI or Tadeco is, at all, entitled to just
compensation, the "taking" should be reckoned as of November 21, 1989, the date
when the SDP was approved, and the amount of compensation should be PhP
40,000 per hectare as this was the same value declared in 1989 by Tadeco to ensure
that the FWBs will not control the majority stockholdings in HLI.10
At the outset, it should be noted that Section 2, Rule 52 of the Rules of Court states,
"No second motion for reconsideration of a judgment or final resolution by the
same party shall be entertained." A second motion for reconsideration, as a rule, is
prohibited for being a mere reiteration of the issues assigned and the arguments
raised by the parties.11
In the instant case, the issue on just compensation and the grounds HLI and Mallari,
et al. rely upon in support of their respective stance on the matter had been
previously raised by them in their first motion for reconsideration and fully passed
upon by the Court in its November 22, 2011 Resolution. The similarities in the issues
then and now presented and the grounds invoked are at once easily discernible
from a perusal of the November 22, 2011 Resolution, the pertinent portions of
which read:
In Our July 5, 2011 Decision, We stated that "HLI shall be paid just compensation for
the remaining agricultural land that will be transferred to DAR for land distribution
to the FWBs." We also ruled that the date of the "taking" is November 21, 1989,
when PARC approved HLI’s SDP per PARC Resolution No. 89-12-2.
In its Motion for Clarification and Partial Reconsideration, HLI disagrees with the
foregoing ruling and contends that the "taking" should be reckoned from finality of
the Decision of this Court, or at the very least, the reckoning period may be tacked
to January 2, 2006, the date when the Notice of Coverage was issued by the DAR
pursuant to PARC Resolution No. 2006-34-01 recalling/revoking the approval of the
SDP.
For their part, Mallari, et al. argue that the valuation of the land cannot be based on
November 21, 1989, the date of approval of the SDP. Instead, they aver that the
date of "taking" for valuation purposes is a factual issue best left to the
determination of the trial courts.
At the other end of the spectrum, AMBALA alleges that HLI should no longer be paid
just compensation for the agricultural land that will be distributed to the FWBs,
since the Manila Regional Trial Court (RTC) already rendered a decision ordering the
Cojuangcos to transfer the control of Hacienda Luisita to the Ministry of Agrarian
Reform, which will distribute the land to small farmers after compensating the
landowners P3.988 million. In the event, however, that this Court will rule that HLI
is indeed entitled to compensation, AMBALA contends that it should be pegged at
forty thousand pesos (PhP 40,000) per hectare, since this was the same value that
Tadeco declared in 1989 to make sure that the farmers will not own the majority of
its stocks.
Despite the above propositions, We maintain that the date of "taking" is November
21, 1989, the date when PARC approved HLI’s SDP per PARC Resolution No. 89-12-2,
in view of the fact that this is the time that the FWBs were considered to own and
possess the agricultural lands in Hacienda Luisita. To be precise, these lands became
subject of the agrarian reform coverage through the stock distribution scheme only
upon the approval of the SDP, that is, November 21, 1989. Thus, such approval is
akin to a notice of coverage ordinarily issued under compulsory acquisition. Further,
any doubt should be resolved in favor of the FWBs. As this Court held in Perez-
Rosario v. CA:
It is an established social and economic fact that the escalation of poverty is the
driving force behind the political disturbances that have in the past compromised
the peace and security of the people as well as the continuity of the national order.
To subdue these acute disturbances, the legislature over the course of the history of
the nation passed a series of laws calculated to accelerate agrarian reform,
ultimately to raise the material standards of living and eliminate discontent.
Agrarian reform is a perceived solution to social instability. The edicts of social
justice found in the Constitution and the public policies that underwrite them, the
extraordinary national experience, and the prevailing national consciousness, all
command the great departments of government to tilt the balance in favor of the
poor and underprivileged whenever reasonable doubt arises in the interpretation of
the law. But annexed to the great and sacred charge of protecting the weak is the
diametric function to put every effort to arrive at an equitable solution for all
parties concerned: the jural postulates of social justice cannot shield illegal acts, nor
do they sanction false sympathy towards a certain class, nor yet should they deny
justice to the landowner whenever truth and justice happen to be on her side. In
the occupation of the legal questions in all agrarian disputes whose outcomes can
significantly affect societal harmony, the considerations of social advantage must be
weighed, an inquiry into the prevailing social interests is necessary in the
adjustment of conflicting demands and expectations of the people, and the social
interdependence of these interests, recognized. (Emphasis and citations omitted.)
Considering that the issue on just compensation has already been passed upon and
denied by the Court in its November 22, 2011 Resolution, a subsequent motion
touching on the same issue undeniably partakes of a second motion for
reconsideration, hence, a prohibited pleading, and as such, the motion or plea must
be denied. Sec. 3 of Rule 15 of the Internal Rules of the Supreme Court is clear:
SEC. 3. Second motion for reconsideration. – The Court shall not entertain a second
motion for reconsideration, and any exception to this rule can only be granted in
the higher interest of justice by the Court en banc upon a vote of at least two-thirds
of its actual membership. There is reconsideration "in the higher interest of justice"
when the assailed decision is not only legally erroneous, but is likewise patently
unjust and potentially capable of causing unwarranted and irremediable injury or
damage to the parties. A second motion for reconsideration can only be entertained
before the ruling sought to be reconsidered becomes final by operation of law or by
the Court’s declaration.
In the Division, a vote of three Members shall be required to elevate a second
motion for reconsideration to the Court En Banc.
Nonetheless, even if we entertain said motion and examine the arguments raised
by HLI and Mallari, et al. one last time, the result will be the same.
Sec. 4, Article XIII of the 1987 Constitution expressly provides that the taking of land
for use in the agrarian reform program of the government is conditioned on the
payment of just compensation. As stated:
Section 4. The State shall, by law, undertake an agrarian reform program founded
on the right of farmers and regular farm workers, who are landless, to own directly
or collectively the lands they till or, in the case of other farm workers, to receive a
just share of the fruits thereof. To this end, the State shall encourage and undertake
the just distribution of all agricultural lands, subject to such priorities and
reasonable retention limits as the Congress may prescribe, taking into account
ecological, developmental, or equity considerations, and subject to the payment of
just compensation. (Emphasis supplied.)
Just compensation has been defined as "the full and fair equivalent of the property
taken from its owner by the expropriator."12 The measure is not the taker’s gain, but
the owner’s loss.13 In determining just compensation, the price or value of the
property at the time it was taken from the owner and appropriated by the
government shall be the basis. If the government takes possession of the land
before the institution of expropriation proceedings, the value should be fixed as of
the time of the taking of said possession, not of the filing of the complaint.14
In Land Bank of the Philippines v. Livioco, the Court held that "the ‘time of taking’ is
the time when the landowner was deprived of the use and benefit of his property,
such as when title is transferred to the Republic."15 It should be noted, however,
that "taking" does not only take place upon the issuance of title either in the name
of the Republic or the beneficiaries of the Comprehensive Agrarian Reform Program
(CARP). "Taking" also occurs when agricultural lands are voluntarily offered by a
landowner and approved by PARC for CARP coverage through the stock distribution
scheme, as in the instant case. Thus, HLI’s submitting its SDP for approval is an
acknowledgment on its part that the agricultural lands of Hacienda Luisita are
covered by CARP. However, it was the PARC approval which should be considered
as the effective date of "taking" as it was only during this time that the government
officially confirmed the CARP coverage of these lands.
Indeed, stock distribution option and compulsory land acquisition are two (2)
different modalities under the agrarian reform program. Nonetheless, both share
the same end goal, that is, to have "a more equitable distribution and ownership of
land, with due regard to the rights of landowners to just compensation." 16
The fact that Sec. 31 of Republic Act No. 6657 (RA 6657) gives corporate landowners
the option to give qualified beneficiaries the right to avail of a stock distribution or,
in the phraseology of the law, "the right to purchase such proportion of the capital
stock of the corporation that the agricultural land, actually devoted to agricultural
activities, bears in relation to the company’s total assets," does not detract from the
avowed policy of the agrarian reform law of equitably distributing ownership of
land. The difference lies in the fact that instead of actually distributing the
agricultural lands to the farmer-beneficiaries, these lands are held by the
corporation as part of the capital contribution of the farmer-beneficiaries, not of
the landowners, under the stock distribution scheme. The end goal of equitably
distributing ownership of land is, therefore, undeniable. And since it is only upon
the approval of the SDP that the agricultural lands actually came under CARP
coverage, such approval operates and takes the place of a notice of coverage
ordinarily issued under compulsory acquisition.
Moreover, precisely because due regard is given to the rights of landowners to just
compensation, the law on stock distribution option acknowledges that landowners
can require payment for the shares of stock corresponding to the value of the
agricultural lands in relation to the outstanding capital stock of the corporation.
Although Tadeco did not require compensation for the shares of stock
corresponding to the value of the agricultural lands in relation to the outstanding
capital stock of HLI, its inability to receive compensation cannot be attributed to the
government. The second paragraph of Sec. 31 of RA 6657 explicitly states that
"[u]pon certification by DAR, corporations owning agricultural lands may give their
qualified beneficiaries the right to purchase such proportion of the capital stock of
the corporation that the agricultural land, actually devoted to agricultural activities,
bears in relation to the company’s total assets, under such terms and conditions as
may be agreed upon by them. x x x"17 On the basis of this statutory provision,
Tadeco could have exacted payment for such shares of stock corresponding to the
value of the agricultural lands of Hacienda Luisita in relation to the outstanding
capital stock of HLI, but it did not do so.
What is notable, however, is that the divestment by Tadeco of the agricultural lands
of Hacienda Luisita and the giving of the shares of stock for free is nothing but an
enticement or incentive for the FWBs to agree with the stock distribution option
scheme and not further push for land distribution. And the stubborn fact is that the
"man days" scheme of HLI impelled the FWBs to work in the hacienda in exchange
for such shares of stock.
Notwithstanding the foregoing considerations, the suggestion that there is "taking"
only when the landowner is deprived of the use and benefit of his property is not
incompatible with Our conclusion that "taking" took place on November 21, 1989.
As mentioned in Our July 5, 2011 Decision, even from the start, the stock
distribution scheme appeared to be Tadeco’s preferred option in complying with
the CARP when it organized HLI as its spin-off corporation in order to facilitate stock
acquisition by the FWBs. For this purpose, Tadeco assigned and conveyed to HLI the
agricultural lands of Hacienda Luisita, set at 4,915.75 hectares, among others. These
agricultural lands constituted as the capital contribution of the FWBs in HLI. In
effect, Tadeco deprived itself of the ownership over these lands when it transferred
the same to HLI.
While it is true that Tadeco has majority control over HLI, the Court cannot
subscribe to the view Mallari, et al. espouse that, on the basis of such majority
stockholding, Tadeco was never deprived of the use and benefit of the agricultural
lands of Hacienda Luisita it divested itself in favor of HLI.
It bears stressing that "[o]wnership is defined as a relation in law by virtue of which
a thing pertaining to one person is completely subjected to his will in everything not
prohibited by law or the concurrence with the rights of another."18The attributes of
ownership are: jus utendi or the right to possess and enjoy, jus fruendi or the right
to the fruits, jus abutendi or the right to abuse or consume, jus disponendi or the
right to dispose or alienate, and jus vindicandi or the right to recover or vindicate. 19
When the agricultural lands of Hacienda Luisita were transferred by Tadeco to HLI in
order to comply with CARP through the stock distribution option scheme, sealed
with the imprimatur of PARC under PARC Resolution No. 89-12-2 dated November
21, 1989, Tadeco was consequently dispossessed of the afore-mentioned attributes
of ownership. Notably, Tadeco and HLI are two different entities with separate and
distinct legal personalities. Ownership by one cannot be considered as ownership
by the other.
Corollarily, it is the official act by the government, that is, the PARC’s approval of
the SDP, which should be considered as the reckoning point for the "taking" of the
agricultural lands of Hacienda Luisita. Although the transfer of ownership over the
agricultural lands was made prior to the SDP’s approval, it is this Court’s consistent
view that these lands officially became subject of the agrarian reform coverage
through the stock distribution scheme only upon the approval of the SDP. And as
We have mentioned in Our November 22, 2011 Resolution, such approval is akin to
a notice of coverage ordinarily issued under compulsory acquisition.
Further, if We adhere to HLI’s view that the Notice of Coverage issued on January 2,
2006 should, at the very least, be considered as the date of "taking" as this was the
only time that the agricultural portion of the hacienda was placed under
compulsory acquisition in view of HLI’s failure to perform certain obligations under
the SDP, this Court would, in effect, be penalizing the qualified FWBs twice for
acceding to the adoption of the stock distribution scheme: first, by depriving the
qualified FWBs of the agricultural lands that they should have gotten early on were
it not for the adoption of the stock distribution scheme of which they only became
minority stockholders; and second, by making them pay higher amortizations for
the agricultural lands that should have been given to them decades ago at a much
lower cost were it not for the landowner’s initiative of adopting the stock
distribution scheme "for free."
Reiterating what We already mentioned in Our November 22, 2011 Resolution,
"[e]ven if it is the government which will pay the just compensation to HLI, this will
also affect the FWBs as they will be paying higher amortizations to the government
if the ‘taking’ will be considered to have taken place only on January 2, 2006." As
aptly observed by Justice Leonardo-De Castro in her Concurring Opinion, "this will
put the land beyond the capacity of the [FWBs] to pay," which this Court should not
countenance.
Considering the above findings, it cannot be gainsaid that effective "taking" took
place in the case at bar upon the approval of the SDP, that is, on November 21,
1989.
HLI postulates that just compensation is a question of fact that should be left to the
determination by the DAR, Land Bank of the Philippines (LBP) or even the special
agrarian court (SAC).20 As a matter of fact, the Court, in its November 22, 2011
Resolution, dispositively ordered the DAR and the LBP to determine the
compensation due to HLI. And as indicated in the body of said Resolution:
The foregoing notwithstanding, it bears stressing that the DAR’s land valuation is
only preliminary and is not, by any means, final and conclusive upon the landowner.
The landowner can file an original action with the RTC acting as a special agrarian
court to determine just compensation. The court has the right to review with
finality the determination in the exercise of what is admittedly a judicial function.
As regards the issue on when "taking" occurred with respect to the agricultural
lands in question, We, however, maintain that this Court can rule, as it has in fact
already ruled on its reckoning date, that is, November 21, 1989, the date of
issuance of PARC Resolution No. 89-12-2, based on the above-mentioned
disquisitions. The investment on SACs of original and exclusive jurisdiction over all
petitions for the determination of just compensation to landowners21 will not
preclude the Court from ruling upon a matter that may already be resolved based
on the records before Us. By analogy, Our ruling in Heirs of Dr. Jose Deleste v. LBP is
applicable:
Indeed, it is the Office of the DAR Secretary which is vested with the primary and
exclusive jurisdiction over all matters involving the implementation of the agrarian
reform program. However, this will not prevent the Court from assuming
jurisdiction over the petition considering that the issues raised in it may already be
resolved on the basis of the records before Us. Besides, to allow the matter to
remain with the Office of the DAR Secretary would only cause unnecessary delay
and undue hardship on the parties. Applicable, by analogy, is Our ruling in the
recent Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Department
of Labor and Employment Secretary, where We held:
But as the CA did, we similarly recognize that undue hardship, to the point of
injustice, would result if a remand would be ordered under a situation where we
are in the position to resolve the case based on the records before us. As we said in
Roman Catholic Archbishop of Manila v. Court of Appeals:
[w]e have laid down the rule that the remand of the case to the lower court for
further reception of evidence is not necessary where the Court is in a position to
resolve the dispute based on the records before it. On many occasions, the Court, in
the public interest and for the expeditious administration of justice, has resolved
actions on the merits instead of remanding them to the trial court for further
proceedings, such as where the ends of justice, would not be subserved by the
remand of the case.22 (Emphasis supplied; citations omitted.)
Even though the compensation due to HLI will still be preliminarily determined by
DAR and LBP, subject to review by the RTC acting as a SAC, the fact that the
reckoning point of "taking" is already fixed at a certain date should already hasten
the proceedings and not further cause undue hardship on the parties, especially the
qualified FWBs.
By a vote of 8-6, the Court affirmed its ruling that the date of "taking" in
determining just compensation is November 21, 1989 when PARC approved HLI’s
stock option plan.
As regards the issue of interest on just compensation, We also leave this matter to
the DAR and the LBP, subject to review by the RTC acting as a SAC.
Option will not ensure
control over agricultural lands
In Our November 22, 2011 Resolution, this Court held:
After having discussed and considered the different contentions raised by the
parties in their respective motions, We are now left to contend with one crucial
issue in the case at bar, that is, control over the agricultural lands by the qualified
FWBs.
Upon a review of the facts and circumstances, We realize that the FWBs will never
have control over these agricultural lands for as long as they remain as stockholders
of HLI. In Our July 5, 2011 Decision, this Court made the following observations:
There is, thus, nothing unconstitutional in the formula prescribed by RA 6657. The
policy on agrarian reform is that control over the agricultural land must always be in
the hands of the farmers. Then it falls on the shoulders of DAR and PARC to see to it
the farmers should always own majority of the common shares entitled to elect the
members of the board of directors to ensure that the farmers will have a clear
majority in the board. Before the SDP is approved, strict scrutiny of the proposed
SDP must always be undertaken by the DAR and PARC, such that the value of the
agricultural land contributed to the corporation must always be more than 50% of
the total assets of the corporation to ensure that the majority of the members of
the board of directors are composed of the farmers. The PARC composed of the
President of the Philippines and cabinet secretaries must see to it that control over
the board of directors rests with the farmers by rejecting the inclusion of non-
agricultural assets which will yield the majority in the board of directors to non-
farmers. Any deviation, however, by PARC or DAR from the correct application of
the formula prescribed by the second paragraph of Sec. 31 of RA 6675 does not
make said provision constitutionally infirm. Rather, it is the application of said
provision that can be challenged. Ergo, Sec. 31 of RA 6657 does not trench on the
constitutional policy of ensuring control by the farmers.
In line with Our finding that control over agricultural lands must always be in the
hands of the farmers, We reconsider our ruling that the qualified FWBs should be
given an option to remain as stockholders of HLI, inasmuch as these qualified FWBs
will never gain control given the present proportion of shareholdings in HLI.
A revisit of HLI’s Proposal for Stock Distribution under CARP and the Stock
Distribution Option Agreement (SDOA) upon which the proposal was based reveals
that the total assets of HLI is PhP 590,554,220, while the value of the 4,915.7466
hectares is PhP 196,630,000. Consequently, the share of the farmer-beneficiaries in
the HLI capital stock is 33.296% (196,630,000 divided by 590,554.220);
118,391,976.85 HLI shares represent 33.296%. Thus, even if all the holders of the
118,391,976.85 HLI shares unanimously vote to remain as HLI stockholders, which is
unlikely, control will never be placed in the hands of the farmer-beneficiaries.
Control, of course, means the majority of 50% plus at least one share of the
common shares and other voting shares. Applying the formula to the HLI
stockholdings, the number of shares that will constitute the majority is 295,112,101
shares (590,554,220 divided by 2 plus one [1] HLI share). The 118,391,976.85 shares
subject to the SDP approved by PARC substantially fall short of the 295,112,101
shares needed by the FWBs to acquire control over HLI. Hence, control can NEVER
be attained by the FWBs. There is even no assurance that 100% of the
118,391,976.85 shares issued to the FWBs will all be voted in favor of staying in HLI,
taking into account the previous referendum among the farmers where said shares
were not voted unanimously in favor of retaining the SDP. In light of the foregoing
consideration, the option to remain in HLI granted to the individual FWBs will have
to be recalled and revoked.
Moreover, bearing in mind that with the revocation of the approval of the SDP, HLI
will no longer be operating under SDP and will only be treated as an ordinary
private corporation; the FWBs who remain as stockholders of HLI will be treated as
ordinary stockholders and will no longer be under the protective mantle of RA 6657.
(Emphasis in the original.)
HLI, however, takes exception to the above-mentioned ruling and contends that
"[t]here is nothing in the Constitution nor in the agrarian laws which require that
control over the agricultural lands must always be in the hands of the
farmers."23 Moreover, both HLI and Mallari, et al. claim that the option given to the
qualified FWBs to remain as stockholders of HLI is neither iniquitous nor prejudicial
to the FWBs.24
The Court agrees that the option given to the qualified FWBs whether to remain as
stockholders of HLI or opt for land distribution is neither iniquitous nor prejudicial
to the FWBs. Nonetheless, the Court is not unmindful of the policy on agrarian
reform that control over the agricultural land must always be in the hands of the
farmers. Contrary to the stance of HLI, both the Constitution and RA 6657 intended
the farmers, individually or collectively, to have control over the agricultural lands
of HLI; otherwise, all these rhetoric about agrarian reform will be rendered for
naught. Sec. 4, Art. XIII of the 1987 Constitution provides:
Section 4. The State shall, by law, undertake an agrarian reform program founded
on the right of farmers and regular farmworkers who are landless, to own directly
or collectively the lands they till or, in the case of other farmworkers, to receive a
just share of the fruits thereof. To this end, the State shall encourage and undertake
the just distribution of all agricultural lands, subject to such priorities and
reasonable retention limits as the Congress may prescribe, taking into account
ecological, developmental, or equity considerations, and subject to the payment of
just compensation. In determining retention limits, the State shall respect the right
of small landowners. The State shall further provide incentives for voluntary land-
sharing. (Emphasis supplied.)
Pursuant to and as a mechanism to carry out the above-mentioned constitutional
directive, RA 6657 was enacted. In consonance with the constitutional policy on
agrarian reform, Sec. 2 of RA 6657 also states:
SECTION 2. Declaration of Principles and Policies. - It is the policy of the State to
pursue a Comprehensive Agrarian Reform Program (CARP). The welfare of the
landless farmers and farm workers will receive the highest consideration to
promote social justice and to move the nation towards sound rural development
and industrialization, and the establishment of owner cultivatorship of economic-
sized farms as the basis of Philippine agriculture.
To this end, a more equitable distribution and ownership of land, with due regard to
the rights of landowners to just compensation and to the ecological needs of the
nation, shall be undertaken to provide farmers and farm workers with the
opportunity to enhance their dignity and improve the quality of their lives through
greater productivity of agricultural lands.
The agrarian reform program is founded on the right of farmers and regular farm
workers, who are landless, to own directly or collectively the lands they till or, in the
case of other farm workers, to receive a share of the fruits thereof. To this end, the
State shall encourage the just distribution of all agricultural lands, subject to the
priorities and retention limits set forth in this Act, having taken into account
ecological, developmental, and equity considerations, and subject to the payment
of just compensation. The State shall respect the right of small landowners and shall
provide incentives for voluntary land-sharing.
The State shall recognize the right of farmers, farm workers and landowners, as well
as cooperatives and other independent farmers’ organization, to participate in the
planning, organization, and management of the program, and shall provide support
to agriculture through appropriate technology and research, and adequate
financial, production, marketing and other support services.
The State shall apply the principles of agrarian reform or stewardship, whenever
applicable, in accordance with law, in the disposition or utilization of other natural
resources, including lands of the public domain, under lease or concession, suitable
to agriculture, subject to prior rights, homestead rights of small settlers and the
rights of indigenous communities to their ancestral lands.
The State may resettle landless farmers and farm workers in its own agricultural
estates, which shall be distributed to them in the manner provided by law.
By means of appropriate incentives, the State shall encourage the formation and
maintenance of economic-sized family farms to be constituted by individual
beneficiaries and small landowners.
The State shall protect the rights of subsistence fishermen, especially of local
communities, to the preferential use of communal marine and fishing resources,
both inland and offshore. It shall provide support to such fishermen through
appropriate technology and research, adequate financial, production and marketing
assistance and other services, The State shall also protect, develop and conserve
such resources. The protection shall extend to offshore fishing grounds of
subsistence fishermen against foreign intrusion. Fishworkers shall receive a just
share from their labor in the utilization of marine and fishing resources.
The State shall be guided by the principles that land has a social function and land
ownership has a social responsibility. Owners of agricultural land have the
obligation to cultivate directly or through labor administration the lands they own
and thereby make the land productive.
The State shall provide incentives to landowners to invest the proceeds of the
agrarian reform program to promote industrialization, employment and
privatization of public sector enterprises. Financial instruments used as payment for
lands shall contain features that shall enhance negotiability and acceptability in the
marketplace.
The State may lease undeveloped lands of the public domain to qualified entities for
the development of capital-intensive farms, traditional and pioneering crops
especially those for exports subject to the prior rights of the beneficiaries under this
Act. (Emphasis supplied.)
Based on the above-quoted provisions, the notion of farmers and regular
farmworkers having the right to own directly or collectively the lands they till is
abundantly clear. We have extensively discussed this ideal in Our July 5, 2011
Decision:
The wording of the provision is unequivocal –– the farmers and regular
farmworkers have a right TO OWN DIRECTLY OR COLLECTIVELY THE LANDS THEY
TILL. The basic law allows two (2) modes of land distribution—direct and indirect
ownership. Direct transfer to individual farmers is the most commonly used method
by DAR and widely accepted. Indirect transfer through collective ownership of the
agricultural land is the alternative to direct ownership of agricultural land by
individual farmers. The aforequoted Sec. 4 EXPRESSLY authorizes collective
ownership by farmers. No language can be found in the 1987 Constitution that
disqualifies or prohibits corporations or cooperatives of farmers from being the
legal entity through which collective ownership can be exercised. The word
‘collective’ is defined as ‘indicating a number of persons or things considered as
constituting one group or aggregate,’ while ‘collectively’ is defined as ‘in a collective
sense or manner; in a mass or body.’ By using the word ‘collectively,’ the
Constitution allows for indirect ownership of land and not just outright agricultural
land transfer. This is in recognition of the fact that land reform may become
successful even if it is done through the medium of juridical entities composed of
farmers.
Collective ownership is permitted in two (2) provisions of RA 6657. Its Sec. 29 allows
workers’ cooperatives or associations to collectively own the land, while the second
paragraph of Sec. 31 allows corporations or associations to own agricultural land
with the farmers becoming stockholders or members. Said provisions read:
SEC. 29. Farms owned or operated by corporations or other business associations.—
In the case of farms owned or operated by corporations or other business
associations, the following rules shall be observed by the PARC.
In general, lands shall be distributed directly to the individual worker-beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall be
owned collectively by the worker beneficiaries who shall form a workers’
cooperative or association which will deal with the corporation or business
association. x x x
SEC. 31. Corporate Landowners.— x x x
xxxx
Upon certification by the DAR, corporations owning agricultural lands may give their
qualified beneficiaries the right to purchase such proportion of the capital stock of
the corporation that the agricultural land, actually devoted to agricultural activities,
bears in relation to the company’s total assets, under such terms and conditions as
may be agreed upon by them. In no case shall the compensation received by the
workers at the time the shares of stocks are distributed be reduced. The same
principle shall be applied to associations, with respect to their equity or
participation. x x x
Clearly, workers’ cooperatives or associations under Sec. 29 of RA 6657 and
corporations or associations under the succeeding Sec. 31, as differentiated from
individual farmers, are authorized vehicles for the collective ownership of
agricultural land. Cooperatives can be registered with the Cooperative Development
Authority and acquire legal personality of their own, while corporations are juridical
persons under the Corporation Code. Thus, Sec. 31 is constitutional as it simply
implements Sec. 4 of Art. XIII of the Constitution that land can be owned
COLLECTIVELY by farmers. Even the framers of the l987 Constitution are in unison
with respect to the two (2) modes of ownership of agricultural lands tilled by
farmers––DIRECT and COLLECTIVE, thus:
MR. NOLLEDO. And when we talk of the phrase ‘to own directly,’ we mean the
principle of direct ownership by the tiller?
MR. MONSOD. Yes.
MR. NOLLEDO. And when we talk of ‘collectively,’ we mean communal ownership,
stewardship or State ownership?
MS. NIEVA. In this section, we conceive of cooperatives; that is farmers’
cooperatives owning the land, not the State.
MR. NOLLEDO. And when we talk of ‘collectively,’ referring to farmers’
cooperatives, do the farmers own specific areas of land where they only unite in
their efforts?
MS. NIEVA. That is one way.
MR. NOLLEDO. Because I understand that there are two basic systems involved: the
‘moshave’ type of agriculture and the ‘kibbutz.’ So are both contemplated in the
report?
MR. TADEO. Ang dalawa kasing pamamaraan ng pagpapatupad ng tunay na
reporma sa lupa ay ang pagmamay-ari ng lupa na hahatiin sa individual na
pagmamay-ari – directly – at ang tinatawag na sama-samang gagawin ng mga
magbubukid. Tulad sa Negros, ang gusto ng mga magbubukid ay gawin nila itong
‘cooperative or collective farm.’ Ang ibig sabihin ay sama-sama nilang sasakahin.
xxxx
MR. TINGSON. x x x When we speak here of ‘to own directly or collectively the lands
they till,’ is this land for the tillers rather than land for the landless? Before, we used
to hear ‘land for the landless,’ but now the slogan is ‘land for the tillers.’ Is that
right?
MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for the tillers. Ang ibig
sabihin ng ‘directly’ ay tulad sa implementasyon sa rice and corn lands kung saan
inaari na ng mga magsasaka ang lupang binubungkal nila. Ang ibig sabihin naman ng
‘collectively’ ay sama-samang paggawa sa isang lupain o isang bukid, katulad ng
sitwasyon sa Negros.
As Commissioner Tadeo explained, the farmers will work on the agricultural land
‘sama-sama’ or collectively. Thus, the main requisite for collective ownership of
land is collective or group work by farmers of the agricultural land. Irrespective of
whether the landowner is a cooperative, association or corporation composed of
farmers, as long as concerted group work by the farmers on the land is present,
then it falls within the ambit of collective ownership scheme. (Emphasis in the
original; underscoring supplied.)
As aforequoted, there is collective ownership as long as there is a concerted group
work by the farmers on the land, regardless of whether the landowner is a
cooperative, association or corporation composed of farmers. However, this
definition of collective ownership should be read in light of the clear policy of the
law on agrarian reform, which is to emancipate the tiller from the bondage of the
soil and empower the common people. Worth noting too is its noble goal of
rectifying "the acute imbalance in the distribution of this precious resource among
our people."25Accordingly, HLI’s insistent view that control need not be in the hands
of the farmers translates to allowing it to run roughshod against the very reason for
the enactment of agrarian reform laws and leave the farmers in their shackles with
sheer lip service to look forward to.
Notably, it has been this Court’s consistent stand that control over the agricultural
land must always be in the hands of the farmers. As We wrote in Our July 5, 2011
Decision:
There is, thus, nothing unconstitutional in the formula prescribed by RA 6657. The
policy on agrarian reform is that control over the agricultural land must always be in
the hands of the farmers. Then it falls on the shoulders of DAR and PARC to see to it
the farmers should always own majority of the common shares entitled to elect the
members of the board of directors to ensure that the farmers will have a clear
majority in the board. Before the SDP is approved, strict scrutiny of the proposed
SDP must always be undertaken by the DAR and PARC, such that the value of the
agricultural land contributed to the corporation must always be more than 50% of
the total assets of the corporation to ensure that the majority of the members of
the board of directors are composed of the farmers. The PARC composed of the
President of the Philippines and cabinet secretaries must see to it that control over
the board of directors rests with the farmers by rejecting the inclusion of non-
agricultural assets which will yield the majority in the board of directors to non-
farmers. Any deviation, however, by PARC or DAR from the correct application of
the formula prescribed by the second paragraph of Sec. 31 of RA 6675 does not
make said provision constitutionally infirm. Rather, it is the application of said
provision that can be challenged. Ergo, Sec. 31 of RA 6657 does not trench on the
constitutional policy of ensuring control by the farmers. (Emphasis supplied.)
There is an aphorism that "what has been done can no longer be undone." That
may be true, but not in this case. The SDP was approved by PARC even if the
qualified FWBs did not and will not have majority stockholdings in HLI, contrary to
the obvious policy by the government on agrarian reform. Such an adverse situation
for the FWBs will not and should not be permitted to stand. For this reason, We
maintain Our ruling that the qualified FWBs will no longer have the option to
remain as stockholders of HLI.
FWBs Entitled
to Proceeds of Sale
HLI reiterates its claim over the proceeds of the sales of the 500 hectares and 80.51
hectares of the land as corporate owner and argues that the return of said proceeds
to the FWBs is unfair and violative of the Corporation Code.
This claim is bereft of merit.
It cannot be denied that the adverted 500-hectare converted land and the SCTEX lot
once formed part of what would have been agrarian-distributable lands, in fine
subject to compulsory CARP coverage. And, as stated in our July 5, 2011 Decision,
were it not for the approval of the SDP by PARC, these large parcels of land would
have been distributed and ownership transferred to the FWBs, subject to payment
of just compensation, given that, as of 1989, the subject 4,915 hectares of Hacienda
Luisita were already covered by CARP. Accordingly, the proceeds realized from the
sale and/or disposition thereof should accrue for the benefit of the FWBs, less
deductions of the 3% of the proceeds of said transfers that were paid to the FWBs,
the taxes and expenses relating to the transfer of titles to the transferees, and the
expenditures incurred by HLI and Centennary Holdings, Inc. for legitimate corporate
purposes, as prescribed in our November 22, 2011 Resolution.
Homelots
In the present recourse, HLI also harps on the fact that since the homelots given to
the FWBs do not form part of the 4,915.75 hectares covered by the SDP, then the
value of these homelots should, with the revocation of the SDP, be paid to Tadeco
as the landowner.26
We disagree. As We have explained in Our July 5, 2011 Decision, the distribution of
homelots is required under RA 6657 only for corporations or business associations
owning or operating farms which opted for land distribution. This is provided under
Sec. 30 of RA 6657. Particularly:
SEC. 30. Homelots and Farmlots for Members of Cooperatives. ¾ The individual
members of the cooperatives or corporations mentioned in the preceding section
shall be provided with homelots and small farmlots for their family use, to be taken
from the land owned by the cooperative or corporation. (Italics supplied.)
The "preceding section" referred to in the above-quoted provision is Sec. 29 of RA
6657, which states:
SEC. 29. Farms Owned or Operated by Corporations or Other Business
Associations.¾In the case of farms owned or operated by corporations or other
business associations, the following rules shall be observed by the PARC.
In general, lands shall be distributed directly to the individual worker-beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall be
owned collectively by the worker-beneficiaries who shall form a workers’
cooperative or association which will deal with the corporation or business
association. Until a new agreement is entered into by and between the workers’
cooperative or association and the corporation or business association, any
agreement existing at the time this Act takes effect between the former and the
previous landowner shall be respected by both the workers’ cooperative or
association and the corporation or business association.
Since none of the above-quoted provisions made reference to corporations which
opted for stock distribution under Sec. 31 of RA 6657, then it is apparent that said
corporations are not obliged to provide for homelots. Nonetheless, HLI undertook
to "subdivide and allocate for free and without charge among the qualified family-
beneficiaries x x x residential or homelots of not more than 240 sq. m. each, with
each family beneficiary being assured of receiving and owning a homelot in the
barrio or barangay where it actually resides." In fact, HLI was able to distribute
homelots to some if not all of the FWBs. Thus, in our November 22, 2011
Resolution, We declared that the homelots already received by the FWBs shall be
respected with no obligation to refund or to return them.
The Court, by a unanimous vote, resolved to maintain its ruling that the FWBs shall
retain ownership of the homelots given to them with no obligation to pay for the
value of said lots. However, since the SDP was already revoked with finality, the
Court directs the government through the DAR to pay HLI the just compensation for
said homelots in consonance with Sec. 4, Article XIII of the 1987 Constitution that
the taking of land for use in the agrarian reform program is "subject to the payment
of just compensation." Just compensation should be paid to HLI instead of Tadeco in
view of the Deed of Assignment and Conveyance dated March 22, 1989 executed
between Tadeco and HLI, where Tadeco transferred and conveyed to HLI the titles
over the lots in question. DAR is ordered to compute the just compensation of the
homelots in accordance with existing laws, rules and regulations.
To recapitulate, the Court voted on the following issues in this manner:
1. In determining the date of "taking," the Court voted 8-6 to maintain the
ruling fixing November 21, 1989 as the date of "taking," the value of the
affected lands to be determined by the LBP and the DAR;
2. On the propriety of the revocation of the option of the FWBs to remain
as HLI stockholders, the Court, by unanimous vote, agreed to reiterate its
ruling in its November 22, 2011 Resolution that the option granted to the
FWBs stays revoked;
3. On the propriety of returning to the FWBs the proceeds of the sale of
the 500-hectare converted land and of the 80.51-hectare SCTEX land, the
Court unanimously voted to maintain its ruling to order the payment of the
proceeds of the sale of the said land to the FWBs less the 3% share, taxes
and expenses specified in the fallo of the November 22, 2011 Resolution;
4. On the payment of just compensation for the homelots to HLI, the Court,
by unanimous vote, resolved to amend its July 5, 2011 Decision and
November 22, 2011 Resolution by ordering the government, through the
DAR, to pay to HLI the just compensation for the homelots thus distributed
to the FWBS.
WHEREFORE, the Motion to Clarify and Reconsider Resolution of November 22,
2011 dated December 16, 2011 filed by petitioner Hacienda Luisita, Inc. and the
Motion for Reconsideration/Clarification dated December 9, 2011 filed by private
respondents Noel Mallari, Julio Suniga, Supervisory Group of Hacienda Luisita, Inc.
and Windsor Andaya are hereby DENIED with this qualification: the July 5, 2011
Decision, as modified by the November 22, 2011 Resolution, is FURTHER MODIFIED
in that the government, through DAR, is ordered to pay Hacienda Luisita, Inc. the
just compensation for the 240-square meter homelots distributed to the
FWBs.1âwphi1
The July 5, 2011 Decision, as modified by the November 22, 2011 Resolution and
further modified by this Resolution is declared FINAL and EXECUTORY. The entry of
judgment of said decision shall be made upon the time of the promulgation of this
Resolution.
No further pleadings shall be entertained in this case.
SO ORDERED.
NPC. VS ZABALA
DEL CASTILLO, J.:
Legislative enactments, as well as executive issuances, fixing or providing fix the
method of computing just compensation are tantamount to impermissible
encroachment on judicial prerogatives.1 Thus they are not binding on courts and, at
best, are treated as mere guidelines in ascertaining the amount of just
compensation.2
3 4
This Petition for Review on Certiorari assails the July 10, 2006 Decision of the
Court of Appeals (CA) in CA-G.R. CV No. 85396 which affirmed the June 28, 2004
Partial Decision5 of the Regional Trial Court (RTC), Branch 2, Balanga City in an
eminent domain case,6 ordering petitioner National Power Corporation ( Napocor)
to pay respondents spouses Rodolfo Zabala and Lilia Baylon (spouses Zabala) just
compensation ofP-150.00 per square meter for the 6,820-square meter portion of
the spouses' property which was traversed by transmission lines of Napocor under
its 230 KV Limay-Hermosa Permanent Transmission Lines Project.
Factual Antecedents
The facts of this case as found by the CA and adopted by Napocor are as follows:
On October 27, 1994, plaintiff-appellant National Power Corporation ("Napocor" x x
x) filed a complaint for Eminent Domain against defendants-appellees Sps. R. Zabala
& L. Baylon, Tomas Aguirre, Generosa de Leon and Leonor Calub ("Spouses Zabala",
"Aguirre" "de Leon", and "Calub," respectively x x x) before the Regional Trial Court,
Balanga City, Bataan alleging that: defendants-appellees Spouses Zabala and
Baylon, Aguirre, de Leon, and Calub own parcels of land located in Balanga City,
Bataan; it urgently needed an easement of right of way over the affected areas for
its 230 KV Limay-Hermosa Transmission Line[s]; the said parcels of land have
neither been applied nor expropriated for any public use, and were selected in a
manner compatible with the greatest public good and the least private injury; it
repeatedly negotiated with the defendants-appellees for the acquisition of right of
way easement over the said parcels of land but failed to reach an agreement with
the latter; it has the right to take or enter upon the possession of the subject
properties pursuant to Presidential Decree No. 42, which repealed Section 2, Rule
67 of the Rules of Court upon the filing of the expropriation complaint before the
proper court or at anytime thereafter, after due notice to defendants-appellees,
and upon deposit with the Philippine National Bank of the amount equal to the
assessed value of the subject properties for taxation purposes which is to be held by
said bank subject to the orders and final disposition of the court; and it is willing to
deposit the provisional value representing the said assessed value of the affected
portions of the subject property x x x. It prayed for the issuance of a writ of
possession authorizing it to enter and take possession of the subject property, to
demolish all the improvements x x x thereon, and to commence with the
construction of the transmission lines project on the subject properties, and to
appoint not more than three (3) commissioners to ascertain and report the just
compensation for the said easement of right of way.
xxxx
On January 11, 1995, defendant-appellee Spouses Zabala moved to dismiss the
complaint averring that: the Balanga City proper is already crowded and x x x needs
additional space to meet the housing requirements of the growing population; the
only direction the city proper could expand is the side where their subject property
is located; they incurred a considerable expense in the preparatory development of
the subject property into a subdivision to serve the interest and well being of the
growing population of Balanga; the said growing need for housing and said
preparatory development would necessarily increase the value of the said property;
the just compensation would be higher if the proposed transmission lins of plaintiff-
appellant Napocor is installed or made to pass or traverse through their property
rather than through the parcels of land farther from the existing city proper and
away from their property which was tapped to meet the expansion requirements of
the Balanga City proper; the transfer of the proposed transmission lines from their
property to a farther location is more economical and less expensive to plaintiff-
appellant Napocor and it would better serve the interest of the people of Balanga
because said location is less developed, not needed for the expansion requirements
of Balanga City proper, the lots that would be traversed command a lower price and
less compensation would be paid by plaintiff-appellant Napocor; the traversing of
the transmission lines through their property would impact negatively on the
housing expansion in Balanga, the high tension wires would endanger the life and
limb of the inhabitants within the area, and decrease the value of their subject
property; the complaint does not show that the installation of the proposed
transmission wires on their property is the most direct, practical and least
burdensome means to achieve public good; the assessed value of ₱1,636.89 stated
in Tax Declaration No. 1646 is insufficient because it has been revised and cancelled
by Tax Declaration No. 11052 which shows a higher assessment value for the said
property; and plaintiff-appellant Napocor did not exert earnest efforts toward the
direct purchase of the needed portion of their property before filing a complaint
before the lower court.
On March 4, 1996 and March 7, 1996 plaintiff-appellant Napocor and defendants-
appellees Spouses Zabala filed their respective Pre-Trial Briefs.
On December 4, 1997, the Commissioners submitted their
Report/Recommendation fixing the just compensation for the use of defendants-
appellees Spouses Zabala’s property as easement of right of way at ₱150.00 per
square meter without considering the consequential damages.
Plaintiff-appellant Napocor prayed in its Comment to the commissioners’ report,
that the report be recommitted to the commissioners for the modification of the
report and the substantiation of the same with reliable and competent
documentary evidence based on the value of the property at the time of its taking.
On their part, defendants-appellees Spouses Zabala prayed, in the Comments, for
the fixing of the just compensation at ₱250.00 per square meter.
On February 25, 1998, the lower court recommitted the report to the
Commissioners for further report on the points raised by the parties.
On August 20, 2003, the Commissioners submitted their Final Report fixing the just
compensation at ₱500.00 per square meter.7
Since the Commissioners had already submitted their Final Report8 on the valuation
of the subject property, spouses Zabala moved for the resolution of the case insofar
as their property was concerned. Thus, on June 28, 2004, the RTC rendered its
Partial Decision,9 ruling that Napocor has the lawful authority to take for public
purpose and upon payment of just compensation a portion of spouses Zabala’s
property. The RTC likewise ruled that since the spouses Zabala were deprived of the
beneficial use of their property, they are entitled to the actual or basic value of their
property. Thus, it fixed the just compensation at ₱150.00 per square meter. The
dispositive portion of the RTC’s Partial Decision reads:
WHEREFORE, premises considered, the Court having determined that Napocor has a
lawful right to take the subject properties in the exercise of the power of eminent
domain upon payment of just compensation, the petition is hereby granted.
Accordingly, Napocor is hereby ordered to pay defendant Spouses Rodolfo Zabala
and Lilia Baylon the amount of Php 150.00 per square meter for the 6,820 square
meters taken from the latter’s property, as the just compensation fixed and
recommended by the commissioners determined as of the date of the taking of the
property.
As regards x x x the properties of the other defendants, the determination of x x x
just compensation is hereby held in abeyance until the submission of the
commissioners’ report.
SO ORDERED.10
Napocor appealed to the CA. It argued that the Commissioners’ reports upon which
the RTC based the just compensation are not supported by documentary evidence.
Necessarily, therefore, the just compensation pegged by the RTC at ₱150.00 per
square meter also lacked basis. Napocor likewise imputed error on the part of the
RTC in not applying Section 3A of Republic Act (RA) No. 639511 which limits its
liability to easement fee of not more than 10% of the market value of the property
traversed by its transmission lines.
On July 10, 2006, the CA rendered the assailed Decision affirming the RTC’s Partial
Decision.
Issue
Hence, this Petition anchored on the ground that:
THE COURT OF APPEALS ERRED IN AFFIRMING THE PARTIAL DECISION DATED JUNE
28, 2004 AND THE ORDER DATED FEBRUARY 7, 2005 OF THE TRIAL COURT FIXING
THE AMOUNT OF ₱150.00 PER SQUARE METER AS THE FAIR MARKET VALUE OF THE
SUBJECT PROPERTY SINCE THE SAME IS NOT SUPPORTED BY DOCUMENTARY
EVIDENCE.12
Napocor contends that under Section 3A of RA No. 6395, it is not required to pay
the full market value of the property when the principal purpose for which it is
actually devoted will not be impaired by its transmission lines. It is enough for
Napocor to pay easement fee which, under the aforementioned law, should not
exceed 10% of the market value of the affected property. Napocor argues that
when it installed its transmission lines, the property of spouses Zabala was classified
as riceland and was in fact devoted to the cultivation of palay. Its transmission lines
will not, therefore, affect the primary purpose for which the subject land is devoted
as the same only pass through it. The towers to which such lines are connected are
not even built on the property of spouses Zabala, who will remain the owner of and
continue to enjoy their property. Hence, the RTC and the CA, according to Napocor,
both erred in not applying Section 3A of RA No. 6395.
Napocor further argues that even assuming that spouses Zabala are entitled to the
full market value of their property, the award of ₱150.00 per square meter as just
compensation lacks basis because the recommendation of the Commissioners is not
supported by documentary evidence.
Our Ruling
The petition is partially meritorious.
Section 3A of RA No. 6395 cannot is a judicial function that cannot "be usurped by any other branch or official of the
government."15 Thus, we have consistently ruled that statutes and executive
restrict the constitutional power of the issuances fixing or providing for the method of computing just compensation are
not binding on courts and, at best, are treated as mere guidelines in ascertaining
courts to determine just compensation. the amount thereof.16 In National Power Corporation v. Bagui,17 where the same
petitioner also invoked the provisions of Section 3A of RA No. 6395, we held that:
In insisting that the just compensation cannot exceed 10% of the market value of
the affected property, Napocor relies heavily on Section 3A of RA No. 6395, the Moreover, Section 3A-(b) of R.A. No. 6395, as amended, is not binding on the Court.
pertinent portions of which read: It has been repeatedly emphasized that the determination of just compensation in
eminent domain cases is a judicial function and that any valuation for just
compensation laid down in the statutes may serve only as a guiding principle or one
Sec. 3A. In acquiring private property or private property rights through
of the factors in determining just compensation but it may not substitute the
expropriation proceedings where the land or portion thereof will be traversed by
court’s own judgment as to what amount should be awarded and how to arrive at
the transmission lines, only a right-of-way easement thereon shall be acquired
such amount.18
when the principal purpose for which such land is actually devoted will not be
impaired, and where the land itself or portion thereof will be needed for the
projects or works, such land or portion thereof as necessary shall be acquired. This ruling was reiterated in Republic v. Lubinao,19 National Power Corporation v.
Tuazon20 and National Power Corporation v. Saludares21 and continues to be the
controlling doctrine. Notably, in all these cases, Napocor likewise argued that it is
In determining the just compensation of the property or property sought to be
liable to pay the property owners for the easement of right-of-way only and not the
acquired through expropriation proceedings, the same shall:
full market value of the land traversed by its transmission lines. But we uniformly
held in those cases that since the high-tension electric current passing through the
(a) With respect to the acquired land or portion thereof, not to exceed the
transmission lines will perpetually deprive the property owners of the normal use of
market value declared by the owner or administrator or anyone having
their land, it is only just and proper to require Napocor to recompense them for the
legal interest in the property, or such market value as determined by the
full market value of their property.
assessor, whichever is lower.
The just compensation of ₱150.00 per
(b) With respect to the acquired right-of-way easement over the land or
square meter as fixed by the RTC is not
portion thereof, not to exceed ten percent (10%) of the market value
supported by evidence.
declared by the owner or administrator or anyone having legal interest in
the property, or such market value as determined by the assessor
It has likewise been our consistent ruling that just compensation cannot be arrived
whichever is lower.
at arbitrarily. Several factors must be considered, such as, but not limited to,
acquisition cost, current market value of like properties, tax value of the
xxxx
condemned property, its size, shape, and location. But before these factors can be
considered and given weight, the same must be supported by documentary
Just compensation has been defined as "the full and fair equivalent of the property evidence.
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 qualify the meaning of the word
In the case before us, it appears that the Commissioners’ November 28, 1997
‘compensation’ and to convey thereby the idea that the amount to be tendered for
Report/Recommendation22 is not supported by any documentary evidence. There is
the property to be taken shall be real, substantial, full and ample." 13 The payment
nothing therein which would show that before arriving at the recommended just
of just compensation for private property taken for public use is guaranteed no less
compensation of ₱150.00, the Commissioners considered documents relevant and
by our Constitution and is included in the Bill of Rights. 14 As such, no legislative
pertinent thereto. Their Report/Recommendation simply states that on November
enactments or executive issuances can prevent the courts from determining
17, 1997, the Commissioners conducted an ocular inspection; that they interviewed
whether the right of the property owners to just compensation has been violated. It
persons in the locality; that the adjacent properties have market value of ₱150.00
per square meter; and, that the property of Nobel Philippine which is farther from
the Roman Expressway is being sold for ₱200.00 per square meter. No documentary
evidence whatsoever was presented to support their report that indeed the market
value of the adjacent properties are ₱150.00 and that of Nobel Philippine is
₱200.00.
Napocor objected to the Report/Recommendation of the Commissioners and
pointed out that the same is not supported by documentary evidence. 23 spouses
Zabala likewise commented thereon and argued that their property should be
valued at ₱250.00 per square meter.24 Accordingly, the RTC recommitted the
Report/Recommendation to the Commissioners for further evaluation of the points
raised by the parties.25
In April 1998, the Commissioners submitted a Supplemental Report. 26 Then on
August 20, 2003, the Commissioners submitted their Final Report27 recommending
a compensation of ₱500.00 per square meter. But like their earlier reports, the
Commissioners’ Final Report lacks documentary support. It reads:
1. Further ocular inspection was conducted on the property under
consideration of the Honorable Court.
2. To date the land is properly secured, contained and fenced with
concrete hollow blocks.
3. The property is not tenanted and the area covered and affected by the
transmission lines has not been tilled and planted x x x.
4. Upon inquiry from the landowners, the Sps. Rodolfo and Lilia Zabala,
they intimated that they are proposing to develop the property into a
subdivision, as they already fenced and contained the area.
5. At present, another property which is very far from the Roman
Expressway was subdivided, known as the St. Elizabeth Country Homes.
Lots are being sold there at ₱1,700.00 per square meter.
6. The property of the Sps. Zabala is only some meters away from the
Roman Expressway compared to the St. Elizabeth Country Homes which is
very far from the highway.
7. Moreover, the other subdivisions, Maria Lourdes and Vicarville which
are within the vicinity sell their lots now ranging from ₱1,800.00 per
square meter to ₱2,500.00.
8. As already stated, the property of the Sps. Zabala is within the built-up
area classified as residential, commercial and industrial.
9. In its earlier reports in 1998, the commission recommended a just
compensation of ₱150.00 per square meter.
10. But considering the considerable lapse of time and increase in the
valuation of the properties within the area, the commissioners are
impelled to increase the recommended valuation to ₱500.00 per square
meter.
WHEREFORE, it is recommended to the Honorable Court that the owners of the
property affected and traversed by the transmission lines of the NPC be
compensated at ₱500.00 per square meter.28
In Republic v. Santos,29 we ruled that a commissioners’ land valuation which is not
based on any documentary evidence is manifestly hearsay and should be
disregarded by the court, viz:
The statement in the 1970 report of the commissioners that according to the
owners of adjoining lots the prices per square meter ranged from ₱150 to ₱200 and
that subdivision lots in the vicinity were being sold at ₱85 to ₱120 a square meter
was not based on any documentary evidence. It is manifestly hearsay. Moreover,
those prices refer to 1970 or more than a year after the expropriation was
effected.30
The same ruling was arrived at in National Power Corporation v. Diato-
Bernal,31 where we overturned the ruling of the trial court and the CA adopting the
findings of the commissioners sans supporting documentary evidence therefor.
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 property’s
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 respondent’s property. Finally, the
market sales data and price listings alluded to in the report were not even
appended thereto.32
Under Section 8,33 Rule 67 of the Rules of Court, the trial court may accept or reject,
whether in whole or in part, the commissioners’ report which is merely advisory
and recommendatory in character. It may also recommit the report or set aside the
same and appoint new commissioners. In the case before us, however, in spite of
the insufficient and flawed reports of the Commissioners and Napocor’s objections
thereto, the RTC eventually adopted the same. It shrugged off Napocor’s
protestations and limited itself to the reports submitted by the Commissioners. It
neither considered nor required the submission of additional evidence to support
the recommended ₱150.00 per square meter just compensation. Ergo, insofar as
just compensation is concerned, we cannot sustain the RTC’s Partial Decision for
want of documentary support.1âwphi1
Lastly, it should be borne in mind that just compensation should be computed
based on the fair value of the subject property at the time of its taking or the filing
of the complaint, whichever came first.34 Since in this case the filing of the eminent
domain case came ahead of the taking, just compensation should be based on the
fair market value of spouses Zabala’s property at the time of the filing of Napocor’s
Complaint on October 27, 1994 or thereabouts.
WHEREFORE, the instant Petition is PARTIALLY GRANTED. This case is REMANDED to
the Regional Trial Court, Branch 2, Balanga City for the proper determination of just
compensation.
SO ORDERED.
NPC VS. MANALASTAS
PERALTA, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of
Court, praying that the Decision1 of the Court of Appeals (CA) promulgated on
September 9, 2010, and its Resolution2 dated March 14, 2011, denying petitioner's
Motion for Partial Reconsideration be reversed and set aside.
Sometime in 1977 to 1978, petitioner, a government-owned and controlled
corporation involved in the development of hydro-electric generation of power and
production of electricity, and the construction, operation and maintenance of
power plants, transmission lines, power stations and substations, among others,
constructed a 230 KV transmission line for the Naga-Tiwi line and a 69 KV
transmission line for the Naga-Tinambac line on respondents' parcel of land covered
by TCT No. 26263, affecting an area of 26,919 square meters. Petitioner entered
said land without the knowledge or consent of respondents, without properly
initiating expropriation proceedings, and without any compensation to
respondents-landowners. Because of said transmission lines, respondents alleged
that they could no longer use their land as part of a subdivision project as originally
intended, which ultimately caused financial loss to their family. Thus, in July 2000,
respondents (plaintiffs below, who were then joined by their mother, Celedonia,
and brother, Mariano; Celedonia and Mariano are no longer impleaded as parties in
this petition as the CA Decision has attained finality as to them) 3 filed a complaint
against petitioner and its officers with the Regional Trial Court of Naga City (RTC).
Respondents demanded the removal of the power lines and its accessories and
payment of damages, or in the alternative, payment of the fair market value of the
affected areas totalling 26,000 square meters of respondents' land at P800.00 per
square meter.
On November 17, 2006, the RTC issued a Decision, the dispositive portion of which
reads as follows:
WHEREFORE, defendant NAPOCOR is hereby ordered to:
1) Pay plaintiffs the amount of PESOS: NINETY-TWO MILLION EIGHT HUNDRED
TWENTY-SEVEN THOUSAND and THREE HUNDRED FIFTY-ONE (P92,827,351.00), by
way of just compensation, broken down as follows:
a) For the plaintiffs Elizabeth Manalastas and Bea Castillo:
P32,033,610.00 – Value of the land
P53,816,461.00 – Interest at 6% per annum for 28 years
P85,850,071.00 – Total
b) For the plaintiffs Celedonia Mariano and Enrico Mariano:
P1,000,200.00 – Value of the land
P5,887,080.00 – Interest at 6% per annum for 9 years
P6,977,280.00 – Total
2) Pay Attorney's fees to plaintiffs in the amount of Pesos: One Hundred
Thousand (P100,000.00).
With cost against plaintiff (sic) NAPOCOR.
SO ORDERED.4
On appeal to the CA, herein petitioner argued that the RTC erred in factoring the
devaluation of the peso in the computation of the fair market value of respondents'
land. In a Decision dated September 9, 2010, the CA affirmed the RTC judgment
with modification, reducing the award to Celedonia and Enrico Mariano
(respondents' co-plaintiffs below) to P1,678,908.00. The CA ruled that petitioner
could no longer assail the valuation that petitioner itself recommended, the same
being a judicial admission. Moreover, the CA pointed out that taking an inconsistent
position on appeal cannot be allowed. Petitioner's motion for reconsideration was
denied in a Resolution dated March 14, 2010.
Hence, the present petition where petitioner alleges as follows:
I.
ESTOPPEL IS INOPERATIVE AGAINST THE GOVERNMENT; THE INFLATION FACTOR
SHOULD NOT BE INCLUDED IN THE COMPUTATION OF JUST COMPENSATION
II.
THE DETERMINATION OF JUST COMPENSATION IS A JUDICIAL FUNCTION. COURTS
ARE THEREFORE NOT BOUND TO UPHOLD A PARTY'S FORMULATION OF JUST
COMPENSATION; [and]
III.
THE AWARD OF EIGHTY-FIVE MILLION EIGHT HUNDRED THOUSAND AND SEVENTY-
ONE PESOS (Php85,850,071.00) WILL UNJUSTLY ENRICH THE RESPONDENTS.5
The Court finds the petition meritorious.
The bone of contention in this case is the inclusion of the inflation rate of the
Philippine Peso in determining the just compensation due to respondents.
Petitioners maintain that such inclusion of the inflation rate in arriving at the value
of just compensation has no legal basis, and it was a palpable mistake on the part of
its representatives and counsel below to make a recommendation factoring in said
inflation rate in the computation of just compensation. None of the parties contest
the finding that the fair market value of the property at the time of taking was
Php170.00 per square meter.
It should be noted that in Secretary of the Department of Public Works and
Highways, et al. v. Spouses Heracleo and Ramona Tecson,6 the Court stressed that
"just compensation is the value of the property at the time of taking that is
controlling for purposes of compensation." In a motion for reconsideration of the
Decision in said case, the landowners argued that it would be unjust if the amount
that will be awarded to them today will be based on the value of the property at the
time of actual taking. In its Resolution dated April 21, 2015, the Court fully
explained that:
x x x the State is not obliged to pay premium to the property owner for
appropriating the latter's property; it is only bound to make good the loss sustained
by the landowner, with due consideration of the circumstances availing at the time
the property was taken. More, the concept of just compensation does not imply
fairness to the property owner alone. Compensation must also be just to the
public, which ultimately bears the cost of expropriation.
Notwithstanding the foregoing, we recognize that the owner's loss is not only his
property but also its income-generating potential. Thus, when property is taken, full
compensation of its value must immediately be paid to achieve a fair exchange for
the property and the potential income lost. Accordingly, in Apo, we held that the
rationale for imposing the interest is to compensate the petitioners for the
income they would have made had they been proprerly compensated for their
properties at the time of the taking. Thus:
We recognized in Republic v. Court of Appeals the need for prompt payment and
the necessity of the payment of interest to compensate for any delay in the
payment of compensation for property already taken. We ruled in this case that:
The constitutional limitation of "just compensation" is considered to be the sum
equivalent to the market value of the property, broadly described to be 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, i[f] fixed at the time of the actual taking by the government.
Thus, if property is taken for public use before compensation is deposited with the
court having jurisdiction over the case, the final compensation must include
interest[s] on its just value to be computed from the time the property is taken to
the time when compensation is actually paid or deposited with the court. In fine,
between the taking of the property and the actual payment, legal interest[s]
accrue in order to place the owner in a position as good as (but not better than)
the position he was in before the taking occurred. [Emphasis supplied]
In other words, the just compensation due to the landowners amounts to an
effective forbearance on the part of the State—a proper subject of interest
computed from the time the property was taken until the full amount of just
compensation is paid—in order to eradicate the issue of the constant variability of
the value of the currency over time. In the Court's own words:
The Bulacan trial court, in its 1979 decision, was correct in imposing interests 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 x x x.7
The foregoing clearly dictates that valuation of the land for purposes of determining
just compensation should not include the inflation rate of the Philippine Peso
because the delay in payment of the price of expropriated land is sufficiently
recompensed through payment of interest on the market value of the land as of the
time of taking from the landowner.1âwphi1
Moreover, the fact that it was petitioner's own counsel below that recommended
the inclusion of the inflation rate in the determination of just compensation should
not be taken against petitioner. After all, it is ultimately the courts' mandated duty
to adjudge whether the parties' submissions are correct. It is the courts, not the
litigants, who decide on the proper interpretation or application of the law and,
thus, only the courts may determine the rightful compensation in accordance with
the law and evidence presented by the parties. It is incongruous for the court below
to uphold a proposition merely because it was recommended by a party, despite
the same being erroneous. Thus, in Secretary of Finance v. Oro Maura Shipping
Lines,8 the Court emphasized, thus:
x x x Assuming further x x x that the Collector of the Port of Manila similarly erred,
we reiterate the legal principle that estoppel generally finds no application against
the State when it acts to rectify mistakes, errors, irregularities, or illegal acts, of its
officials and agents, irrespective of rank. This ensures efficient conduct of the affairs
of the State without any hindrance on the part of the government from
implementing laws and regulations, despite prior mistakes or even illegal acts of its
agents shackling government operations and allowing others, some by malice, to
profit from official error or misbehavior. The rule holds true even if the
rectification prejudices parties who had meanwhile received benefits. 9
Such important principle was reiterated in the more recent Republic v.
Bacas,10 where the Court stated that even "[g]ranting that the persons representing
the government were negligent, the doctrine of estoppel cannot be taken against
the Republic."11 Again, in National Power Corporation v. Samar,12 the Court
admonished the trial court to disregard even the panel of commissioners'
recommended valuation of the land if such valuation is not the relevant value at the
time the NPC took possession of the property.13 The cases cited by the lower court
to justify its ruling that petitioner is bound by the recommendation made by its
counsel before the trial court, are all inapplicable to the present case as said cases
do not involve agencies or instrumentalities of the State.
Lastly, in addition to the award for interests, Article 2229 of the Civil Code provides
that "[e]xemplary or corrective damages are imposed by way of example or
correction for the public good" and Article 2208 of the same code states that
attorney's fees may be awarded by the court in cases where such would be just and
equitable. As held in the Resolution dated April 21, 2015 in Secretary of the
Department of Public Works and Highways, et al. v. Spouses Heracleo and Ramona
Tecson,14 additional compensation in the form of exemplary damages and
attorney's fees should likewise be awarded as a consequence of the government
agency's illegal occupation of the owner's property for a very long time, resulting
in pecuniary loss to the owner. Indeed, government agencies should be
admonished and made to realize that its negligence and inaction in failing to
commence the proper expropriation proceedings before taking private property, as
provided for by law, cannot be countenanced by the Court.
To recapitulate, the formula for determination of just compensation to landowners
does not include the factor for inflation rate, as inflation is properly accounted for
through payment of interest on the amount due to the landowner, and through the
award of exemplary damages and attorney's fees in cases where there was
irregularity in the taking of property.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-
G.R. CV No. 89366 is MODIFIED, such that petitioner is adjudged liable to PAY JUST
COMPENSATION to respondents at the rate of Php170.00 per square meter, subject
to interest at the rate of twelve percent (12%) per annum from the time of taking in
1978 up to June 30, 2013 and, thereafter, six percent (6%) per annum from July 1,
2013 until full satisfaction, pursuant to Bangko Sentral ng Pilipinas – Monetary
Board Circular No. 799, Series of 2013 and applicable jurisprudence. Petitioner is,
likewise, ORDERED to PAY respondents exemplary damages in the amount of
Php500,000.00 and attorney's fees in the amount of Php200,000.00.
SO ORDERED.
SY VS. LOCAL GOVERNMENT OF QUEZON CITY
This is a petition for review on certiorari seeking to reverse and set aside the March
21, 2014 Decision1 and the October 22, 2014 Resolution2 of the Court of
Appeals (CA) in CA-G.R. CV No. 96407, which affirmed the December 23, 2009
Decision3 and the July 6, 2010 Order4 of the Regional Trial Court, Branch 35,
Calamba City (RTC), in an expropriation case docketed as Civil Case No. 3 818-05-C.
On August 3, 2005, a complaint for expropriation 5 was filed by petitioner Republic
of the Philippines (petitioner), through the Toll Regulatory Board (TRB). Under
Section 3(c) of Presidential Decree No. 1112,6 the TRB was authorized to condemn
private property for public use upon payment of just compensation.
Petitioner, through the TRB, sought to implement the South Luzon Tollway
Extension Project (SLEP), particularly the Calamba City, Laguna – Sto. Tomas,
Batangas Section, which aimed to extend the South Luzon Expressway for faster
travel in the region.
Respondent C.C. Unson Company, Inc. (Unson) was the owner of the affected
properties which were described as follows: (1) Lot No. 6-B (Lot 6B) under Transfer
Certificate Title (TCT) No. T-57646,7 covering an area of 8,780 sq.m; and (2) Lot 4-C-
2 (Lot 4C2) under TCT No. T-51596,8 covering an area of 16,947 sq.m. It sought to
expropriate Lot 6B and Lot 4C2 in the amount of P2,250.00 per square meter (sq.m.)
On November 15, 2006, petitioner filed its Motion for Leave to File Amended
Complaint and to Admit Attached Amended Complaint.9 In the Amended
Complaint,10 petitioner indicated that Lot 4C2 should have a lower zonal value of
P1,050.00 per sq.m instead of P2,250.00 per sq.m., pursuant to the
certification11 and tax declaration12issued by Revenue District Office No. 56 and the
City Assessor’s Office.
In its Answer,13 as well as in its Answer to Amended Complaint,14 Unson, by way
affirmative defense, alleged that both properties had been classified and assessed
as residential. Thus, Lot 4C2 should have a higher value ranging from P5,000.00 to
P10,000.00 per sq.m.
On December 4, 2006, Unson filed the Urgent Twin Motion: To Release Initial
Deposit and to Order Plaintiff to make Additional Deposit (twin motion).15 It
reiterated that Lot 4C2 should have a higher valuation because the affected areas
were classified as residential with zonal value in the amount of P2,250.00 per sq.m.
Accordingly, Unson sought the release of an additional amount of P20,336,400.00
to complete the total of P38,130,750.00 which was required for Lot 4C2. It also
prayed that petitioner release the amount of P37,549,350.00 pending compliance
with the additional deposit of P20,336,400.00.
On December 20, 2006, petitioner filed the Urgent Ex-Parte Motion for Issuance of
Writ of Possession16 (December 20, 2006 Motion) alleging that it had already
deposited P37,549,350.00 or 100% of the total zonal value for the said properties
with the Development Bank of the Philippines (DBP). It prayed that a writ of
possession be issued in its favor and that the RTC order the Register of Deeds of
Calamba City to register the said writ and annotate the same in the subject TCTs.
On December 21, 2006, the RTC issued the Order17 granting the December 20, 2006
motion and the motion to release initial deposit. The RTC further directed the
parties to submit their nominees to the commission who would determine just
compensation.
On January 3, 2007, petitioner filed its Motion for Issuance of Order of
Expropriation18 praying that an order for expropriation be issued in its favor.
In its Order,19 dated June 15, 2007, the RTC directed petitioner to pay the additional
amount of P20,336,400.00. To quote the RTC:
To the mind of the Court, the affected portion of TCT No. T-51596, particularly lot 4-
C-2, is classified as residential and the corresponding BIR zonal value of said
affected portion should be computed at Php2,250.00 per square meter. Hence,
plaintiff should make an additional deposit equivalent to Php20,336,400.00
xxx From all indications, the required portion of defendant’s property falls within
that portion of Lot 4 (TCT No. T-51596) classified as residential. Plaintiff cannot
simply claim that defendant has failed to delineate which portion is residential or
industrial for purposes of computing the appropriate zonal value of the subject
property. It should have been the plaintiff itself who must have determined first
hand what particular portion of defendant’s property would be traversed by the
expropriation proceedings so as to conform with the deposit requirement of R.A.
8974.
In sum, Unson received the total amount of P57,886,750.00 from petitioner.
Through a motion,20 dated August 14, 2007, Unson asked the trial court to include
the remaining 750 sq.m. dangling lot in the expropriation proceedings. Although by
no means a small area, the said 750 sq.m. lot had been rendered without value to
Unson considering its resultant shape.
In the Order,21 dated July 17, 2009, the RTC instituted the Board of
Commissioners (Board) and appointed the following: Atty. Allan Hilbero (Chairman
Hilbero) as chairman with Antonio Amata (Commissioner Amata) and Engineer
Salvador Oscianas, Jr. (Commissioner Oscianas) as members. An ocular inspection
was conducted by the Board on August 17, 2009. 22 As can be gleaned from the
Commissioner’s Report, 23 dated November 25, 2009, the Board considered the
following factors in the assessment of just compensation:
(1) Location Description- the parcels of land could be reached from the
National Highway via concrete Barangay Road located across Yakult
Philippines Compound. The property was beside Diver Sy Liver Corporation
and more or less across Laguna Rubber. At the time of the inspection, the
property was undergoing road construction.
(2) Highest and Most Profitable Use- an analysis of the prevailing land
usage led the Board to hold that industrial development would represent
the highest and best use of the property.
(3) Ocular Inspection- the Board, guided by the parcellary plan, was able to
identify the properties which were directly affected by the expropriation
proceedings as well as the portion which would not be affected by it.
(4) Valuation/Appraisal- the Board conducted hearings and held several
interviews and deliberations on the fair market value. Chairman Hilbero
directed the two other commissioners to make and prepare an appraisal
report on the subject properties. In his report, Commissioner Oscianas
manifested that he personally inspected the property and investigated the
local market conditions. He also considered the extent, character and
utility of the property, the highest and best use of the property; and the
sales and holding prices of similar or comparable land as basis of appraisal
using the Market Data Approach. Commissioner Amata, on the other hand,
did not submit any appraisal report.
(5) BIR Certificate on Zonal Valuation- using Tax Declaration Nos. E-030-
05276 and E-030-05242, the members of the Board were of the consensus
that the subject properties were classified as industrial which had a zonal
valuation of ₱2,250.00 per sq.m.
(5) Market Value- the Board considered the narrative report of
Commissioner Oscanias to determine the market value of the subject
properties.
On November 12, 2009, during the deliberation of the Board on the just
compensation, Chairman Hilbero directed the two other commissioners to state
their respective positions. Commissioner Oscianas recommended the amount of
P4,400 per sq.m. after considering the following factors as stated in his narrative
report: 24
a. extent, character and utility of the property;
b. highest and best use of the property; and
c. sales and holding prices of similar or comparable lands as basis of
appraisal using the Market Data Approach.
d. that the property is easily accessible from the national highway;
e. that the vicinity had several existing manufacturing plants/factories and
that there are also residential subdivisions in the area; and
f. that the prices of the nearby parcels of land and similar in characteristics
ranged from P3,000.00 per square meter at the lowest and P8,000.00 per
square meter at the highest;
g. that the subject property is adjacent to a concrete barangay road; and
h. that it is one of the first, if not the first, parcels of land right after the
existing South Luzon Expressway (SLEX).
[Underscoring Supplied]
In addition, Commissioner Oscianas opined that the consequential damages
suffered by Unson should also be taken into consideration. The expropriation left
two dangling lots which could no longer be utilized. It would be unfair for Unson to
continue paying taxes on the lots as industrial when these could no longer be
utilized for such purposes.
Commissioner Amata, on the other hand, posited that Unson was already fully
compensated and that the amount of P2,250.00 per sq.m. for the two lots should
be enough.
To break the stalemate, Chairman Hilbero suggested that they consider the amount
of P3,000.00 as compromise amount.
The Ruling of the RTC
The RTC, after carefully considering the recommendation of the Board, fixed the
amount at P3,500.00 per sq.m, as just compensation in its Decision, dated
December 23, 2009.
In rendering judgment, the RTC emphasized that the Board did not only rely on the
potential use of the properties as basis for just compensation, but also considered
all the factors set forth in Section 5 of Republic Act (R.A.) No. 8974.25
Relative to the consequential damages suffered by Unson, the RTC took cognizance
of the expert opinion of Commissioner Oscianas, a highly qualified appraiser, that
the remaining 750 sq.m. of the property which consisted of two irregularly shaped
dangling lots could no longer be utilized by Unson because of the expropriation. The
dispositive portion of the RTC decision reads:
WHEREFORE, with the foregoing premises, this Court renders judgment fixing the
amount of Three Thousand Five Hundred (P3,500.00) Pesos per square meter as the
just compensation for the properties of defendant corporation herein. Accordingly,
the Republic of the Philippines, represented by the Toll Regulatory Board is ordered
to pay the defendant corporation the amount of P32,158,750.00 which represents
the difference between the P57,885,750.00 received by the defendant as
provisional payment for the 25,727 sq. meter lots owned by defendant corporation
and the amount of P90,044,500.00 computed at the rate of P3,500.00 per square
meter.
Further, the defendants are hereby ordered to pay Commissioner’s fee of Ten
Thousand Pesos (P10,000.00) each Commissioner.
of land but there was no evidence to show that such lots were similar to the
property under expropriation.28
Neither was there any reason for the appellate court to reverse or modify the ruling
of the RTC having found that the Board substantially performed their assigned
duties in accordance with law.
With respect to the 750 sq.m. dangling lot, the CA ruled that it was only just and
proper that Unson be compensated as there was sufficient evidence to show that
the expropriation of the subject property resulted in a complete alteration of the
shape of the remaining lot.29 The decretal portion of the CA decision reads:
WHEREFORE, in the light of the foregoing, the decision dated December 23, 2009
and order dated July 6, 2010 of Branch 35, RTC of Calamba City in Civil Case No.
3818-05-C are hereby AFFIRMED.
SO ORDERED.30
Petitioner filed its motion for reconsideration 31 but the same was denied by the CA
in the assailed resolution,32dated October 22, 2014.
Hence, this petition.

SO ORDERED.26
REASON RELIED UPON FOR THE ALLOWANCE OF THE PETITION

Petitioner then filed an appeal under Rule 41, Section 2(a) of the 1997 Rules of Civil
I
Procedure before the CA.
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT’S
The Ruling of the CA
DETERMINATION OF JUST COMPENSATION IN THIS CASE. 33

The CA found no reversible error in the RTC’s determination of just compensation

In its petition for review,34 petitioner asserted that the commissioners’ report was
and held that the conclusions and findings of fact of the trial court were entitled to
flawed because it took into consideration the potential use of the subject
great weight and should not be disturbed unless there appeared some fact or
properties. The report noted the properties’ industrial development as its highest
circumstance of weight which had been misinterpreted and that, if considered,
and best use. The ocular inspection, however, revealed that the subject properties
would had affected the result of the case.
did not have any improvement. Hence, the conclusion arrived at by the Board was
nothing but mere speculation. Petitioner further posited that the possible industrial
The CA concurred with the RTC that the highest and best use of the land would be development of the subject properties, which referred to their potential use, was a
where it was best suited in terms of profitability and utility.27 Contrary to factor that could not have been used in determining just compensation.
petitioner’s assertion, the highest and best use of the land did not equate to
potential use. The RTC was able to take into account several other factors in
In its Comment,35 while reiterating the ruling of the CA that the "highest and best
determining just compensation. The CA further held that petitioner placed too
use" of expropriated properties did not equate to "potential use," Unson stressed
much premium on the value of the lots adjacent and similar to the subject parcels
that the courts below took into consideration several other factors other than the
"highest and best use" criterion. Moreover, Unson affirmed that it should be
properly compensated for the remaining 750 sq. m. of the property which served
no other purpose for the corporation as it had entirely lost its value because of the
fact that it was "not one, but two, dangling and irregularly shaped lots." 36
Petitioner filed a manifestation,37 praying that it be excused from filing a reply
because the matters raised by Unson in its comment were sufficiently addressed in
the petition for review.
The Court’s Ruling
The petition is without merit.
Determination of just compensation
is a judicial function
In Republic v. Asia Pacific Integrated Steel Corporation,38 the Court defined just
compensation "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. Such ‘just’-ness of the
compensation can only be attained by using reliable and actual data as bases in
fixing the value of the condemned property. Trial courts are required to be more
circumspect in its evaluation of just compensation due the property owner,
considering that eminent domain cases involve the expenditure of public funds." 39
The Court further stated in National Power Corporation v. Tuazon, 40 that "[t]he
determination of just compensation in expropriation cases is a function addressed
to the discretion of the courts, and may not be usurped by any other branch or
official of the government. This judicial function has constitutional raison
d’être; Article III of the 1987 Constitution mandates that no private property shall
be taken for public use without payment of just compensation." 41 Legislative
enactments, as well as executive issuances, fixing or providing for the method of
computing just compensation are tantamount to impermissible encroachment on
judicial prerogatives. They are not binding on courts and, at best, are treated as
mere guidelines in ascertaining the amount of just compensation.42
This Court, however, is not a trier of facts; and petitions brought under Rule 45 may
only raise questions of law.1âwphi1This rule applies in expropriation cases as well.
In Republic v. Spouses Bautista,43 the Court explained the reason therefor:
This Court is not a trier of facts. Questions of fact may not be raised in a petition
brought under Rule 45, as such petition may only raise questions of law. This rule
applies in expropriation cases. Moreover, factual findings of the trial court, when
affirmed by the CA, are generally binding on this Court. An evaluation of the case
and the issues presented leads the Court to the conclusion that it is unnecessary to
deviate from the findings of fact of the trial and appellate courts.
Under Section 8 of Rule 67 of the Rules of Court, the trial court sitting as an
expropriation court may, after hearing, accept the commissioners’ report and
render judgment in accordance therewith. This is what the trial court did in this
case. The CA affirmed the trial court’s pronouncement in toto. Given these facts,
the trial court and the CA’s identical findings of fact concerning the issue of just
compensation should be accorded the greatest respect, and are binding on the
Court absent proof that they committed error in establishing the facts and in
drawing conclusions from them. There being no showing that the trial court and the
CA committed any error, we thus accord due respect to their findings.
The only legal question raised by the petitioner relates to the commissioners’ and
the trial court’s alleged failure to take into consideration, in arriving at the amount
of just compensation, Section 5 of RA 8974 enumerating the standards for assessing
the value of expropriated land taken for national government infrastructure
projects. What escapes petitioner, however, is that the courts are not bound to
consider these standards; the exact wording of the said provision is that "in order to
facilitate the determination of just compensation, the courts may consider" them.
The use of the word "may" in the provision is construed as permissive and operating
to confer discretion. In the absence of a finding of abuse, the exercise of such
discretion may not be interfered with. For this case, the Court finds no such abuse
of discretion.44
[Emphasis Supplied]
In this case, petitioner has repeatedly imputed error on the part of the RTC when it
pegged the amount of just compensation at P3,500.00 per sq.m. after it took into
consideration the commissioners’ report. Contrary to petitioner’s contention, the
RTC did not only rely on the potential use of the subject properties. Absent any
showing, however, that there was any serious error on the part of the trial court, its
ruling and discretion should not be interfered with.
To emphasize, the RTC, after hearing, had the option either to (1) accept the report
and render judgment in accordance therewith; (2) for cause shown, it may (a)
recommit the same to the commissioners for further report of facts; or (b) it may
set aside the report and appoint new commissioners; or (c) it may accept the report
in part and reject it in part; and (d) it may make such order or render such judgment
as shall secure to the plaintiff the property essential to the exercise of his right of
expropriation, and to the defendant just compensation for the property so taken. 45
The determination of the amount of just compensation by the RTC was even
affirmed by the appellate court, which had the opportunity to examine the facts
anew. Hence, the Court sees no reason to disturb it.
Payment for the 750 sq.m
dangling lots; ownership
transferred to petitioner
There is no question that the remaining 750 sq.m. dangling lots were not
expropriated by petitioner. The RTC and the CA, however, agreed that Unson was
entitled to just compensation with respect to the said portions.
Both courts took cognizance of the report of Commissioner Oscianas that the
remaining 750 sq.m. dangling lots could no longer be used for any business
purpose, viz.:
This Court likewise takes cognizance on the expert opinion of Engr. Oscianas Jr., a
highly qualified appraiser relative to the consequential damages suffered by the
defendant corporation as a result of the ongoing expropriation proceedings. Based
on their ocular inspection and the other documents attached to the records of this
case, this Court agrees with the position of the defendant corporation that the
remaining areas left to the latter will be practically unutilizable. This conclusion is
arrived at because what was left to the defendant after the taking of the properties
are two dangling lots with irregular shapes which can no longer be utilized for any
business purposes by the defendant corporation. In fact, even if these lots are sold
by the defendant corporation, there will be no takers because the remaining lots
have become practically useless. Worse, the land owner will be required to pay
taxes for the remaining lots as industrial when these lots can no longer be utilized
for industrial purposes.xxx46
As a general rule, just compensation, to which the owner of the property to be
expropriated is entitled, is equivalent to 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." 47
Section 6 of Rule 67 speaks of consequential damages. It specifically provides:
Section 6. Proceedings by commissioners. — Before entering upon the performance
of their duties, the commissioners shall take and subscribe an oath that they will
faithfully perform their duties as commissioners, which oath shall be filed in court
with the other proceedings in the case. Evidence may be introduced by either party
before the commissioners who are authorized to administer oaths on hearings
before them, and the commissioners shall, unless the parties consent to the
contrary, after due notice to the parties, to attend, view and examine the property
sought to be expropriated and its surroundings, and may measure the same, after
which either party may, by himself or counsel, argue the case. 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 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.
[Emphasis Supplied]
Also in Republic v. BPI,48 the Court categorically stated that if as a result of the
expropriation made by the petitioner, the remaining portion of the property of the
owner suffers from impairment or decrease in value, consequential damages were
to be awarded.
In arriving at P3,500.00 as the amount of just compensation, the RTC already
factored in the consequential damages suffered by Unson for the unusable 750
sq.m. lots. In essence, petitioner was already ordered to pay for the dangling lots
when the just compensation was pegged at P3,500.00. If the ownership of the
dangling lots was to be retained by Unson, it would run against the equitable
proscription of unjust enrichment. The principle of unjust enrichment requires two
conditions: (1) that a person is benefited without a valid basis or justification, and
(2) that such benefit is derived at the expense of another. 49
Having established that there was no serious error on the part of the lower courts in
fixing the amount of just compensation, the Court deems it proper that the
ownership over the dangling lots is transferred to petitioner upon payment thereof.
To effectuate the transfer of ownership, it is necessary for petitioner to pay Unson
the full amount of just compensation. At this point, there is still no full payment yet.
Hence, upon paying the amount of P32,158,750.00, the ownership of both the
25,727 sq.m. expropriated property and the remaining unutilized 750 sq.m.
dangling lots should be transferred to petitioner.
WHEREFORE, the petition is DENIED. The March 21, 2014 Decision of the Court of
Appeals in CA-G.R. CV No. 96407 and its October 22, 2014 Resolution
are AFFIRMED. The Republic of the Philippines, through the Toll Regulatory Board,
is ORDERED to pay C.C. Unson Company, Inc., the amount of P32,158,750.00 which
represents the difference between the amount of P57,885,750.00 already received
by the respondent and the amount of P90,044,500.00 computed at the rate of
P3,500.00 per square meter for the 25,727-square meter property and the dangling
lots.
After full payment for the subject properties and dangling lots, ownership and title
should be registered in the name of the petitioner.
SO ORDERED.
Assailed in this petition for review on certiorari1 are the January 20, 2012
Decision2 and July 16, 2012 Resolution3of the Court of Appeals (CA) in CA-G.R. CV
No. 91964 which affirmed with modification the August 22, 2008 Order 4of the
Regional Trial Court of Quezon City, Branch 80 (RTC) in Civil Case No. Q-96-29352,
ordering respondent Local Government of Quezon City (the City) to pay petitioner
Henry L. Sy (Sy) just compensation set as ₱5,500.00 per square meter (sq. m.),
including ₱200,000.00 as exemplary damages and attorney’s fees equivalent to one
percent (1%) of the total amount due.
The Facts
On November 7, 1996, the City, through then Mayor Ismael Mathay, Jr., filed a
complaint for expropriation with the RTC in order to acquire a 1,000 sq. m. parcel of
land, owned and registered under the name of Sy (subject property),5 which was
intended to be used as a site for a multi-purpose barangay hall, day-care center,
playground and community activity center for the benefit of the residents of
Barangay Balingasa, Balintawak, Quezon City.6 The requisite ordinance to undertake
the aforesaid expropriation namely, Ordinance No. Sp-181, s-94, was enacted on
April 12, 1994.7
On March 18, 1997, pursuant to Section 198 of Republic Act No. 7160 (RA 7160),
otherwise known as the "Local Government Code of 1991," the City deposited the
amount of ₱241,090.00 with the Office of the Clerk of Court, representing 15% of
the fair market value of the subject property based on its tax declaration. 9
During the preliminary conference on November 8, 2006, Sy did not question the
City’s right to expropriate the subject property. Thus, only the amount of just
compensation remained at issue.10
On July 6, 2006, the RTC appointed Edgardo Ostaco (Commissioner Ostaco), Engr.
Victor Salinas (Commissioner Salinas) and Atty. Carlo Alcantara (Commissioner
Alcantara) as commissioners to determine the proper amount of just compensation
to be paid by the City for the subject property. Subsequently, Commissioners
Ostaco and Alcantara, in a Report dated February 11, 2008, recommended the
payment of ₱5,500.00 per sq. m., to be computed from the date of the filing of the
expropriation complaint, or on November 7, 1996. On the other hand,
Commissioner Salinas filed a separate Report dated March 7, 2008, recommending
the higher amount of ₱13,500.00 per sq. m. as just compensation.11
The RTC Ruling
In the Order dated August 22, 2008,12 the RTC, citing the principle that just
compensation must be fair not only to the owner but to the expropriator as well,
adopted the findings of Commissioners Ostaco and Alcantara and thus, held that
the just compensation for the subject property should be set at ₱5,500.00 per sq.
m.13 Further, it found no basis for the award of damages and back rentals in favor of
Sy.14 Finally, while legal interest was not claimed, for equity considerations, it
awarded six percent (6%) legal interest, computed from November 7, 1996 until full
payment of just compensation.15
Dissatisfied, Sy filed an appeal with the CA.16
The CA Ruling
In the Decision dated January 20, 2012,17 the CA affirmed the RTC’s ruling but
modified the same, ordering the City to pay Sy the amount of ₱200,000.00 as
exemplary damages and attorney’s fees equivalent to one percent (1%) of the total
amount due.
It found the appraisal of Commissioners Ostaco and Alcantara for the subject
property to be more believable than the ₱13,000.00 per sq. m. valuation made by
independent appraisers Cuervo and Asian Appraisers in 1995 and 1996,
respectively, considering that it was arrived at after taking into account: (a) the fair
market value of the subject property in the amount of ₱4,000.00 per sq. m. based
on the September 4, 1996 recommendation of the City Appraisal Committee; 18 (b)
the market value of the subject lot in the amount of ₱2,000.00 per sq. m. based on
several sworn statements made by Sy himself;19 and (c) Sy’s own tax declaration for
1996,20 stating that the subject property has a total market value of ₱2,272,050.00.
Accordingly, it held that the fair market value of ₱5,500.00 per sq. m., or
₱5,500,000.00 in total, for the 1,000 sq. m. subject property arrived at by
Commissioners Ostaco and Alcantara was more than fair and reasonable.21
The CA also denied Sy’s assertion that he should be entitled to damages on account
of the purported shelving of his housing project, finding no sufficient evidence to
support the same. Likewise, it observed that the expropriation would not leave the
rest of Sy’s properties useless as they would still be accessible through a certain Lot
8 based on the Property Identification Map.22
Nonetheless, citing the case of Manila International Airport Authority v. Rodriguez
(MIAA),23 it awarded exemplary damages in the amount of ₱200,000.00 and
attorney’s fees equivalent to one percent (1%) of the amount due because of the
City’s taking of the subject property without even initiating expropriation
proceedings.24 It, however, denied Sy’s claim of back rentals considering that the
RTC had already granted legal interest in his favor. 25
Aggrieved, Sy moved for reconsideration which was denied in the Resolution dated
July 16, 201226 for being filed out of time.27 The City also filed a motion for
reconsideration which was equally denied for lack of merit.28
Hence, this petition.
Issues Before The Court
The present controversy revolves around the issue of whether the CA correctly: (a)
dismissed Sy’s motion for reconsideration for being filed out of time; (b) upheld the
amount of just compensation as determined by the RTC as well as its grant of six
percent (6%) legal interest; and (c) awarded exemplary damages and attorney’s
fees.
The Court’s Ruling
The petition is partly meritorious.
A. Failure to seasonably move for
reconsideration; excusable
negligence; relaxation of procedural
rules
At the outset, the Court observes that Sy’s motion for reconsideration was filed out
of time and thus, was properly dismissed by the CA. Records show that, as per the
Postmaster’s Certification, the CA’s January 20, 2012 Decision was received by Sy on
January 26, 2012 and as such, any motion for reconsideration therefrom should
have been filed not later than fifteen (15) days from receipt, 29 or on February 10,
2012.30 However, Sy filed his motion for reconsideration (subject motion) a day late,
or on February 13, 2012,31 which thus, renders the CA decision final and
executory.32
In this regard, it is apt to mention that Sy’s counsel, Atty. Tranquilino F. Meris (Atty.
Meris), claims that his secretary’s inadvertent placing of the date January 27, 2012,
instead of January 26, 2012, on the Notice of Decision33constitutes excusable
negligence which should therefore, justify a relaxation of the rules.
The assertion is untenable.
A claim of excusable negligence does not loosely warrant a relaxation of the rules.
Verily, the party invoking such should be able to show that the procedural oversight
or lapse is attended by a genuine miscalculation or unforeseen fortuitousness which
ordinary prudence could not have guarded against so as to justify the relief
sought.34 The standard of carerequired is that which an ordinarily prudent man
bestows upon his important business.35 In this accord, the duty rests on every
counsel to see to adopt and strictly maintain a system that will efficiently take into
account all court notices sent to him.36
Applying these principles, the Court cannot excuse Atty. Meris’ misstep based on his
proffered reasons. Evidently, the erroneous stamping of the Notice of Decision
could have been averted if only he had instituted a credible filing system in his
office to account for oversights such as that committed by his secretary. Indeed,
ordinary prudence could have prevented such mistake.
Be that as it may, procedural rules may, nonetheless, be relaxed for the most
persuasive of reasons in order to relieve a litigant of an injustice not commensurate
with the degree of his thoughtlessness in not complying with the procedure
prescribed.37 Corollarily, the rule, which states that the mistakes of counsel bind the
client, may not be strictly followed where observance of it would result in the
outright deprivation of the client’s liberty or property, or where the interest of
justice so requires.38
As applied in this case, the Court finds that the procedural consequence of the
above-discussed one-day delay in the filing of the subject motion – which, as a
matter of course, should render the CA’s January 20, 2012 Decision already final
and executory and hence, bar the instant petition – is incommensurate to the
injustice which Sy may suffer. This is in line with the Court’s observation that the
amount of just compensation, the rate of legal interest, as well as the time of its
accrual, were incorrectly adjudged by both the RTC and the CA, contrary to existing
jurisprudence. In this respect, the Court deems it proper to relax the rules of
procedure and thus, proceed to resolve these substantive issues.
B. Rate of legal interest and time of accrual
Based on a judicious review of the records and application of jurisprudential rulings,
the Court holds that the correct rate of legal interest to be applied is twelve percent
(12%) and not six percent (6%) per annum, owing to the nature of the City’s
obligation as an effective forbearance.
In the case of Republic v. CA,39 the Court ruled that the debt incurred by the
government on account of the taking of the property subject of an expropriation
constitutes an effective forbearance which therefore, warrants the application of
the 12% legal interest rate, viz:
The constitutional limitation of "just compensation" is considered to be the sum
equivalent to the market value of the property, broadly described to be 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.
Thus, 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 to be computed from the time the property is taken to the
time when compensation is actually paid or deposited with the court. In fine,
between the taking of the property and the actual payment, legal interests accrue
in order to place the owner in a position as good as (but not better than) the
position he was in before the taking occurred.
The Bulacan trial court, in its 1979 decision, was correct in imposing interests 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. x x x (Emphasis and underscoring supplied)
In similar regard, the Court, in Land Bank of the Philippines v. Rivera,40 pronounced
that:
In many cases decided by this Court,41 it has been repeated time and again that the
award of 12% 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. This is to ensure prompt payment of the value of the land and limit the
opportunity loss of the owner that can drag from days to decades. (Emphasis and
underscoring supplied)
As to the reckoning point on which the legal interest should accrue, the same
should be computed from the time of the taking of the subject property in 1986 and
not from the filing of the complaint for expropriation on November 7, 1996.
Records show that the City itself admitted in its Appellee’s Brief filed before the CA
that as early as 1986, "a burden was already imposed upon the owner of the subject
property x x x, considering that the expropriated property was already being used
as Barangay day care and office."42 Thus, the property was actually taken during
that time and from thereon, legal interest should have already accrued. In this light,
the Court has held that:43
x x x [T]he final compensation must include interests on its just value to be
computed from the time the property is taken to the time when compensation is
actually paid or deposited with the court. x x x (Emphasis supplied)
This is based on the principle that interest "runs as a matter of law and follows from
the right of the landowner to be placed in as good position as money can
accomplish, as of the date of the taking."44
Notably, the lack of proper authorization, i.e., resolution to effect
expropriation,45 did not affect the character of the City’s taking of the subject
property in 1986 as the CA, in its January 20, 2012 Decision, suggests. Case law
dictates that there is "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.46 Therefore, notwithstanding the lack of proper authorization, the legal
character of the City’s action as one of "taking" did not change. In this relation, the
CA noted that the City enacted Ordinance No. Sp-181, s-94, only on April 12, 1994
and filed its expropriation complaint on November 7, 1996. However, as it
previously admitted, it already commenced with the taking of the subject property
as early as 1986. Accordingly, interest must run from such time.
This irregularity does not, however, proceed without any consequence.1âwphi1 As
correctly observed by the CA, citing as basis the MIAA case, exemplary damages and
attorney’s fees should be awarded to the landowner if the government takes
possession of the property for a prolonged period of time without properly
initiating expropriation proceedings. The MIAA ruling was applied in the more
recent case of City of Iloilo v. Judge Lolita Contreras-Besana ,47 wherein the Court
said:
We stress, however, that the City of Iloilo should be held liable for damages for
taking private respondent’s property without payment of just compensation. In
Manila International Airport Authority v. Rodriguez, the Court held that a
government agency’s prolonged occupation of private property without the benefit
of expropriation proceedings undoubtedly entitled the landowner to damages:
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 point up to full payment by the
MIAA. This is based on the principle that interest "runs as a matter of law and
follows from the right of the landowner to be placed in as good position as money
can accomplish, as of the date of the taking x x x.
xxxx
For more than twenty (20) years, the MIAA occupied the subject lot without the
benefit of expropriation proceedings and without the MIAA exerting efforts to
ascertain ownership of the lot and negotiating with any of the owners of the
property. To our mind, these are wanton and irresponsible acts which should be
suppressed and corrected. Hence, the award of exemplary damages and attorneys
fees is in order. x x x. (Emphasis and underscoring supplied; citations omitted)
All told, the Court finds the grant of exemplary damages in the amount of
₱200,000.00 as well as attorney’s fees equivalent to 1% of the total amount due
amply justified, square as it is with existing jurisprudence.
C. Amount of just compensation
Finally, the Court cannot sustain the amount of ₱5,500.00/sq. m. as just
compensation which was set by the RTC and upheld by the CA. The said valuation
was actually arrived at after considering: (a) the September 4, 1996
recommendation of the City Appraisal Committee; (b) several sworn statements
made by Sy himself; and (c) Sy’s own tax declaration for 1996.48
It is well-settled that the amount of just compensation is to be ascertained as of the
time of the taking.49 However, the above-stated documents do not reflect the value
of the subject property at the time of its taking in 1986 but rather, its valuation in
1996. Consequently, the case must be remanded to the RTC in order to properly
determine the amount of just compensation during such time the subject property
was actually taken.
WHEREFORE, the petition is PARTLY GRANTED. The January 20, 2012 Decision and
July 16, 2012 Resolution of the Court of Appeals in CA-G.R. CV No. 91964 are hereby
SET ASIDE. Accordingly, the case is REMANDED to the trial court for the proper
determination of the amount of just compensation in accordance with this Decision.
To forestall any further delay in the resolution of this case, the trial court is hereby
ordered to fix the just compensation for petitioner Henry L. Sy's property with
dispatch and report to the Court its compliance. Finally, respondent Local
Government of Quezon City is ordered to PAY exemplary damages in the amount of
₱200,000.00 and attorney's fees equivalent to one percent (1%) of the amount due,
after final determination of the amount of just compensation.
SO ORDERED.
REPUBLIC VS. LIM
Justice is the first virtue of social institutions.1 When the state wields its power of
eminent domain, there arises a correlative obligation on its part to pay the owner of
the expropriated property a just compensation. If it fails, there is a clear case of
injustice that must be redressed. In the present case, fifty-seven (57) years have
lapsed from the time the Decision in the subject expropriation proceedings became
final, but still the Republic of the Philippines, herein petitioner, has not
compensated the owner of the property. To tolerate such prolonged inaction on its
part is to encourage distrust and resentment among our people – the very vices
that corrode the ties of civility and tempt men to act in ways they would otherwise
shun.
A revisit of the pertinent facts in the instant case is imperative.
On September 5, 1938, the Republic of the Philippines (Republic) instituted a special
civil action for expropriation with the Court of First Instance (CFI) of Cebu, docketed
as Civil Case No. 781, involving Lots 932 and 939 of the Banilad Friar Land Estate,
Lahug, Cebu City, for the purpose of establishing a military reservation for the
Philippine Army. Lot 932 was registered in the name of Gervasia Denzon under
Transfer Certificate of Title (TCT) No. 14921 with an area of 25,137 square meters,
while Lot 939 was in the name of Eulalia Denzon and covered by TCT No. 12560
consisting of 13,164 square meters.
After depositing ₱9,500.00 with the Philippine National Bank, pursuant to the Order
of the CFI dated October 19, 1938, the Republic took possession of the lots.
Thereafter, or on May 14, 1940, the CFI rendered its Decision ordering the Republic
to pay the Denzons the sum of ₱4,062.10 as just compensation.
The Denzons interposed an appeal to the Court of Appeals but it was dismissed on
March 11, 1948. An entry of judgment was made on April 5, 1948.
In 1950, Jose Galeos, one of the heirs of the Denzons, filed with the National
Airports Corporation a claim for rentals for the two lots, but it "denied knowledge
of the matter." Another heir, Nestor Belocura, brought the claim to the Office of
then President Carlos Garcia who wrote the Civil Aeronautics Administration and
the Secretary of National Defense to expedite action on said claim. On September 6,
1961, Lt. Manuel Cabal rejected the claim but expressed willingness to pay the
appraised value of the lots within a reasonable time.
For failure of the Republic to pay for the lots, on September 20, 1961, the Denzons’
successors-in-interest, Francisca Galeos-Valdehueza and Josefina Galeos-
Panerio,2 filed with the same CFI an action for recovery of possession with damages
against the Republic and officers of the Armed Forces of the Philippines in
possession of the property. The case was docketed as Civil Case No. R-7208.
In the interim or on November 9, 1961, TCT Nos. 23934 and 23935 covering Lots
932 and 939 were issued in the names of Francisca Valdehueza and Josefina
Panerio, respectively. Annotated thereon was the phrase "subject to the priority of
the National Airports Corporation to acquire said parcels of land, Lots 932 and 939
upon previous payment of a reasonable market value."
On July 31, 1962, the CFI promulgated its Decision in favor of Valdehueza and
Panerio, holding that they are the owners and have retained their right as such over
Lots 932 and 939 because of the Republic’s failure to pay the amount of ₱4,062.10,
adjudged in the expropriation proceedings. However, in view of the annotation on
their land titles, they were ordered to execute a deed of sale in favor of the
Republic. In view of "the differences in money value from 1940 up to the present,"
the court adjusted the market value at ₱16,248.40, to be paid with 6% interest per
annum from April 5, 1948, date of entry in the expropriation proceedings, until full
payment.
After their motion for reconsideration was denied, Valdehueza and Panerio
appealed from the CFI Decision, in view of the amount in controversy, directly to
this Court. The case was docketed as No. L-21032.3 On May 19, 1966, this Court
rendered its Decision affirming the CFI Decision. It held that Valdehueza and
Panerio are still the registered owners of Lots 932 and 939, there having been no
payment of just compensation by the Republic. Apparently, this Court found
nothing in the records to show that the Republic paid the owners or their
successors-in-interest according to the CFI decision. While it deposited the amount
of ₱9,500,00, and said deposit was allegedly disbursed, however, the payees could
not be ascertained.
Notwithstanding the above finding, this Court still ruled that Valdehueza and
Panerio are not entitled to recover possession of the lots but may only demand the
payment of their fair market value, ratiocinating as follows:
"Appellants would contend that: (1) possession of Lots 932 and 939 should be
restored to them as owners of the same; (2) the Republic should be ordered to pay
rentals for the use of said lots, plus attorney’s fees; and (3) the court a quo in the
present suit had no power to fix the value of the lots and order the execution of the
deed of sale after payment.
It is true that plaintiffs are still the registered owners of the land, there not having
been a transfer of said lots in favor of the Government. The records do not show
that the Government paid the owners or their successors-in-interest according to
the 1940 CFI decision although, as stated, ₱9,500.00 was deposited by it, and said
deposit had been disbursed. With the records lost, however, it cannot be known
who received the money (Exh. 14 says: ‘It is further certified that the corresponding
Vouchers and pertinent Journal and Cash Book were destroyed during the last
World War, and therefore the names of the payees concerned cannot be
ascertained.’) And the Government now admits that there is no available record
showing that payment for the value of the lots in question has been
made (Stipulation of Facts, par. 9, Rec. on Appeal, p. 28).
The points in dispute are whether such payment can still be made and, if so, in
what amount. Said lots have been the subject of expropriation proceedings. By
final and executory judgment in said proceedings, they were condemned for
public use, as part of an airport, and ordered sold to the Government. In fact, the
abovementioned title certificates secured by plaintiffs over said lots contained
annotations of the right of the National Airports Corporation (now CAA) to pay for
and acquire them. It follows that both by virtue of the judgment, long final, in the
expropriation suit, as well as the annotations upon their title certificates,
plaintiffs are not entitled to recover possession of their expropriated lots – which
are still devoted to the public use for which they were expropriated – but only to
demand the fair market value of the same."
Meanwhile, in 1964, Valdehueza and Panerio mortgaged Lot 932 to Vicente
Lim, herein respondent,4 as security for their loans. For their failure to pay Lim
despite demand, he had the mortgage foreclosed in 1976. Thus, TCT No. 23934 was
cancelled, and in lieu thereof, TCT No. 63894 was issued in his name.
On August 20, 1992, respondent Lim filed a complaint for quieting of title with the
Regional Trial Court (RTC), Branch 10, Cebu City, against General Romeo Zulueta, as
Commander of the Armed Forces of the Philippines, Commodore Edgardo Galeos,
as Commander of Naval District V of the Philippine Navy, Antonio Cabaluna,
Doroteo Mantos and Florencio Belotindos, herein petitioners. Subsequently, he
amended the complaint to implead the Republic.
On May 4, 2001, the RTC rendered a decision in favor of respondent, thus:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff Vicente Lim and
against all defendants, public and private, declaring plaintiff Vicente Lim the
absolute and exclusive owner of Lot No. 932 with all the rights of an absolute
owner including the right to possession. The monetary claims in the complaint and
in the counter claims contained in the answer of defendants are ordered Dismissed.
Petitioners elevated the case to the Court of Appeals, docketed therein as CA-G.R.
CV No. 72915. In its Decision5dated September 18, 2003, the Appellate Court
sustained the RTC Decision, thus:
"Obviously, defendant-appellant Republic evaded its duty of paying what was due
to the landowners. The expropriation proceedings had already become final in the
late 1940’s and yet, up to now, or more than fifty (50) years after, the Republic
had not yet paid the compensation fixed by the court while continuously reaping
benefits from the expropriated property to the prejudice of the landowner. x x x.
This is contrary to the rules of fair play because the concept of just compensation
embraces not only the correct determination of the amount to be paid to the
owners of the land, but also the payment for the land within a reasonable time
from its taking. Without prompt payment, compensation cannot be considered
"just" for the property owner is made to suffer the consequence of being
immediately deprived of his land while being made to wait for a decade or more,
in this case more than 50 years, before actually receiving the amount necessary to
cope with the loss. To allow the taking of the landowners’ properties, and in the
meantime leave them empty-handed by withholding payment of compensation
while the government speculates on whether or not it will pursue expropriation,
or worse, for government to subsequently decide to abandon the property and
return it to the landowners, is undoubtedly an oppressive exercise of eminent
domain that must never be sanctioned. (Land Bank of the Philippines vs. Court of
Appeals, 258 SCRA 404).
xxxxxx
An action to quiet title is a common law remedy for the removal of any cloud or
doubt or uncertainty on the title to real property. It is essential for the plaintiff or
complainant to have a legal or equitable title or interest in the real property, which
is the subject matter of the action. Also the deed, claim, encumbrance or
proceeding that is being alleged as cloud on plaintiff’s title must be shown to be in
fact invalid or inoperative despite its prima facie appearance of validity or legal
efficacy (Robles vs. Court of Appeals, 328 SCRA 97). In view of the foregoing
discussion, clearly, the claim of defendant-appellant Republic constitutes a cloud,
doubt or uncertainty on the title of plaintiff-appellee Vicente Lim that can be
removed by an action to quiet title.
WHEREFORE, in view of the foregoing, and finding no reversible error in the
appealed May 4, 2001 Decision of Branch 9, Regional Trial Court of Cebu City, in
Civil Case No. CEB-12701, the said decision is UPHELD AND AFFIRMED. Accordingly,
the appeal is DISMISSED for lack of merit."
Undaunted, petitioners, through the Office of the Solicitor General, filed with this
Court a petition for review on certiorari alleging that the Republic has remained the
owner of Lot 932 as held by this Court in Valdehueza vs. Republic.6
In our Resolution dated March 1, 2004, we denied the petition outright on the
ground that the Court of Appeals did not commit a reversible error. Petitioners filed
an urgent motion for reconsideration but we denied the same with finality in our
Resolution of May 17, 2004.
On May 18, 2004, respondent filed an ex-parte motion for the issuance of an entry
of judgment. We only noted the motion in our Resolution of July 12, 2004.
On July 7, 2004, petitioners filed an urgent plea/motion for clarification, which is
actually a second motion for reconsideration. Thus, in our Resolution of September
6, 2004, we simply noted without action the motion considering that the instant
petition was already denied with finality in our Resolution of May 17, 2004.
On October 29, 2004, petitioners filed a very urgent motion for leave to file a
motion for reconsideration of our Resolution dated September 6, 2004 (with prayer
to refer the case to the En Banc). They maintain that the Republic’s right of
ownership has been settled in Valdehueza.
The basic issue for our resolution is whether the Republic has retained ownership of
Lot 932 despite its failure to pay respondent’s predecessors-in-interest the just
compensation therefor pursuant to the judgment of the CFI rendered as early as
May 14, 1940.
Initially, we must rule on the procedural obstacle.
While we commend the Republic for the zeal with which it pursues the present
case, we reiterate that its urgent motion for clarification filed on July 7, 2004 is
actually a second motion for reconsideration. This motion is prohibited under
Section 2, Rule 52, of the 1997 Rules of Civil Procedure, as amended, which
provides:
"Sec. 2. Second motion for reconsideration. – No second motion for reconsideration
of a judgment or final resolution by the same party shall be entertained."
Consequently, as mentioned earlier, we simply noted without action the motion
since petitioners’ petition was already denied with finality.
Considering the Republic’s urgent and serious insistence that it is still the owner of
Lot 932 and in the interest of justice, we take another hard look at the controversial
issue in order to determine the veracity of petitioner’s stance.
One of the basic principles enshrined in our Constitution is that no person shall be
deprived of his private property without due process of law; and in expropriation
cases, an essential element of due process is that there must be just compensation
whenever private property is taken for public use.7 Accordingly, Section 9, Article III,
of our Constitution mandates: "Private property shall not be taken for public use
without just compensation."
The Republic disregarded the foregoing provision when it failed and refused to pay
respondent’s predecessors-in-interest the just compensation for Lots 932 and 939.
The length of time and the manner with which it evaded payment demonstrate its
arbitrary high-handedness and confiscatory attitude. The final judgment in the
expropriation proceedings (Civil Case No. 781) was entered on April 5, 1948. More
than half of a century has passed, yet, to this day, the landowner, now respondent,
has remained empty-handed. Undoubtedly, over 50 years of delayed payment
cannot, in any way, be viewed as fair. This is more so when such delay is
accompanied by bureaucratic hassles. Apparent from Valdehueza is the fact that
respondent’s predecessors-in-interest were given a "run around" by the Republic’s
officials and agents. In 1950, despite the benefits it derived from the use of the two
lots, the National Airports Corporation denied knowledge of the claim of
respondent’s predecessors-in-interest. Even President Garcia, who sent a letter to
the Civil Aeronautics Administration and the Secretary of National Defense to
expedite the payment, failed in granting relief to them. And, on September 6, 1961,
while the Chief of Staff of the Armed Forces expressed willingness to pay the
appraised value of the lots, nothing happened.lawphil.net
The Court of Appeals is correct in saying that Republic’s delay is contrary to the
rules of fair play, as "just compensation embraces not only the correct
determination of the amount to be paid to the owners of the land, but also the
payment for the land within a reasonable time from its taking. Without prompt
payment, compensation cannot be considered ‘just.’" In jurisdictions similar to
ours, where an entry to the expropriated property precedes the payment of
compensation, it has been held that if the compensation is not paid in a reasonable
time, the party may be treated as a trespasser ab initio.8
Corollarily, in Provincial Government of Sorsogon vs. Vda. De Villaroya,9 similar to
the present case, this Court expressed its disgust over the government’s vexatious
delay in the payment of just compensation, thus:
"The petitioners have been waiting for more than thirty years to be paid for their
land which was taken for use as a public high school. As a matter of fair procedure,
it is the duty of the Government, whenever it takes property from private persons
against their will, to supply all required documentation and facilitate payment of
just compensation. The imposition of unreasonable requirements and vexatious
delays before effecting payment is not only galling and arbitrary but a rich source
of discontent with government. There should be some kind of swift and effective
recourse against unfeeling and uncaring acts of middle or lower level
bureaucrats."
We feel the same way in the instant case.
More than anything else, however, it is the obstinacy of the Republic that prompted
us to dismiss its petition outright. As early as May 19, 1966, in Valdehueza, this
Court mandated the Republic to pay respondent’s predecessors-in-interest the sum
of ₱16,248.40 as "reasonable market value of the two lots in question."
Unfortunately, it did not comply and allowed several decades to pass without
obeying this Court’s mandate. Such prolonged obstinacy bespeaks of lack of respect
to private rights and to the rule of law, which we cannot countenance. It is
tantamount to confiscation of private property. While it is true that all private
properties are subject to the need of government, and the government may take
them whenever the necessity or the exigency of the occasion demands, however,
the Constitution guarantees that when this governmental right of expropriation is
exercised, it shall be attended by compensation.10 From the taking of private
property by the government under the power of eminent domain, there arises an
implied promise to compensate the owner for his loss.11
Significantly, the above-mentioned provision of Section 9, Article III of the
Constitution is not a grant but a limitationof power. This limiting function is in
keeping with the philosophy of the Bill of Rights against the arbitrary exercise of
governmental powers to the detriment of the individual’s rights. Given this
function, the provision should therefore be strictly interpreted against the
expropriator, the government, and liberally in favor of the property owner.12
Ironically, in opposing respondent’s claim, the Republic is invoking this Court’s
Decision in Valdehueza, a Decision it utterly defied. How could the Republic acquire
ownership over Lot 932 when it has not paid its owner the just compensation,
required by law, for more than 50 years? The recognized rule is that title to the
property expropriated shall pass from the owner to the expropriator only upon full
payment of the just compensation. Jurisprudence on this settled principle is
consistent both here and in other democratic jurisdictions. In Association of Small
Landowners in the Philippines, Inc. et al., vs. Secretary of Agrarian Reform,13 thus:
"Title to property which is the subject of condemnation proceedings does not vest
the condemnor until the judgment fixing just compensation is entered and
paid, but the condemnor’s title relates back to the date on which the petition under
the Eminent Domain Act, or the commissioner’s report under the Local
Improvement Act, is filed.
x x x Although the right to appropriate and use land taken for a canal is complete
at the time of entry, title to the property taken remains in the owner until
payment is actually made. (Emphasis supplied.)
In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that
title to property does not pass to the condemnor until just compensation had
actually been made. In fact, the decisions appear to be uniform to this effect. As
early as 1838, in Rubottom v. McLure, it was held that ‘actual payment to the
owner of the condemned property was a condition precedent to the investment
of the title to the property in the State’ albeit ‘not to the appropriation of it to
public use.’ In Rexford v. Knight, the Court of Appeals of New York said that the
construction upon the statutes was that the fee did not vest in the State until the
payment of the compensation although the authority to enter upon and
appropriate the land was complete prior to the payment. Kennedy further said
that ‘both on principle and authority the rule is . . . that the right to enter on and
use the property is complete, as soon as the property is actually appropriated
under the authority of law for a public use, but that the title does not pass from
the owner without his consent, until just compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes,
that:
‘If the laws which we have exhibited or cited in the preceding discussion are
attentively examined it will be apparent that the method of expropriation
adopted in this jurisdiction is such as to afford absolute reassurance that no piece
of land can be finally and irrevocably taken from an unwilling owner until
compensation is paid...’"(Emphasis supplied.)
Clearly, without full payment of just compensation, there can be no transfer of title
from the landowner to the expropriator. Otherwise stated, the Republic’s
acquisition of ownership is conditioned upon the full payment of just compensation
within a reasonable time.14
Significantly, in Municipality of Biñan v. Garcia15 this Court ruled that the
expropriation of lands consists of two stages, to wit:
"x x x The first is concerned with the determination of the authority of the plaintiff
to exercise the power of eminent domain and the propriety of its exercise in the
context of the facts involved in the suit. It ends with an order, if not of dismissal of
the action, "of condemnation declaring that the plaintiff has a lawful right to take
the property sought to be condemned, for the public use or purpose described in
the complaint, upon the payment of just compensation to be determined as of the
date of the filing of the complaint" x x x.
The second phase of the eminent domain action is concerned with the
determination by the court of "the just compensation for the property sought to be
taken." This is done by the court with the assistance of not more than three (3)
commissioners. x x x.
It is only upon the completion of these two stages that expropriation is said to have
been completed. In Republic v. Salem Investment Corporation,16 we ruled that, "the
process is not completed until payment of just compensation." Thus, here, the
failure of the Republic to pay respondent and his predecessors-in-interest for a
period of 57 years rendered the expropriation process incomplete.
The Republic now argues that under Valdehueza, respondent is not entitled to
recover possession of Lot 932 but only to demand payment of its fair market value.
Of course, we are aware of the doctrine that "non-payment of just compensation
(in an expropriation proceedings) does not entitle the private landowners to
recover possession of the expropriated lots." This is our ruling in the recent cases
of Republic of the Philippines vs. Court of Appeals, et al.,17and Reyes vs. National
Housing Authority.18 However, the facts of the present case do not justify its
application. It bears stressing that the Republic was ordered to pay just
compensation twice, the first was in the expropriation proceedings and the second,
in Valdehueza. Fifty-seven (57) years have passed since then. We cannot but
construe the Republic’s failure to pay just compensation as a deliberate refusal on
its part. Under such circumstance, recovery of possession is in order. In several
jurisdictions, the courts held that recovery of possession may be had when property
has been wrongfully taken or is wrongfully retained by one claiming to act under
the power of eminent domain 19 or where a rightful entry is made and the party
condemning refuses to pay the compensation which has been assessed or agreed
upon;20 or fails or refuses to have the compensation assessed and paid. 21
The Republic also contends that where there have been constructions being used
by the military, as in this case, public interest demands that the present suit should
not be sustained.
It must be emphasized that an individual cannot be deprived of his property for the
public convenience.22 In Association of Small Landowners in the Philippines, Inc. vs.
Secretary of Agrarian Reform,23 we ruled:
"One of the basic principles of the democratic system is that where the rights of the
individual are concerned, the end does not justify the means. It is not enough that
there be a valid objective; it is also necessary that the means employed to pursue it
be in keeping with the Constitution. Mere expediency will not excuse constitutional
shortcuts. There is no question that not even the strongest moral conviction or the
most urgent public need, subject only to a few notable exceptions, will excuse the
bypassing of an individual's rights. It is no exaggeration to say that a person
invoking a right guaranteed under Article III of the Constitution is a majority of
one even as against the rest of the nation who would deny him that right.
The right covers the person’s life, his liberty and his property under Section 1 of
Article III of the Constitution. With regard to his property, the owner enjoys the
added protection of Section 9, which reaffirms the familiar rule that private
property shall not be taken for public use without just compensation."
The Republic’s assertion that the defense of the State will be in grave danger if we
shall order the reversion of Lot 932 to respondent is an overstatement. First, Lot
932 had ceased to operate as an airport. What remains in the site is just the
National Historical Institute’s marking stating that Lot 932 is the "former location of
Lahug Airport." And second, there are only thirteen (13) structures located on Lot
932, eight (8) of which are residence apartments of military personnel. Only two (2)
buildings are actually used as training centers. Thus, practically speaking, the
reversion of Lot 932 to respondent will only affect a handful of military personnel. It
will not result to "irreparable damage" or "damage beyond pecuniary estimation,"
as what the Republic vehemently claims.
We thus rule that the special circumstances prevailing in this case entitle
respondent to recover possession of the expropriated lot from the Republic. Unless
this form of swift and effective relief is granted to him, the grave injustice
committed against his predecessors-in-interest, though no fault or negligence on
their part, will be perpetuated. Let this case, therefore, serve as a wake-up call to
the Republic that in the exercise of its power of eminent domain, necessarily in
derogation of private rights, it must comply with the Constitutional limitations. This
Court, as the guardian of the people’s right, will not stand still in the face of the
Republic’s oppressive and confiscatory taking of private property, as in this case.
At this point, it may be argued that respondent Vicente Lim acted in bad faith in
entering into a contract of mortgage with Valdehueza and Panerio despite the clear
annotation in TCT No. 23934 that Lot 932 is "subject to the priority of the National
Airports Corporation [to acquire said parcels of land] x x x upon previous payment
of a reasonable market value."
The issue of whether or not respondent acted in bad faith is immaterial considering
that the Republic did not complete the expropriation process. In short, it failed to
perfect its title over Lot 932 by its failure to pay just compensation. The issue of bad
faith would have assumed relevance if the Republic actually acquired title over Lot
932. In such a case, even if respondent’s title was registered first, it would be the
Republic’s title or right of ownership that shall be upheld. But now, assuming that
respondent was in bad faith, can such fact vest upon the Republic a better title
over Lot 932? We believe not. This is because in the first place, the Republic has no
title to speak of.
At any rate, assuming that respondent had indeed knowledge of the annotation,
still nothing would have prevented him from entering into a mortgage contract
involving Lot 932 while the expropriation proceeding was pending. Any person who
deals with a property subject of an expropriation does so at his own risk, taking
into account the ultimate possibility of losing the property in favor of the
government. Here, the annotation merely served as a caveatthat the Republic had
a preferential right to acquire Lot 932 upon its payment of a "reasonable market
value." It did not proscribe Valdehueza and Panerio from exercising their rights of
ownership including their right to mortgage or even to dispose of their property.
In Republic vs. Salem Investment Corporation,24 we recognized the owner’s absolute
right over his property pending completion of the expropriation proceeding, thus:
"It is only upon the completion of these two stages that expropriation is said to
have been completed. Moreover, it is only upon payment of just compensation that
title over the property passes to the government. Therefore, until the action for
expropriation has been completed and terminated, ownership over the property
being expropriated remains with the registered owner. Consequently, the latter
can exercise all rights pertaining to an owner, including the right to dispose of his
property subject to the power of the State ultimately to acquire it through
expropriation.
It bears emphasis that when Valdehueza and Panerio mortgaged Lot 932 to
respondent in 1964, they were still the owners thereof and their title had not yet
passed to the petitioner Republic. In fact, it never did. Such title or ownership was
rendered conclusive when we categorically ruled in Valdehueza that: "It is true that
plaintiffs are still the registered owners of the land, there not having been a
transfer of said lots in favor of the Government."
The Republic’s motion for reconsideration of our Resolution dated March 1, 2004 is
DENIED with FINALITY. No further pleadings will be allowed.
Let an entry of judgment be made in this case.
SO ORDERED.

For respondent’s part, it is reasonable to conclude that he entered into the contract MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY VS. LOZADA SR
of mortgage with Valdehueza and Panerio fully aware of the extent of his right as a
mortgagee. A mortgage is merely an accessory contract intended to secure the
performance of the principal obligation. One of its characteristics is that it
is inseparablefrom the property. It adheres to the property regardless of who its
This is a petition for review on certiorari under Rule 45 of the Rules of Court,
owner may subsequently be.25 Respondent must have known that even if Lot 932 is
seeking to reverse, annul, and set aside the Decision 1 dated February 28, 2006 and
ultimately expropriated by the Republic, still, his right as a mortgagee is protected.
the Resolution2 dated February 7, 2007 of the Court of Appeals (CA) (Cebu City),
In this regard, Article 2127 of the Civil Code provides:
Twentieth Division, in CA-G.R. CV No. 65796.

"Art. 2127. The mortgage extends to the natural accessions, to the improvements,
The antecedent facts and proceedings are as follows:
growing fruits, and the rents or income not yet received when the obligation
becomes due, and to the amount of the indemnity granted or owing to the
Subject of this case is Lot No. 88-SWO-25042 (Lot No. 88), with an area of 1,017
proprietor from the insurers of the property mortgaged, or in virtue of
square meters, more or less, located in Lahug, Cebu City. Its original owner was
expropriation for public use, with the declarations, amplifications, and limitations
Anastacio Deiparine when the same was subject to expropriation proceedings,
established by law, whether the estate remains in the possession of the mortgagor
initiated by the Republic of the Philippines (Republic), represented by the then Civil
or it passes in the hands of a third person.
Aeronautics Administration (CAA), for the expansion and improvement of the Lahug
Airport. The case was filed with the then Court of First Instance of Cebu, Third
In summation, while the prevailing doctrine is that "the non-payment of just
Branch, and docketed as Civil Case No. R-1881.
compensation does not entitle the private landowner to recover possession of the
expropriated lots,26 however, in cases where the government failed to pay just
As early as 1947, the lots were already occupied by the U.S. Army. They were
compensation within five (5)27 years from the finality of the judgment in the
turned over to the Surplus Property Commission, the Bureau of Aeronautics, the
expropriation proceedings, the owners concerned shall have the right to recover
National Airport Corporation and then to the CAA.
possession of their property. This is in consonance with the principle that "the
government cannot keep the property and dishonor the judgment." 28 To be sure,
the five-year period limitation will encourage the government to pay just During the pendency of the expropriation proceedings, respondent Bernardo L.
compensation punctually. This is in keeping with justice and equity. After all, it is Lozada, Sr. acquired Lot No. 88 from Deiparine. Consequently, Transfer Certificate
the duty of the government, whenever it takes property from private persons of Title (TCT) No. 9045 was issued in Lozada’s name.
against their will, to facilitate the payment of just compensation. In Cosculluela v.
Court of Appeals,29 we defined just compensation as not only the correct On December 29, 1961, the trial court rendered judgment in favor of the Republic
determination of the amount to be paid to the property owner but also the and ordered the latter to pay Lozada the fair market value of Lot No. 88, adjudged
payment of the property within a reasonable time. Without prompt payment, at ₱3.00 per square meter, with consequential damages by way of legal interest
compensation cannot be considered "just." computed from November 16, 1947—the time when the lot was first occupied by
the airport. Lozada received the amount of ₱3,018.00 by way of payment.
WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 72915
is AFFIRMED in toto. The affected landowners appealed. Pending appeal, the Air Transportation Office
(ATO), formerly CAA, proposed a compromise settlement whereby the owners of
the lots affected by the expropriation proceedings would either not appeal or
withdraw their respective appeals in consideration of a commitment that the
expropriated lots would be resold at the price they were expropriated in the event
that the ATO would abandon the Lahug Airport, pursuant to an established policy
involving similar cases. Because of this promise, Lozada did not pursue his appeal.
Thereafter, Lot No. 88 was transferred and registered in the name of the Republic
under TCT No. 25057.
The projected improvement and expansion plan of the old Lahug Airport, however,
was not pursued.
(a) Spouses Bernardo and Rosario Lozada were the registered owners of
Lot No. 88 covered by TCT No. 9045;
(b) In the early 1960’s, the Republic sought to acquire by expropriation Lot
No. 88, among others, in connection with its program for the improvement
and expansion of the Lahug Airport;
(c) A decision was rendered by the Court of First Instance in favor of the
Government and against the land owners, among whom was Bernardo
Lozada, Sr. appealed therefrom;

Lozada, with the other landowners, contacted then CAA Director Vicente Rivera, Jr.,
requesting to repurchase the lots, as per previous agreement. The CAA replied that
there might still be a need for the Lahug Airport to be used as an emergency DC-3
airport. It reiterated, however, the assurance that "should this Office dispose and
resell the properties which may be found to be no longer necessary as an airport,
then the policy of this Office is to give priority to the former owners subject to the
approval of the President."
(d) During the pendency of the appeal, the parties entered into a
compromise settlement to the effect that the subject property would be
resold to the original owner at the same price when it was expropriated in
the event that the Government abandons the Lahug Airport;
(e) Title to Lot No. 88 was subsequently transferred to the Republic of the
Philippines (TCT No. 25057);

On November 29, 1989, then President Corazon C. Aquino issued a Memorandum (f) The projected expansion and improvement of the Lahug Airport did not
to the Department of Transportation, directing the transfer of general aviation materialize;
operations of the Lahug Airport to the Mactan International Airport before the end
of 1990 and, upon such transfer, the closure of the Lahug Airport.
(g) Plaintiffs sought to repurchase their property from then CAA Director
Vicente Rivera. The latter replied by giving as assurance that priority would
Sometime in 1990, the Congress of the Philippines passed Republic Act (R.A.) No. be given to the previous owners, subject to the approval of the President,
6958, entitled "An Act Creating the Mactan-Cebu International Airport Authority, should CAA decide to dispose of the properties;
Transferring Existing Assets of the Mactan International Airport and the Lahug
Airport to the Authority, Vesting the Authority with Power to Administer and
(h) On November 29, 1989, then President Corazon C. Aquino, through a
Operate the Mactan International Airport and the Lahug Airport, and For Other
Memorandum to the Department of Transportation and Communications
Purposes."
(DOTC), directed the transfer of general aviation operations at the Lahug
Airport to the Mactan-Cebu International Airport Authority;
From the date of the institution of the expropriation proceedings up to the present,
the public purpose of the said expropriation (expansion of the airport) was never
(i) Since the public purpose for the expropriation no longer exists, the
actually initiated, realized, or implemented. Instead, the old airport was converted
property must be returned to the plaintiffs.4
into a commercial complex. Lot No. 88 became the site of a jail known as Bagong
Buhay Rehabilitation Complex, while a portion thereof was occupied by
In their Answer, petitioners asked for the immediate dismissal of the complaint.
squatters.3 The old airport was converted into what is now known as the Ayala I.T.
They specifically denied that the Government had made assurances to reconvey Lot
Park, a commercial area.1avvphi1
No. 88 to respondents in the event that the property would no longer be needed
for airport operations. Petitioners instead asserted that the judgment of
Thus, on June 4, 1996, petitioners initiated a complaint for the recovery of
condemnation was unconditional, and respondents were, therefore, not entitled to
possession and reconveyance of ownership of Lot No. 88. The case was docketed as
recover the expropriated property notwithstanding non-use or abandonment
Civil Case No. CEB-18823 and was raffled to the Regional Trial Court (RTC), Branch
thereof.
57, Cebu City. The complaint substantially alleged as follows:
After pretrial, but before trial on the merits, the parties stipulated on the following
set of facts:
(1) The lot involved is Lot No. 88-SWO-25042 of the Banilad Estate,
situated in the City of Cebu, containing an area of One Thousand
Seventeen (1,017) square meters, more or less;
(2) The property was expropriated among several other properties in
Lahug in favor of the Republic of the Philippines by virtue of a Decision
dated December 29, 1961 of the CFI of Cebu in Civil Case No. R-1881;
(3) The public purpose for which the property was expropriated was for
the purpose of the Lahug Airport;
(4) After the expansion, the property was transferred in the name of
MCIAA; [and]
(5) On November 29, 1989, then President Corazon C. Aquino directed the
Department of Transportation and Communication to transfer general
aviation operations of the Lahug Airport to the Mactan-Cebu International
Airport Authority and to close the Lahug Airport after such transfer[.]5
During trial, respondents presented Bernardo Lozada, Sr. as their lone witness,
while petitioners presented their own witness, Mactan-Cebu International Airport
Authority legal assistant Michael Bacarisas.
On October 22, 1999, the RTC rendered its Decision, disposing as follows:
WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in
favor of the plaintiffs, Bernardo L. Lozada, Sr., and the heirs of Rosario Mercado,
namely, Vicente M. Lozada, Marcia L. Godinez, Virginia L. Flores, Bernardo M.
Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro and Rosario M. Lozada,
represented by their attorney-in-fact Marcia Lozada Godinez, and against
defendants Cebu-Mactan International Airport Authority (MCIAA) and Air
Transportation Office (ATO):
1. ordering MCIAA and ATO to restore to plaintiffs the possession and
ownership of their land, Lot No. 88 Psd-821 (SWO-23803), upon payment
of the expropriation price to plaintiffs; and
2. ordering the Register of Deeds to effect the transfer of the Certificate of
Title from defendant[s] to plaintiffs on Lot No. [88], cancelling TCT No.
20357 in the name of defendant MCIAA and to issue a new title on the
same lot in the name of Bernardo L. Lozada, Sr. and the heirs of Rosario
Mercado, namely: Vicente M. Lozada, Mario M. Lozada, Marcia L. Godinez,
Virginia L. Flores, Bernardo M. Lozada, Jr., Dolores L. Gacasan, Socorro L.
Cafaro and Rosario M. Lozada.
No pronouncement as to costs.
SO ORDERED.6
Aggrieved, petitioners interposed an appeal to the CA. After the filing of the
necessary appellate briefs, the CA rendered its assailed Decision dated February 28,
2006, denying petitioners’ appeal and affirming in toto the Decision of the RTC,
Branch 57, Cebu City. Petitioners’ motion for reconsideration was, likewise, denied
in the questioned CA Resolution dated February 7, 2007.
Hence, this petition arguing that: (1) the respondents utterly failed to prove that
there was a repurchase agreement or compromise settlement between them and
the Government; (2) the judgment in Civil Case No. R-1881 was absolute and
unconditional, giving title in fee simple to the Republic; and (3) the respondents’
claim of verbal assurances from government officials violates the Statute of Frauds.
The petition should be denied.
Petitioners anchor their claim to the controverted property on the supposition that
the Decision in the pertinent expropriation proceedings did not provide for the
condition that should the intended use of Lot No. 88 for the expansion of the Lahug
Airport be aborted or abandoned, the property would revert to respondents, being
its former owners. Petitioners cite, in support of this position, Fery v. Municipality
of Cabanatuan,7 which declared that the Government acquires only such rights in
expropriated parcels of land as may be allowed by the character of its title over the
properties—
If x x x land is expropriated for a particular purpose, with the condition that when
that purpose is ended or abandoned the property shall return to its former owner,
then, of course, when the purpose is terminated or abandoned the former owner
reacquires the property so expropriated. If x x x land is expropriated for a public
street and the expropriation is granted upon condition that the city can only use it
for a public street, then, of course, when the city abandons its use as a public street,
it returns to the former owner, unless there is some statutory provision to the
contrary. x x x. If, upon the contrary, however, the decree of expropriation gives to
the entity a fee simple title, then, of course, the land becomes the absolute
property of the expropriator, whether it be the State, a province, or municipality,
and in that case the non-user does not have the effect of defeating the title
acquired by the expropriation proceedings. x x x.
When land has been acquired for public use in fee simple, unconditionally, either by
the exercise of eminent domain or by purchase, the former owner retains no right
in the land, and the public use may be abandoned, or the land may be devoted to a
different use, without any impairment of the estate or title acquired, or any
reversion to the former owner. x x x.8
Contrary to the stance of petitioners, this Court had ruled otherwise in Heirs of
Timoteo Moreno and Maria Rotea v. Mactan-Cebu International Airport
Authority,9 thus—
Moreover, respondent MCIAA has brought to our attention a significant and telling
portion in the Decision in Civil Case No. R-1881 validating our discernment that the
expropriation by the predecessors of respondent was ordered under the running
impression that Lahug Airport would continue in operation—
As for the public purpose of the expropriation proceeding, it cannot now be
doubted. Although Mactan Airport is being constructed, it does not take away the
actual usefulness and importance of the Lahug Airport: it is handling the air traffic
both civilian and military. From it aircrafts fly to Mindanao and Visayas and pass
thru it on their flights to the North and Manila. Then, no evidence was adduced to
show how soon is the Mactan Airport to be placed in operation and whether the
Lahug Airport will be closed immediately thereafter. It is up to the other
departments of the Government to determine said matters. The Court cannot
substitute its judgment for those of the said departments or agencies. In the
absence of such showing, the Court will presume that the Lahug Airport will
continue to be in operation (emphasis supplied).
While in the trial in Civil Case No. R-1881 [we] could have simply acknowledged the
presence of public purpose for the exercise of eminent domain regardless of the
survival of Lahug Airport, the trial court in its Decision chose not to do so but
instead prefixed its finding of public purpose upon its understanding that "Lahug
Airport will continue to be in operation." Verily, these meaningful statements in the
body of the Decision warrant the conclusion that the expropriated properties would
remain to be so until it was confirmed that Lahug Airport was no longer "in
operation." This inference further implies two (2) things: (a) after the Lahug Airport
ceased its undertaking as such and the expropriated lots were not being used for
any airport expansion project, the rights vis-à-vis the expropriated Lots Nos. 916
and 920 as between the State and their former owners, petitioners herein, must be
equitably adjusted; and (b) the foregoing unmistakable declarations in the body of
the Decision should merge with and become an intrinsic part of the fallo thereof
which under the premises is clearly inadequate since the dispositive portion is not
in accord with the findings as contained in the body thereof. 10
Indeed, the Decision in Civil Case No. R-1881 should be read in its entirety, wherein
it is apparent that the acquisition by the Republic of the expropriated lots was
subject to the condition that the Lahug Airport would continue its operation. The
condition not having materialized because the airport had been abandoned, the
former owner should then be allowed to reacquire the expropriated property.11
On this note, we take this opportunity to revisit our ruling in Fery, which involved an
expropriation suit commenced upon parcels of land to be used as a site for a public
market. Instead of putting up a public market, respondent Cabanatuan constructed
residential houses for lease on the area. Claiming that the municipality lost its right
to the property taken since it did not pursue its public purpose, petitioner Juan
Fery, the former owner of the lots expropriated, sought to recover his properties.
However, as he had admitted that, in 1915, respondent Cabanatuan acquired a fee
simple title to the lands in question, judgment was rendered in favor of the
municipality, following American jurisprudence, particularly City of Fort Wayne v.
Lake Shore & M.S. RY. Co.,12 McConihay v. Theodore Wright,13 and Reichling v.
Covington Lumber Co.,14 all uniformly holding that the transfer to a third party of
the expropriated real property, which necessarily resulted in the abandonment of
the particular public purpose for which the property was taken, is not a ground for
the recovery of the same by its previous owner, the title of the expropriating agency
being one of fee simple.
Obviously, Fery was not decided pursuant to our now sacredly held constitutional
right that private property shall not be taken for public use without just
compensation.15 It is well settled that the taking of private property by the
Government’s power of eminent domain is subject to two mandatory
requirements: (1) that it is for a particular public purpose; and (2) that just
compensation be paid to the property owner. These requirements partake of the
nature of implied conditions that should be complied with to enable the condemnor
to keep the property expropriated.16
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.
In light of these premises, we now expressly hold that the taking of private
property, consequent to the Government’s 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.17
Even without the foregoing declaration, in the instant case, on the question of
whether respondents were able to establish the existence of an oral compromise
agreement that entitled them to repurchase Lot No. 88 should the operations of the
Lahug Airport be abandoned, we rule in the affirmative.
It bears stressing that both the RTC, Branch 57, Cebu and the CA have passed upon
this factual issue and have declared, in no uncertain terms, that a compromise
agreement was, in fact, entered into between the Government and respondents,
with the former undertaking to resell Lot No. 88 to the latter if the improvement
and expansion of the Lahug Airport would not be pursued. In affirming the factual
finding of the RTC to this effect, the CA declared—
Lozada’s testimony is cogent. An octogenarian widower-retiree and a resident of
Moon Park, California since 1974, he testified that government representatives
verbally promised him and his late wife while the expropriation proceedings were
on-going that the government shall return the property if the purpose for the
expropriation no longer exists. This promise was made at the premises of the
airport. As far as he could remember, there were no expropriation proceedings
against his property in 1952 because the first notice of expropriation he received
was in 1962. Based on the promise, he did not hire a lawyer. Lozada was firm that
he was promised that the lot would be reverted to him once the public use of the
lot ceases. He made it clear that the verbal promise was made in Lahug with other
lot owners before the 1961 decision was handed down, though he could not name
the government representatives who made the promise. It was just a verbal
promise; nevertheless, it is binding. The fact that he could not supply the necessary
details for the establishment of his assertions during cross-examination, but that
"When it will not be used as intended, it will be returned back, we just believed in
the government," does not dismantle the credibility and truthfulness of his
allegation. This Court notes that he was 89 years old when he testified in November
1997 for an incident which happened decades ago. Still, he is a competent witness
capable of perceiving and making his perception known. The minor lapses are
immaterial. The decision of the competency of a witness rests primarily with the
trial judge and must not be disturbed on appeal unless it is clear that it was
erroneous. The objection to his competency must be made before he has given any
testimony or as soon as the incompetency becomes apparent. Though Lozada is not
part of the compromise agreement,18 he nevertheless adduced sufficient evidence
to support his claim.19
As correctly found by the CA, unlike in Mactan Cebu International Airport Authority
v. Court of Appeals,20 cited by petitioners, where respondent therein offered
testimonies which were hearsay in nature, the testimony of Lozada was based on
personal knowledge as the assurance from the government was personally made to
him. His testimony on cross-examination destroyed neither his credibility as a
witness nor the truthfulness of his words.
Verily, factual findings of the trial court, especially when affirmed by the CA, are
binding and conclusive on this Court and may not be reviewed. A petition for
certiorari under Rule 45 of the Rules of Court contemplates only questions of law
and not of fact.21 Not one of the exceptions to this rule is present in this case to
warrant a reversal of such findings.
As regards the position of petitioners that respondents’ testimonial evidence
violates the Statute of Frauds, suffice it to state that the Statute of Frauds operates
only with respect to executory contracts, and does not apply to contracts which
have been completely or partially performed, the rationale thereof being as follows:
In executory contracts there is a wide field for fraud because unless they be in
writing there is no palpable evidence of the intention of the contracting parties. The
statute has precisely been enacted to prevent fraud. However, if a contract has
been totally or partially performed, the exclusion of parol evidence would promote
fraud or bad faith, for it would enable the defendant to keep the benefits already
delivered by him from the transaction in litigation, and, at the same time, evade the
obligations, responsibilities or liabilities assumed or contracted by him thereby.22
In this case, the Statute of Frauds, invoked by petitioners to bar the claim of
respondents for the reacquisition of Lot No. 88, cannot apply, the oral compromise
settlement having been partially performed. By reason of such assurance made in
their favor, respondents relied on the same by not pursuing their appeal before the
CA. Moreover, contrary to the claim of petitioners, the fact of Lozada’s eventual
conformity to the appraisal of Lot No. 88 and his seeking the correction of a clerical
error in the judgment as to the true area of Lot No. 88 do not conclusively establish
that respondents absolutely parted with their property. To our mind, these acts
were simply meant to cooperate with the government, particularly because of the
oral promise made to them.
The right of respondents to repurchase Lot No. 88 may be enforced based on a
constructive trust constituted on the property held by the government in favor of
the former. On this note, our ruling in Heirs of Timoteo Moreno is instructive, viz.:
Mactan-Cebu International Airport Authority is correct in stating that one would not
find an express statement in the Decision in Civil Case No. R-1881 to the effect that
"the [condemned] lot would return to [the landowner] or that [the landowner] had
a right to repurchase the same if the purpose for which it was expropriated is ended
or abandoned or if the property was to be used other than as the Lahug Airport."
This omission notwithstanding, and while the inclusion of this pronouncement in
the judgment of condemnation would have been ideal, such precision is not
absolutely necessary nor is it fatal to the cause of petitioners herein. No doubt, the
return or repurchase of the condemned properties of petitioners could be readily
justified as the manifest legal effect or consequence of the trial court’s underlying
presumption that "Lahug Airport will continue to be in operation" when it granted
the complaint for eminent domain and the airport discontinued its activities.
The predicament of petitioners involves a constructive trust, one that is akin to the
implied trust referred to in Art. 1454 of the Civil Code, "If an absolute conveyance of
property is made in order to secure the performance of an obligation of the grantor
toward the grantee, a trust by virtue of law is established. If the fulfillment of the
obligation is offered by the grantor when it becomes due, he may demand the
reconveyance of the property to him." In the case at bar, petitioners conveyed Lots
No. 916 and 920 to the government with the latter obliging itself to use the realties
for the expansion of Lahug Airport; failing to keep its bargain, the government can
be compelled by petitioners to reconvey the parcels of land to them, otherwise,
petitioners would be denied the use of their properties upon a state of affairs that
was not conceived nor contemplated when the expropriation was authorized.
Although the symmetry between the instant case and the situation contemplated
by Art. 1454 is not perfect, the provision is undoubtedly applicable. For, as
explained by an expert on the law of trusts: "The only problem of great importance
in the field of constructive trust is to decide whether in the numerous and varying
fact situations presented to the courts there is a wrongful holding of property and
hence a threatened unjust enrichment of the defendant." Constructive trusts are
fictions of equity which are bound by no unyielding formula when they are used by
courts as devices to remedy any situation in which the holder of legal title may not
in good conscience retain the beneficial interest.
In constructive trusts, the arrangement is temporary and passive in which the
trustee’s sole duty is to transfer the title and possession over the property to the
plaintiff-beneficiary. Of course, the "wronged party seeking the aid of a court of
equity in establishing a constructive trust must himself do equity." Accordingly, the
court will exercise its discretion in deciding what acts are required of the plaintiff-
beneficiary as conditions precedent to obtaining such decree and has the obligation
to reimburse the trustee the consideration received from the latter just as the
plaintiff-beneficiary would if he proceeded on the theory of rescission. In the good
judgment of the court, the trustee may also be paid the necessary expenses he may
have incurred in sustaining the property, his fixed costs for improvements thereon,
and the monetary value of his services in managing the property to the extent that
plaintiff-beneficiary will secure a benefit from his acts.
The rights and obligations between the constructive trustee and the beneficiary, in
this case, respondent MCIAA and petitioners over Lots Nos. 916 and 920, are
echoed in Art. 1190 of the Civil Code, "When the conditions have for their purpose
the extinguishment of an obligation to give, the parties, upon the fulfillment of said
conditions, shall return to each other what they have received x x x In case of the
loss, deterioration or improvement of the thing, the provisions which, with respect
to the debtor, are laid down in the preceding article shall be applied to the party
who is bound to return x x x."23
On the matter of the repurchase price, while petitioners are obliged to reconvey Lot
No. 88 to respondents, the latter must return to the former what they received as
just compensation for the expropriation of the property, plus legal interest to be
computed from default, which in this case runs from the time petitioners comply
with their obligation to respondents.
Respondents must likewise pay petitioners the necessary expenses they may have
incurred in maintaining Lot No. 88, as well as the monetary value of their services in
managing it to the extent that respondents were benefited thereby.
Following Article 118724 of the Civil Code, petitioners may keep whatever income or
fruits they may have obtained from Lot No. 88, and respondents need not account
for the interests that the amounts they received as just compensation may have
earned in the meantime.
In accordance with Article 119025 of the Civil Code vis-à-vis Article 1189, which
provides that "(i)f a thing is improved by its nature, or by time, the improvement
shall inure to the benefit of the creditor x x x," respondents, as creditors, do not
have to pay, as part of the process of restitution, the appreciation in value of Lot
No. 88, which is a natural consequence of nature and time. 26
WHEREFORE, the petition is DENIED. The February 28, 2006 Decision of the Court of
Appeals, affirming the October 22, 1999 Decision of the Regional Trial Court, Branch
87, Cebu City, and its February 7, 2007 Resolution are AFFIRMED with
MODIFICATION as follows:
1. Respondents are ORDERED to return to petitioners the just
compensation they received for the expropriation of Lot No. 88, plus legal
interest, in the case of default, to be computed from the time petitioners
comply with their obligation to reconvey Lot No. 88 to them;
2. Respondents are ORDERED to pay petitioners the necessary expenses
the latter incurred in maintaining Lot No. 88, plus the monetary value of
their services to the extent that respondents were benefited thereby;
3. Petitioners are ENTITLED to keep whatever fruits and income they may
have obtained from Lot No. 88; and
4. Respondents are also ENTITLED to keep whatever interests the amounts
they received as just compensation may have earned in the meantime, as
well as the appreciation in value of Lot No. 88, which is a natural
consequence of nature and time;
In light of the foregoing modifications, the case is REMANDED to the Regional Trial
Court, Branch 57, Cebu City, only for the purpose of receiving evidence on the
amounts that respondents will have to pay petitioners in accordance with this
Court’s decision. No costs.
SO ORDERED.
REPUBLIC OF THE PHILIPPINES AND HOUSING AND URBAN DEVELOPMENT
COORDINATING COUNCIL (HUDCC), Petitioners, v. GONZALO ROQUE, JR.,
MANUELA ALMEDA ROQUE, EDUVIGIS A. PAREDES, MICHAEL A. PAREDES,
PURIFICACION ALMEDA, JOSE A. ALMEDA, MICHELLE A. ALMEDA, MICHAEL A.
ALMEDA, ALBERTO DELURA, AND THERESA ALMEDA, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari1 filed by the Republic of the
Philippines (Republic) assailing the July 4, 2012 decision2 and the September 26,
2012 resolution3 of the Court of Appeals (CA) in CA G.R. CV No. 93018. The CA
affirmed the Regional Trial Court's (RTC) decision annulling the sale of the
respondents' properties to the Republic, and ordering the respondents to return
the purchase price they received from the government.
ANTECEDENT FACTS
Gonzalo Roque, Jr. (Gonzalo), Manuela Almeda-Roque, Eduvigis A. Paredes, Michael
A. Paredes, Purification Almeda, Jose A. Almeda, Michelle A. Almeda, Michael A.
Almeda, Alberto Delura, and Theresa Almeda (respondents), owned several parcels
of land with a total area of about 9,811 square meters,4located in Constitution Hills,
Quezon City.5 Gonzalo represented the respondents in the court proceedings.
In 1978, the Republic, through the Department of Public Works and Highways
(DPWH), approached the respondents and asked them to sell a portion of the land
at government-dictated prices lower than the market value.6 The Republic was
supposed to use the land for President Marcos' National Government Center (NGC)
Project — his plan to bring together the various national government offices in one
venue for greater efficiency and to create additional areas for the expanding needs
of the central government and the people.7chanrobleslaw
The respondents allege that several public hearings regarding the sale took place
between the Republic and the respondents; 8 and that during these meetings, the
Republic made the following representations:
chanRoblesvirtualLawlibraryFirst, the Republic guaranteed that although the
respondents would get paid a price much lower than the market value of the land,
the construction of the NGC Project would eventually enhance the value of the
surrounding portions of the land that they still own.9chanrobleslaw
Second, the Republic assured the respondents that, in the remote possibility that it
abandons the project, they will have the right to buy back the land. 10chanrobleslaw
The respondents further allege that they were reluctant to sell the land, but felt
compelled to do so because martial law was in force, and they dared not resist a
project of President Marcos.11 Thus, relying on the Republic's representations, the
respondents signed the deeds of absolute sale.
The Register of Deeds cancelled the three certificates of title (TCT) and issued six
new titles.12 Three of these new titles were issued in the Republic's name: (a) TCT
No. RT-115781 (283214); (b) TCT No. RT-34249 (283216); and (c) TCT No. RT-115907
(283212).13chanrobleslaw
The Republic did not immediately take possession of all of the land it had bought
from the respondents;14 thus, the respondents continued to occupy portions of the
sold properties.15chanrobleslaw
After several years, informal settlers began to occupy parts of the land, and the
respondents felt that the Republic was reneging on its undertaking to develop the
land into the NGC Project.16 Hence, Gonzalo sent letters dated March 25, 1987, and
September 23, 1988, to then DPWH Secretary Vicente R. Jayme (Jayme) offering to
buy back the properties.17 Gonzalo received no response.
The respondents' suspicion was confirmed in December 2003. Armando A. De
Castro (De Castro), then undersecretary of the Housing and Urban Development
Coordinating Council (HUDCC), wrote a letter to the respondents, requesting them
to vacate all portions of the sold land that they were still occupying, because the
government would use the properties for socialized housing pursuant to Republic
Act (R.A.) No. 9207.18chanrobleslaw
On August 23, 2004, Gonzalo wrote another letter to then HUDCC Secretary
Michael Defensor, offering to buy back the properties. 19 He argued that the
respondents have the right to repurchase the properties after the Republic
abandoned the NGC Project and diverted the use of the properties to socialized
housing.20chanrobleslaw
Secretary Defensor allegedly found the respondents' position reasonable and
requested a feedback on the possibility of a repurchase. 21 However, the secretary
was transferred to another department and was unable to further address the
situation.22 Despite persistent follow-ups, the respondents failed to receive any
action from the Republic on this matter.23chanrobleslaw
Realizing that the Republic had completely abandoned its initial plan to use the land
for the NGC Project, in 2005, the respondents filed a complaint for the annulment
of the sale of the properties on the grounds of fraud, force, intimidation, or undue
influence.24 They also asserted their right to buy back the properties at the same
price at which they sold them since the Republic failed to develop the land
according to the original purpose for which it was
"expropriated."25cralawred Alternatively, they asked for the payment of additional
compensation in the amount of not less than Five Million Pesos. 26chanrobleslaw
In their answer,27 the Republic and the HUDCC (defendants) argue that: (1) they are
immune from suit as government instrumentalities; (2) they agreed to neither the
respondents' right to repurchase the properties in case the government abandons
the NGC Project nor a right to additional compensation in case the respondents'
remaining properties suffer a decrease in market value; (3) the respondents were
not forced, intimidated, or unduly influenced to sell their properties to the
government; and (4) even assuming that any vice of consent attended the sale, the
respondents' action for the annulment of sale is barred by prescription 28 and laches.
During trial, Dante Viloria (Viloria) testified on the negotiations that took place.
Viloria was the Assistant City Assessor of Quezon City and was part of the
government's negotiating team for the NGC Project. He testified that: (a) the
negotiated price was lower than the base amounts in Presidential Decree No.
1517;29 (b) the government did not file any court action to expropriate the
properties; (c) it did not take possession of the properties; and (d) it undertook to
resell the properties to the respondents at the same price if the project would not
push through.30 Gonzalo's testimony corroborated Viloria's testimony.
Several presidential proclamations were issued pertaining to the NGC Project from
1979-1998.31 In 2003, Congress passed RA 9207, amending the proclamations.
Under Section 3 of RA 9207, 184 hectares on the west side and 238 hectares on the
east side were excluded from the original 444-hectare NGC
reservation.32chanrobleslaw
THE RTC RULING
The RTC decided in the respondents' favor. It held that: (1) the Republic is not
immune from suit; (2) the respondents' action is not barred by either prescription
or laches; and (3) the sale should be annulled.
First, the RTC held that the Republic is not immune from suit. Citing Section 9,
Article III of the Constitution,33the Republic cannot invoke government immunity
since the nature of the case is either to obtain just compensation or to retrieve the
properties.
Second, the respondents' action is not barred by either prescription or laches.
It noted Roque's letters to DPWH Secretary Jayme dated March 25, 1987 and
September 23, 1988. In the March letter, Gonzalo brought up the agreement he had
with the Republic that he has pre-emptive right to buy back his property from the
government should the project not push through. In the September letter, Gonzalo
told the DPWH Secretary that he prevented the informal settlers from building
structures within his former property and reiterated his pre-emptive right to buy
back the property. The RTC took these letters as clear indications of the
respondents' vigilance in invoking their right; thus, their action is not barred by
laches.
The RTC added that the respondents found out about the Republic's plan to divert
the use of the properties to low-cost housing only on May 14, 2003, when RA 9207
was enacted. Thus, the filing of the complaint in 2005 was within the four-year
prescriptive period reckoned from the enactment of RA 9207.
Third, the RTC annulled the deeds of absolute sale on the ground of fraud. It gave
credence to Viloria and Gonzalo's testimonies about the matters discussed during
negotiations. Based on these testimonies, the RTC emphasized that the
respondents signed the deeds of absolute sale relying on the government's
assurances that they could retrieve the properties should the NGC Project not
materialize.
Fourth, the RTC declared that the respondents are not entitled to damages and
attorney's fees because the Republic was not in bad faith in resisting the complaint.
The RTC added that the Republic is not entitled to its counterclaims because RA
9207 recognizes the validity of vested rights and precedence of proclamations.
Aggrieved, the Republic filed an appeal with the CA.
THE CA RULING
The CA affirmed the RTC's decision.34 It held that: (1) the Republic is not immune
from suit; (2) the sale was conditioned upon the materialization of the NGC Project;
and (3) the respondents' action is not barred by prescription or laches.
First, the CA ruled that the doctrine of sovereign immunity must be read with
Section 9, Article III of the Constitution, which provides that "private property shall
not be taken for public use without just compensation." This provision imposes two
requirements: public purpose and payment of just compensation.
In the present case, the Republic "extrajudicially expropriated" the respondents'
properties for a public purpose, i.e., the construction of the NGC Project. However,
the Republic failed to pay just compensation to the respondents. To recall, it
expropriated the land at an amount far below the actual market value. Despite the
low price, the respondents sold their properties relying on the Republic's promise
that they would be amply compensated by the appreciation of their remaining
properties' values.
Not only did the NGC Project not materialize but the values of their remaining
properties depreciated due to the illegal settlers in their vicinity. Thus, the
respondents were deprived of just compensation to which they are entitled.
Consequently, the Republic may not validly invoke the non-suability of the State
and conveniently hide under the State's cloak of invincibility against suit. The ends
of justice would be subverted if the court were to uphold the State's immunity from
suit in this case.
Second, the CA held that the parties entered into a conditional sale with a right to
repurchase the properties from the Republic. The sale was subject to these
conditions: (a) the landowners may repurchase the properties at selling price should
the NGC Project not materialize; and (b) the construction of the NGC Project will
increase the land value of the landowners' remaining properties.
The Republic invoked the parol evidence rule in arguing that the sale had no
conditions. In response, the CA noted that the parol evidence rule admits of
exceptions, such as the failure of the written agreement to express the parties' true
intent.35 This exception applies in the present case.
The testimony of Viloria established that the sale contracts failed to express the
parties' true intent and agreement. He explained that the Republic assured the
respondents that it would reconvey the properties to them should the NGC Project
not push through.
The CA added that the enactment of R.A. No. 9207 had no effect on the
respondents' right to repurchase their land, because the law recognizes the
precedence and validity of vested rights. Given that the Republic no longer pushed
through with the NGC Project, it should have allowed the respondents to exercise
their right to buy back the land.
Third, the CA ruled that the respondents' action is not barred by prescription and/or
laches. As the RTC held, the respondents filed their complaint within the prescribed
period and were prompt and vigilant in protecting their rights.
Hence, the Republic filed this petition.
THE PARTIES' ARGUMENTS
In its petition, the Republic argues that: (a) the lower courts erred in annulling the
sale on the ground of fraud; (b) the respondents have no right to reacquire the
properties sold to the Republic; (c) the respondents' action is barred by laches
and/or prescription; and (d) the State has not given its consent to be sued.
The Republic submits that the government did not use insidious words or
machinations constitutive of fraud in transacting with the respondents. The
government did not lie when it told the respondents that it intended to establish
the NGC Project in the area, and its failure to realize the project cannot be
considered a fraudulent act.36chanrobleslaw
Furthermore, the respondents' failure to realize their expected gain from the
"economic boom" is not a ground to annul the sale. They voluntarily agreed to the
sale, albeit reluctantly. They should not be allowed to obtain judicial relief just
because they believe they got the short end of the bargain. Moreover, any
deficiency in the purchase price has been more than adequately compensated by
the respondents' uninterrupted use of a portion of the government's property for
over thirty (30) years.37chanrobleslaw
The Republic points out that the respondents failed to present any document to
prove that there were conditions imposed on the sale.38 Furthermore, the
enactment of R.A. No. 9207 has determined the public use of the
land.39chanrobleslaw
Even assuming that vices of consent attended the sale in 1978 and persisted during
the Marcos regime, the Republic argues that the respondents should have filed the
action to annul within four (4) years from February 24, 1986.40 The respondents,
however, only filed their complaint in January 2005, or clearly beyond the
prescriptive period.
Finally, the Republic reiterates that, under the doctrine of state immunity from suit,
it cannot be sued without its consent.41chanrobleslaw
In their comment, the respondents argue that: (a) the defense of immunity from
suit is not proper in an eminent domain case; (b) the action is not barred by
prescription and/or laches; (c) the Republic compelled them to sell their properties
through extrajudicial expropriation at a government-dictated price; and (d) the CA
correctly annulled the extrajudicial expropriation of the land and allowed the
respondents to repurchase the land given the government's abandonment of the
NGC Project.
The respondents submit that the Republic cannot hide behind the state immunity
doctrine to defeat the constitutionally guaranteed right against the taking of private
property for a purpose other than the specified public use and only after payment
of just compensation.
The respondents argue that their action has not prescribed because they filed the
complaint within four (4) years from the enactment of RA 9207.42 Their action is
also not barred by laches because their act of sending the letters to the DPWH
shows their vigilance in protecting their rights.43 Further, the Republic failed to
prove that the respondents had any constructive or actual knowledge of the
presidential decrees reducing or modifying the land meant for the NGC
Project.44chanrobleslaw
The respondents contend that they had no choice but to accept the price that the
government offered during the Marcos regime. 45 Even the State recognized the
dark period of fear that enveloped the country under President Marcos, as shown
by the passage of R.A. No. 10368.46 This law made it a policy to acknowledge the
State's moral and legal obligation to recognize and provide reparation to victims of
rights violations committed at the time.47chanrobleslaw
Finally, the respondents note that the Republic did not dispute Viloria's testimony
that during the negotiations for the expropriation of the land, the government
undertook to resell the land to its former owners should the government abandon
the NGC Project.48chanrobleslaw
The Republic reiterates its arguments in the reply. It stresses that the RTC annulled
the sale on the ground of fraud despite the absence of deceit or use of insidious
words or machinations to induce the respondents to enter into the sale contracts. It
also insists that the properties will still be devoted to public use, which is socialized
housing. It stresses that the respondents failed to present evidence that P60.00 per
square meter in 1987 did not constitute just compensation. Moreover, the
respondents used the properties without paying rent.
OUR RULING
We grant the Republic's petition.
The issues for the Court's resolution are: (a) whether the Republic is immune from
suit; (b) whether the action is barred by prescription or laches; and (c) whether an
exception to the parol evidence rule applies.
A. Immunity from Suit
We rule that the Republic is not immune from suit in the present case.
The Constitution provides that "the State may not be sued without its
consent."49 One instance when a suit is against the State is when the Republic is
sued by name,50 as in this case.
A suit against the State is allowed when the State gives its consent, either expressly
or impliedly. Express consent is given through a statute51 while implied consent is
given when the State enters into a contract or commences litigation.52 Although not
all contracts entered into by the government operates as a waiver of its non-
suability, the Court held in the two cases below that the State effectively gave its
consent when it entered into contracts and committed breach.
In Santiago v. The Government of the Republic of the Philippines,53 Ildefonso
Santiago and his wife donated a parcel of land to the Republic on the alleged
condition that the latter would install lighting facilities and a water system and
would build an office building and parking lot on the property on or before
December 7, 1974. Santiago filed a complaint for the revocation of the donation
due to the government's breach of the condition. The trial court dismissed the case
based on the State's non-suability. The Court set aside the dismissal on certiorari,
reasoning that the State's consent to be sued is presumed when the State fails to
comply with the alleged terms of a deed of donation. It essentially held that the
Republic impliedly waived its immunity.
In Republic v. Sandiganbayan,54 the Court ruled that when the Republic entered into
a compromise agreement with a private person, it stripped itself of its immunity
from suit and placed itself on the same level as its adversary. When the State enters
into a contract which creates mutual or reciprocal rights and obligations, the State
may be sued even without express consent. 55 Its consent to be sued is implied from
its entry into the contract and the Republic's breach grants the other party the right
to enforce or repudiate the contract.
In the present case, the Republic entered into deeds of sale with the respondents to
construct the NGC Project on the lots sold. To facilitate the sale, the Republic
created a negotiating team to discuss the terms of the sale with the respondents.
The latter agreed to the negotiated sale on these alleged conditions: (a) that they
will have the right to repurchase the properties if the NGC Project does not push
through; and (b) that the NGC Project will increase the market value of their
remaining properties.
Following Santiago and Republic, the State's failure to abide by these conditions
constitutes the State's implied waiver of its immunity. We reiterate that the
doctrine of state immunity from suit cannot serve to perpetrate an injustice on a
citizen.56 If we rule otherwise, we will be tolerating unfair dealing in contract
negotiation.
B. Prescription and Laches
We turn to the issue of whether the respondents' action for annulment of sale is
barred by prescription and/or laches.
Prescription can either be a question of law or fact.57 It is question of fact where
there is a need to determine the veracity of factual matters. 58 Laches is also
evidentiary in nature.59chanrobleslaw
This Court is not a trier of facts. It is not our function to review, examine, and
evaluate the probative value of the evidence presented. We give great weight to
the RTC's conclusion and findings; we are even bound by the RTC's findings when
the CA adopts them.60chanrobleslaw
Resolving the issues of prescription and laches in the present case requires a factual
review, specifically whether the presidential proclamations that reduced the land
allotted for the NGC Project covered the subject properties and when the
prescription period should start to run under the circumstances. These are
questions of fact that this Court need not delve into.
Nevertheless, the RTC found and concluded, with the CA affirming, that the
respondents' action to annul the sale is not barred either by prescription or laches.
Both court ruled that the enactment of RA 9207 was the earliest time that the
respondents could have known about the government's plans to officially use the
land for socialized housing. Thus, the respondents were not barred by prescription
when they filed their complaint in 2005, within four (4) years from the enactment of
RA 9207.
As to laches, both the RTC and the CA found that the respondents' letters to the
DPWH showed that they were vigilant in asserting their alleged right to repurchase
the properties from the Republic. This vigilance negates the Republic's claim of
laches.
We are bound and accordingly adopt these findings and conclusions by the lower
courts.
C. Parol Evidence
The core issue in this case is whether an exception to the parol evidence rule
applies. In resolving this issue, we examine whether the parol evidence presented,
particularly Gonzalo and Viloria's testimonies, are admissible to establish the
alleged oral conditions in the sale contract.
We rule in the negative.
Section 9, Rule 130 of the Rules of Court provides that a written contract is deemed
to contain all the terms agreed upon by the parties and no evidence of these terms
is admissible other than the contents of the contract.
The parol evidence rule forbids any addition to the terms of a written agreement by
testimony showing that the parties orally agreed on other terms before the signing
of the document.61 However, a party may present evidence to modify, explain, or
add to the terms of a written agreement if he puts in issue in his pleadings either:
(a) an intrinsic ambiguity, mistake, or imperfection in the written agreement; (b)
the failure of the written agreement to express the parties' true intent and
agreement; (c) the validity of the written agreement; or (d) the existence of other
terms agreed to by the parties or their successors in interest after the execution of
the written agreement. The issue must be squarely presented.62chanrobleslaw
We note the basic rule that he who alleges must prove his case. In this case, the
respondents have the burden to prove that the sale was subject to two conditions:
(a) their remaining properties will benefit from the increase in land value after the
construction of the NGC Project and (b) the government will return the sold
properties to them should the NGC Project not materialize. However, they failed to
discharge this burden.
Notably, they failed to present copies of the deeds of sale to show that the sale was
attended by the alleged conditions. Pursuant to the parol evidence rule, no
evidence of contractual terms is admissible other than the contract itself. On this
level alone, the respondents failed to discharge their burden.
Furthermore, the respondents failed to put in issue in their pleadings the sale
contract's failure to express the parties' agreement. In Ortañez v. Court of
Appeals,63 the respondents alleged the existence of oral conditions which were not
reflected in the deeds of sale. A witness testified in court that the sale was subject
to the oral conditions. The Court held that the parol evidence was inadmissible
because, among others, the respondents failed to expressly plead that the deeds of
sale did not reflect the parties' intentions. Instead, they merely alleged that the sale
was subject to four conditions which they tried to prove during trial. The Court
emphasized that this cannot be done because they failed to put in issue in their
pleadings any exception to the parol evidence rule.
Similar to Ortañez, a review of the complaint reveals that the respondents failed to
put in issue in their complaint that the deeds of sale do not express the parties' true
intent. Hence, the failure of the deeds of sale to reflect the parties' agreement was
not squarely presented as an issue for the court to hear evidence on it. Therefore,
the exceptions to the parol evidence rule cannot apply.
Even assuming that the respondents put in issue in the complaint the deed of sales'
failure to express the parties' true agreement, the parol evidence will still not apply
because they failed to justify the applicability of the second exception to the parol
evidence in this case.
The second exception to the parol evidence rule applies only when the written
contract is so ambiguous or obscure in terms that the parties' contractual
intention cannot be understood from a mere reading of the agreement.64 Hence,
the court may receive extrinsic evidence to enable the court to address the
ambiguity.65chanrobleslaw
Although parol evidence is admissible to explain the contract's meaning, it cannot
serve to incorporate into the contract additional conditions which are not
mentioned at all in the contract unless there is fraud or mistake. 66 Evidence of a
prior or contemporaneous verbal agreement is generally not admissible to vary,
contradict, or defeat the operation of a valid contract.67 Hence, parol evidence is
inadmissible to modify the terms of the agreement if the complaint fails to allege
any mistake or imperfection in the written agreement.
In the present case, the respondents failed to allege that the terms of the deeds of
sale are ambiguous or obscure to require the presentation of parol evidence to
ascertain the parties' intent. Both parties agree that the transaction was clearly a
sale to transfer ownership over the properties to the Republic. Absent any
allegation that the contractual terms are ambiguous, the testimonies of Gonzalo
and Viloria are unnecessary to establish the two alleged oral conditions.
To reiterate, the respondents failed to comply with the parol evidence rule
because: first, they failed to produce copies of the deeds of sale; second, they failed
to prove that the second exception to the parol evidence rule applies. Hence, the
testimonies of Gonzalo and Viloria are inadmissible under the parol evidence rule.
CONCLUSION
In sum, we rule that (a) the State is not immune from suit; (b) the respondents'
action is not barred by either prescription or laches; and (c) the second exception to
the parol evidence rule does not apply. Consequently, we grant the Republic's
petition and reverse the CA's ruling annulling the sale contract between the parties.
On a final note, we point out that the parties entered into a negotiated sale
transaction; thus, the Republic did not acquire the property through expropriation.
In expropriation, the Republic's acquisition of the expropriated property is subject
to the condition that the Republic will return the property should the public
purpose for which the expropriation was done did not materialize.68 On the other
hand, a sale contract between the Republic and private persons is not subject to
this same condition unless the parties stipulate it.
The respondents in this case failed to prove that the sale was attended by a similar
condition. Hence, the parties are bound by their sale contract transferring the
property without the condition applicable in expropriation cases.
WHEREFORE, we grant the Republic's petition and accordingly REVERSE and SET
ASIDE the Court of Appeal's July 4, 2012 decision and September 26, 2012
resolution in CA G.R. CV No. 93018.
SO ORDERED.chanRoblesvirtualLawlibrary
REPUBLIC VS. HEIRS OF SATURNINO Q BORBON
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 NAPOCOR’s 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 attorney’s 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 petitioner’s 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
Government’s 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.1âwphi1 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,
NAPOCOR’s 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, NAPOCOR’s 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, 2012 49 and the Certificate of
Inspection/Accomplishment dated February 5, 200550 attached to NAPOCOR’s
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 NAPOCOR’s
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 NAPOCOR’s 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 Government’s 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 NAPOCOR’s
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.
CABAHUG VS NPC
This Rule 45 Petition for Review on Certiorari seeks the reversal of (a) the 16 May
2007 Decision1 rendered by the Eighteenth Division of the Court of Appeals (CA) in
CA-G.R. CV No. 67331 which reversed the 14 March 2000 Decision rendered by the
Regional Trial Court (RTC), Branch 17, Palompon, Leyte, in Civil Case No. PN-0213
and ordered the dismissal of the complaint for just compensation tiled by
petitioners Spouses Jesus L. Cabahug and Coronacion M. Cabahug (Spouses
Cabahug) against respondent National Power Corporation (NPC);2 and (b) the CA's
Resolution dated 9 January 2009, denying the motion for reconsideration of the 16
May 2007 Decision for lack of merit.3
The facts are not in dispute.
The Spouses Cabahug are the owners of two parcels of land situated in Barangay
Capokpok, Tabango, Leyte, registered in their names under Transfer Certificate of
Title (TCT) Nos. T-9813 and T-1599 of the Leyte provincial registry.4 They were
among the defendants in Special Civil
Action No. 0019-PN, a suit for expropriation earlier filed by NPC before the RTC, in
connection with its Leyte-Cebu Interconnection Project. The suit was later
dismissed when NPC opted to settle with the landowners by paying an easement
fee equivalent to 10% of value of their property in accordance with Section 3-A of
Republic Act (RA) No. 6395.5 In view of the conflicting land values presented by the
affected landowners, it appears that the Leyte Provincial Appraisal Committee,
upon request of NPC, fixed the valuation of the affected properties at P45.00 per
square meter.6
On 9 November 1996, Jesus Cabahug executed two documents denominated as
Right of Way Grant in favor of NPC. For and in consideration of the easement fees in
the sums of P112,225.50 and P21,375.00, Jesus Cabahug granted NPC a continuous
easement of right of way for the latter’s transmissions lines and their
appurtenances over 24,939 and 4,750 square meters of the parcels of land covered
by TCT Nos. T-9813 and T-1599, respectively. By said grant, Jesus Cabahug agreed
not to construct any building or structure whatsoever, nor plant in any area within
the Right of Way that will adversely affect or obstruct the transmission line of NPC,
except agricultural crops, the growth of which will not exceed three meters high.
Under paragraph 4 of the grant, however, Jesus Cabahug reserved the option to
seek additional compensation for easement fee, based on the Supreme Court’s 18
January 1991 Decision in G.R. No. 60077, entitled National Power Corporation v.
Spouses Misericordia Gutierrez and Ricardo Malit, et al. (Gutierrez).7
On 21 September 1998, the Spouses Cabahug filed the complaint for the payment
of just compensation, damages and attorney’s fees against NPC which was
docketed as Civil Case No. PN-0213 before the RTC. Claiming to have been totally
deprived of the use of the portions of land covered by TCT Nos. T-9813 and T-1599,
the Spouses Cabahug alleged, among other matters, that in accordance with the
reservation provided under paragraph 4 of the aforesaid grant, they have
demanded from NPC payment of the balance of the just compensation for the
subject properties which, based on the valuation fixed by the Leyte Provincial
Appraisal Committee, amounted to P1,202,404.50.8 In its answer, on the other
hand, NPC averred that it already paid the full easement fee mandated under
Section 3-A of RA 6395 and that the reservation in the grant referred to additional
compensation for easement fee, not the full just compensation sought by the
Spouses Cabahug.9
Acting on the motion for judgment on the pleadings that was filed by the Spouses
Cabahug, the RTC went on to render a Decision dated 14 March 2000. Brushing
aside NPC’s reliance on Section 3-A of RA 6395, the RTC applied the ruling handed
down by this Court in Gutierrez to the effect that NPC’s easement of right of way
which indefinitely deprives the owner of their proprietary rights over their property
falls within the purview of the power of eminent domain. 10 As a consequence, the
RTC disposed of the complaint in the following wise:
WHEREFORE, premises considered, judgment is hereby rendered for the Spouses
Cabahug and against NPC, ordering NPC:
1. To pay the Spouses Cabahug the sum of ONE MILLION THREE HUNDRED
THIRTY SIX THOUSAND and FIVE PESOS (P1,336,005.00) together with the
legal rate of interest thereon per annum reckoned from January 3, 1997
less the amount previously paid by NPC to the Spouses Cabahug for
easement fee only;
2. To pay the Spouses Cabahug the sum equivalent to FIVE (5%) PERCENT
of the amount mentioned in the next preceding paragraph for attorney’s
fees; and
3. To pay the Spouses Cabahug the sum of TWENTY THOUSAND
(P20,000.00) PESOS for actual damages and litigation expenses plus costs
of the proceedings.
SO ORDERED.11
Aggrieved by the foregoing decision, the NPC perfected the appeal which was
docketed as CA-G.R. CV No. 67331 before the CA which, on 16 May 2007, rendered
the herein assailed decision, reversing and setting aside the RTC’s appealed
decision. Finding that the facts of a case are different from those obtaining in
Gutierrez and that Section 3-A of RA 6395 only allows NPC to acquire an easement
of right of way over properties traversed by its transmission lines, 12 the CA
succinctly ruled as follows:
Unfortunately, the Spouses Cabahug had already accepted the payment of
easement fee, pursuant to R.A. 6395, as amended, way back in 1996. Therefore,
NPC’s easement of right of way has for all legal intents and purposes, been
established as far back as 1996. Since vested right has already accrued in favor of
NPC, to allow the Spouses Cabahug to pursue this case when the easement of right
of way had already been consummated would be in violation of the contract. The
contracting parties, the Spouses Cabahug and NPC had already conformed with the
terms and conditions of the agreement. To allow the Spouses Cabahug to again
collect from NPC payment of just compensation would amount to unjust
enrichment at the expense of NPC and would sanction violation of the parties’
contract, which the Spouses Cabahug cannot do in the case at bench. Further, the
award of attorney’s fees and litigation expenses and the costs of suit in favor of the
Spouses Cabahug cannot be justified in the case at bar since it appears that the
complaint actually has no legal basis.13
The Spouses Cabahug’s motion for reconsideration of the 16 May 2007
Decision14 was denied for lack of merit in the CA’s Resolution dated 9 January 2009.
Hence, this petition for review on certiorari.15 In urging the reversal of the CA’s
assailed Decision and Resolution, the Spouses Cabahug argue that the CA erred: (a)
in disregarding paragraph 4 of the Grant of Right of Way whereby Jesus Cabahug
reserved the right to seek additional compensation for easement fee; and (b) in not
applying this Court’s ruling in Gutierrez case. 16 In representation of NPC, on the
other hand, the Office of the Solicitor General (OSG) argues that the sums paid in
1996 by way of easement fees represent the full amount allowed by law and agreed
upon by the parties. Considering that Gutierrez concerned the payment of just
compensation for property expropriated by the NPC, the OSG maintains the CA did
not err in according scant consideration to the Spouses Cabahug’s invocation of the
ruling in said case.17
We find the petition impressed with merit.
The CA regarded the Grant of Right of Way executed by Jesus Cabahug in favor of
NPC as a valid and binding contract between the parties, a fact affirmed by the OSG
in its 8 October 2009 Comment to the petition at bench.18Given that the parties
have already agreed on the easement fee for the portions of the subject parcels
traversed by NPC’s transmissions lines, the CA ruled that the Spouses Cabahug’s
attempt to collect further sums by way of additional easement fee and/or just
compensation is violative of said contract and tantamount to unjust enrichment at
the expense of NPC. As correctly pointed out by the Spouses Cabahug, however, the
CA’s ruling totally disregards the fourth paragraph of the Grant executed by Jesus
Cabahug which expressly states as follows:
That I hereby reserve the option to seek additional compensation for Easement Fee,
based on the Supreme Court Decision in G.R. No. 60077, promulgated on January
18, 1991, which jurisprudence is designated as "NPC vs. Gutierrez" case. 19
From the foregoing reservation, it is evident that the Spouses Cabahug’s receipt of
the easement fee did not bar them from seeking further compensation from NPC.
Even by the basic rules in the interpretation of contracts, we find that the CA erred
in holding that the payment of additional sums to the Spouses Cabahug would be
violative of the parties’ contract and amount to unjust enrichment. Indeed, the rule
is settled that a contract constitutes the law between the parties who are bound by
its stipulations20 which, when couched in clear and plain language, should be
applied according to their literal tenor.21 Courts cannot supply material stipulations,
read into the contract words it does not contain22 or, for that matter, read into it
any other intention that would contradict its plain import.23 Neither can they
rewrite contracts because they operate harshly or inequitably as to one of the
parties, or alter them for the benefit of one party and to the detriment of the other,
or by construction, relieve one of the parties from the terms which he voluntarily
consented to, or impose on him those which he did not. 24
Considering that Gutierrez was specifically made the point of reference for Jesus
Cabahug’s reservation to seek further compensation from NPC, we find that the CA
likewise erred in finding that the ruling in said case does not apply to the case at
bench. Concededly, the NPC was constrained to file an expropriation complaint in
Gutierrez due to the failure of the negotiations for its acquisition of an easement of
right of way for its transmission lines. The issue that was eventually presented for
this Court’s resolution, however, was the propriety of making NPC liable for the
payment of the full market value of the affected property despite the fact that
transfer of title thereto was not required by said easement. In upholding the
landowners’ right to full just compensation, the Court ruled that the power of
eminent domain may be exercised although title is not transferred to the
expropriator in an easement of right of way. Just compensation which should be
neither more nor less than the money equivalent of the property is, moreover, due
where the nature and effect of the easement is to impose limitations against the
use of the land for an indefinite period and deprive the landowner its ordinary use.
Even without the reservation made by Jesus Cabahug in the Grant of Right of Way,
the application of Gutierrez to this case is not improper as NPC represents it to be.
Where the right of way easement, as in this case, similarly involves transmission
lines which not only endangers life and limb but restricts as well the owner's use of
the land traversed thereby, the ruling in Gutierrez remains doctrinal and should be
applied.25 It has been ruled that the owner should be compensated for the
monetary equivalent of the land if, as here, the easement is intended to perpetually
or indefinitely deprive the owner of his proprietary rights through the imposition of
conditions that affect the ordinary use, free enjoyment and disposal of the property
or through restrictions and limitations that are inconsistent with the exercise of the
attributes of ownership, or when the introduction of structures or objects which, by
their nature, create or increase the probability of injury, death upon or destruction
of life and property found on the land is necessary.26 Measured not by the taker’s
gain but the owner’s loss, just compensation is defined as the full and fair
equivalent of the property taken from its owner by the expropriator. 271âwphi1
Too, the CA reversibly erred in sustaining NPC’s reliance on Section 3-A of RA 6395
which states that only 10% of the market value of the property is due to the owner
of the property subject to an easement of right of way. Since said easement falls
within the purview of the power of eminent domain, NPC’s utilization of said
provision has been repeatedly struck down by this Court in a number of cases. 28 The
determination of just compensation in eminent domain proceedings is a judicial
function and no statute, decree, or executive order can mandate that its own
determination shall prevail over the court's findings. 29 Any valuation for just
compensation laid down in the statutes may serve only as a guiding principle or one
of the factors in determining just compensation, but it may not substitute the
court's own judgment as to what amount should be awarded and how to arrive at
such amount.30Hence, Section 3A of R.A. No. 6395, as amended, is not binding upon
this Court.31
In this case, the Leyte Provincial Appraisal Committee fixed the valuation of the
affected properties at P45.00 per square meter at the instance of NPC. Considering
that the installation of the latter’s transmission lines amounted to the taking of
24,939 and 4,750 square meters from the parcels of land covered by TCT Nos. T-
9813 and T-1599 or a total of 29,689 square meters, the RTC correctly determined
that the Spouses Cabahug are entitled to P1,336,005.00 (29,689 x P45.00) by way of
just compensation for their properties. Inasmuch as NPC had already paid the sums
of P112,225.50 and P21,375.00 as easement fee, the sum of P133,600.50 should be
deducted from P1,336,005.00 for a remaining balance of P1,202,404.50. To this
latter sum, the RTC also correctly imposed legal interest since the Spouses Cabahug,
as landowners, are entitled to the payment of legal interest on the compensation
for the subject lands from the time of the taking of their possession up to the time
that full payment is made by petitioner. In accordance with jurisprudence, the legal
interest allowed in payment of just compensation for lands expropriated for public
use is six percent (6%) per annum.32
For want of a statement of the rationale for the award in the body of the RTC’s 14
March 2000 Decision, we are constrained, however, to disallow the grant of
attorney’s fees in favor of the Spouses Cabahug in an amount equivalent to 5% of
the just compensation due as well as the legal interest thereon. Considered the
exception rather than the general rule, the award of attorney’s fees is not due every
time a party prevails in a suit because of the policy that no premium should be set
on the right to litigate.33 The RTC's award of litigation expenses should likewise be
deleted since, like attorney's fees, the award thereof requires that the reasons or
grounds therefor must be set forth in the decision of the court. 34 This is particularly
true in this case where the litigation expenses awarded were alternatively
categorized by the RTC as actual damages which, by jurisprudence, should be
pleaded and adequately proved. Time and again, it has been ruled that the fact and
amount of actual damages cannot be based on speculation, conjecture or guess
work, but must depend on actual proof.35
WHEREFORE, premises considered, the petition is GRANTED and the CA's assailed
16 May 2007 Decision and 9 January 2009 Resolution are, accordingly, REVERSED
and SET ASIDE. In lieu thereof, another is entered REINSTATING the RTC's 14 March
2000 Decision, subject to the MODIFICATION that the awards of attorney's fees,
actual damages and/or litigation expenses are DELETED.
SO ORDERED.
NPC VS. IBRAHIM
DECISION
AZCUNA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking
to annul the Decision1 dated June 8, 2005 rendered by the Court of Appeals (CA) in
C.A.-G.R. CV No. 57792.
The facts are as follows:
On November 23, 1994, respondent Lucman G. Ibrahim, in his personal capacity and
in behalf of his co-heirs Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom,
Mamod G. Maruhom, Farouk G. Maruhom, Hidjara G. Maruhom, Rocania G.
Maruhom, Potrisam G. Maruhom, Lumba G. Maruhom, Sinab G. Maruhom, Acmad
G. Maruhom, Solayman G. Maruhom, Mohamad M. Ibrahim and Caironesa M.
Ibrahim, instituted an action against petitioner National Power Corporation
(NAPOCOR) for recovery of possession of land and damages before the Regional
Trial Court (RTC) of Lanao del Sur.
In their complaint, Ibrahim and his co-heirs claimed that they were owners of
several parcels of land described in Survey Plan FP (VII-5) 2278 consisting of 70,000
square meters, divided into three (3) lots, i.e. Lots 1, 2, and 3 consisting of 31,894,
14,915, and 23,191 square meters each respectively. Sometime in 1978, NAPOCOR,
through alleged stealth and without respondents’ knowledge and prior consent,
took possession of the sub-terrain area of their lands and constructed therein
underground tunnels. The existence of the tunnels was only discovered sometime
in July 1992 by respondents and then later confirmed on November 13, 1992 by
NAPOCOR itself through a memorandum issued by the latter’s Acting Assistant
Project Manager. The tunnels were apparently being used by NAPOCOR in
siphoning the water of Lake Lanao and in the operation of NAPOCOR’s Agus II, III,
IV, V, VI, VII projects located in Saguiran, Lanao del Sur; Nangca and Balo-i in Lanao
del Norte; and Ditucalan and Fuentes in Iligan City.
On September 19, 1992, respondent Omar G. Maruhom requested the Marawi City
Water District for a permit to construct and/or install a motorized deep well in Lot 3
located in Saduc, Marawi City but his request was turned down because the
construction of the deep well would cause danger to lives and property. On October
7, 1992, respondents demanded that NAPOCOR pay damages and vacate the sub-
terrain portion of their lands but the latter refused to vacate much less pay
damages. Respondents further averred that the construction of the underground
tunnels has endangered their lives and properties as Marawi City lies in an area of
local volcanic and tectonic activity. Further, these illegally constructed tunnels
caused them sleepless nights, serious anxiety and shock thereby entitling them to
recover moral damages and that by way of example for the public good, NAPOCOR
must be held liable for exemplary damages.
Disputing respondents’ claim, NAPOCOR filed an answer with counterclaim denying
the material allegations of the complaint and interposing affirmative and special
defenses, namely that (1) there is a failure to state a cause of action since
respondents seek possession of the sub-terrain portion when they were never in
possession of the same, (2) respondents have no cause of action because they
failed to show proof that they were the owners of the property, and (3) the tunnels
are a government project for the benefit of all and all private lands are subject to
such easement as may be necessary for the same. 2
On August 7, 1996, the RTC rendered a Decision, the decretal portion of which
reads as follows:
WHEREFORE, judgment is hereby rendered:
1. Denying plaintiffs’ [private respondents’] prayer for defendant [petitioner]
National Power Corporation to dismantle the underground tunnels constructed
between the lands of plaintiffs in Lots 1, 2, and 3 of Survey Plan FP (VII-5) 2278;
2. Ordering defendant to pay to plaintiffs the fair market value of said 70,000
square meters of land covering Lots 1, 2, and 3 as described in Survey Plan FP (VII-5)
2278 less the area of 21,995 square meters at ₱1,000.00 per square meter or a total
of ₱48,005,000.00 for the remaining unpaid portion of 48,005 square meters; with
6% interest per annum from the filing of this case until paid;
3. Ordering defendant to pay plaintiffs a reasonable monthly rental of ₱0.68 per
square meter of the total area of 48,005 square meters effective from its occupancy
of the foregoing area in 1978 or a total of ₱7,050,974.40.
4. Ordering defendant to pay plaintiffs the sum of ₱200,000.00 as moral damages;
and
5. Ordering defendant to pay the further sum of ₱200,000.00 as attorney’s fees and
the costs.
SO ORDERED.3
On August 15, 1996, Ibrahim, joined by his co-heirs, filed an Urgent Motion for
Execution of Judgment Pending Appeal. On the other hand, NAPOCOR filed a Notice
of Appeal by registered mail on August 19, 1996. Thereafter, NAPOCOR filed a
vigorous opposition to the motion for execution of judgment pending appeal with a
motion for reconsideration of the Decision which it had received on August 9, 1996.
On August 26, 1996, NAPOCOR filed a Manifestation and Motion withdrawing its
Notice of Appeal purposely to give way to the hearing of its motion for
reconsideration.
On August 28, 1996, the RTC issued an Order granting execution pending appeal
and denying NAPOCOR’s motion for reconsideration, which Order was received by
NAPOCOR on September 6, 1996.
On September 9, 1996, NAPOCOR filed its Notice of Appeal by registered mail which
was denied by the RTC on the ground of having been filed out of time. Meanwhile,
the Decision of the RTC was executed pending appeal and funds of NAPOCOR were
garnished by respondents Ibrahim and his co-heirs.
On October 4, 1996, a Petition for Relief from Judgment was filed by respondents
Omar G. Maruhom, Elias G. Maruhom, Bucay G. Maruhom, Mamod G. Maruhom,
Farouk G. Maruhom, Hidjara G. Maruhom, Potrisam G. Maruhom and Lumba G.
Maruhom asserting as follows:
1) they did not file a motion to reconsider or appeal the decision within the
reglementary period of fifteen (15) days from receipt of judgment because they
believed in good faith that the decision was for damages and rentals and attorney’s
fees only as prayed for in the complaint:
2) it was only on August 26, 1996 that they learned that the amounts awarded to
the plaintiffs represented not only rentals, damages and attorney’s fees but the
greatest portion of which was payment of just compensation which in effect would
make the defendant NPC the owner of the parcels of land involved in the case;
3) when they learned of the nature of the judgment, the period of appeal has
already expired;
4) they were prevented by fraud, mistake, accident, or excusable negligence from
taking legal steps to protect and preserve their rights over their parcels of land in so
far as the part of the decision decreeing just compensation for petitioners’
properties;
5) they would never have agreed to the alienation of their property in favor of
anybody, considering the fact that the parcels of land involved in this case were
among the valuable properties they inherited from their dear father and they would
rather see their land crumble to dust than sell it to anybody. 4
The RTC granted the petition and rendered a modified judgment dated September
8, 1997, thus:
WHEREFORE, a modified judgment is hereby rendered:
1) Reducing the judgment award of plaintiffs for the fair market value of
₱48,005,000.00 by 9,526,000.00 or for a difference by ₱38,479,000.00 and by the
further sum of ₱33,603,500.00 subject of the execution pending appeal leaving a
difference of 4,878,500.00 which may be the subject of execution upon the finality
of this modified judgment with 6% interest per annum from the filing of the case
until paid.
2) Awarding the sum of ₱1,476,911.00 to herein petitioners Omar G. Maruhom,
Elias G. Maruhom, Bucay G. Maruhom, Mahmod G. Maruhom, Farouk G. Maruhom,
Hidjara G. Maruhom, Portrisam G. Maruhom and Lumba G. Maruhom as reasonable
rental deductible from the awarded sum of ₱7,050,974.40 pertaining to plaintiffs.
3) Ordering defendant embodied in the August 7, 1996 decision to pay plaintiffs the
sum of ₱200,000.00 as moral damages; and further sum of ₱200,000.00 as
attorney’s fees and costs.
SO ORDERED.5
Subsequently, both respondent Ibrahim and NAPOCOR appealed to the CA.
In the Decision dated June 8, 2005, the CA set aside the modified judgment and
reinstated the original Decision dated August 7, 1996, amending it further by
deleting the award of moral damages and reducing the amount of rentals and
attorney’s fees, thus:
WHEREFORE, premises considered, herein Appeals are hereby partially GRANTED,
the Modified Judgment is ordered SET ASIDE and rendered of no force and effect
and the original Decision of the court a quo dated 7 August 1996 is hereby
RESTORED with the MODIFICATION that the award of moral damages is DELETED
and the amounts of rentals and attorney’s fees are REDUCED to ₱6,888,757.40 and
₱50,000.00, respectively.
In this connection, the Clerk of Court of RTC Lanao del Sur is hereby directed to
reassess and determine the additional filing fee that should be paid by Plaintiff-
Appellant IBRAHIM taking into consideration the total amount of damages sought in
the complaint vis-à-vis the actual amount of damages awarded by this Court. Such
additional filing fee shall constitute a lien on the judgment.
SO ORDERED.6
Hence, this petition ascribing the following errors to the CA:
(a) RESPONDENTS WERE NOT DENIED THE BENEFICIAL USE OF THEIR SUBJECT
PROPERTIES TO ENTITLE THEM TO JUST COMPENSATION BY WAY OF DAMAGES;
(b) ASSUMING THAT RESPONDENTS ARE ENTITLED TO JUST COMPENSATION BY
WAY OF DAMAGES, NO EVIDENCE WAS PRESENTED ANENT THE VALUATION OF
RESPONDENTS’ PROPERTY AT THE TIME OF ITS TAKING IN THE YEAR 1978 TO
JUSTIFY THE AWARD OF ONE THOUSAND SQUARE METERS (₱1000.00/SQ. M.) EVEN
AS PAYMENT OF BACK RENTALS IS ITSELF IMPROPER.
This case revolves around the propriety of paying just compensation to
respondents, and, by extension, the basis for computing the same. The threshold
issue of whether respondents are entitled to just compensation hinges upon who
owns the sub-terrain area occupied by petitioner.
Petitioner maintains that the sub-terrain portion where the underground tunnels
were constructed does not belong to respondents because, even conceding the fact
that respondents owned the property, their right to the subsoil of the same does
not extend beyond what is necessary to enable them to obtain all the utility and
convenience that such property can normally give. In any case, petitioner asserts
that respondents were still able to use the subject property even with the existence
of the tunnels, citing as an example the fact that one of the respondents, Omar G.
Maruhom, had established his residence on a part of the property. Petitioner
concludes that the underground tunnels 115 meters below respondents’ property
could not have caused damage or prejudice to respondents and their claim to this
effect was, therefore, purely conjectural and speculative. 7
The contention lacks merit.
Generally, in an appeal by certiorari under Rule 45 of the Rules of Court, the Court
does not pass upon questions of fact. Absent any showing that the trial and
appellate courts gravely abused their discretion, the Court will not examine the
evidence introduced by the parties below to determine if they correctly assessed
and evaluated the evidence on record.8 The jurisdiction of the Court in cases
brought to it from the CA is limited to reviewing and revising the errors of law
imputed to it, its findings of fact being as a rule conclusive and binding on the Court.
In the present case, petitioner failed to point to any evidence demonstrating grave
abuse of discretion on the part of the CA or to any other circumstances which
would call for the application of the exceptions to the above rule. Consequently, the
CA’s 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.
In Republic of the Philippines v. Court of Appeals,9 this principle was applied to show
that rights over lands are indivisible and, consequently, require a definitive and
categorical classification, thus:
The Court of Appeals justified this by saying there is "no conflict of interest"
between the owners of the surface rights and the owners of the sub-surface rights.
This is rather strange doctrine, for it is a well-known principle that the owner of a
piece of land has rights not only to its surface but also to everything underneath
and the airspace above it up to a reasonable height. Under the aforesaid ruling, the
land is classified as mineral underneath and agricultural on the surface, subject to
separate claims of title. This is also difficult to understand, especially in its practical
application.
Under the theory of the respondent court, the surface owner will be planting on the
land while the mining locator will be boring tunnels underneath. The farmer cannot
dig a well because he may interfere with the mining operations below and the
miner cannot blast a tunnel lest he destroy the crops above. How deep can the
farmer, and how high can the miner go without encroaching on each others rights?
Where is the dividing line between the surface and the sub-surface rights?
The Court feels that the rights over the land are indivisible and that the land itself
cannot be half agricultural and half mineral. The classification must be categorical;
the land must be either completely mineral or completely agricultural.
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.10
Moreover, petitioner’s 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.11
In this regard, the trial court found that respondents could have dug upon their
property motorized deep wells but were prevented from doing so by the authorities
precisely because of the construction and existence of the tunnels underneath the
surface of their property. Respondents, therefore, still had a legal interest in the
sub-terrain portion insofar as they could have excavated the same for the
construction of the deep well. The fact that they could not was appreciated by the
RTC as proof that the tunnels interfered with respondents’ enjoyment of their
property and deprived them of its full use and enjoyment, thus:
Has it deprived the plaintiffs of the use of their lands when from the evidence they
have already existing residential houses over said tunnels and it was not shown that
the tunnels either destroyed said houses or disturb[ed] the possession thereof by
plaintiffs? From the evidence, an affirmative answer seems to be in order. The
plaintiffs and [their] co-heirs discovered [these] big underground tunnels in 1992.
This was confirmed by the defendant on November 13, 1992 by the Acting Assistant
Project Manager, Agus 1 Hydro Electric Project (Exh. K). On September 16, 1992,
Atty. Omar Maruhom (co-heir) requested the Marawi City Water District for permit
to construct a motorized deep well over Lot 3 for his residential house (Exh. Q). He
was refused the permit "because the construction of the deep well as (sic) the
parcels of land will cause danger to lives and property." He was informed that
"beneath your lands are constructed the Napocor underground tunnel in
connection with Agua Hydroelectric plant" (Exh. Q-2). There in fact exists ample
evidence that this construction of the tunnel without the prior consent of plaintiffs
beneath the latter’s property endangered the lives and properties of said plaintiffs.
It has been proved indubitably that Marawi City lies in an area of local volcanic and
tectonic activity. Lake Lanao has been formed by extensive earth movements and is
considered to be a drowned basin of volcano/tectonic origin. In Marawi City, there
are a number of former volcanoes and an extensive amount of faulting. Some of
these faults are still moving. (Feasibility Report on Marawi City Water District by
Kampsa-Kruger, Consulting Engineers, Architects and Economists, Exh. R).
Moreover, it has been shown that the underground tunnels [have] deprived the
plaintiffs of the lawful use of the land and considerably reduced its value. On March
6, 1995, plaintiffs applied for a two-million peso loan with the Amanah Islamic Bank
for the expansion of the operation of the Ameer Construction and Integrated
Services to be secured by said land (Exh. N), but the application was disapproved by
the bank in its letter of April 25, 1995 (Exh. O) stating that:
"Apropos to this, we regret to inform you that we cannot consider your loan
application due to the following reasons, to wit:
That per my actual ocular inspection and verification, subject property offered as
collateral has an existing underground tunnel by the NPC for the Agus I Project,
which tunnel is traversing underneath your property, hence, an encumbrance. As a
matter of bank policy, property with an existing encumbrance cannot be considered
neither accepted as collateral for a loan."
All the foregoing evidence and findings convince this Court that preponderantly
plaintiffs have established the condemnation of their land covering an area of
48,005 sq. meters located at Saduc, Marawi City by the defendant National Power
Corporation without even the benefit of expropriation proceedings or the payment
of any just compensation and/or reasonable monthly rental since 1978.12
In the past, the Court has held that if the government takes property without
expropriation and devotes the property to public use, after many years, the
property owner may demand payment of just compensation in the event
restoration of possession is neither convenient nor feasible. 13 This is in accordance
with the principle that persons shall not be deprived of their property except by
competent authority and for public use and always upon payment of just
compensation.14
Petitioner contends that the underground tunnels in this case constitute an
easement upon the property of 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.15 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. 16
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.17 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 owners 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. 18
The entitlement of respondents to just compensation having been settled, the issue
now is on the manner of computing the same. In this regard, petitioner claims that
the basis for the computation of the just compensation should be the value of the
property at the time it was taken in 1978. Petitioner also impugns the reliance
made by the CA upon National Power Corporation v. Court of Appeals and
Macapanton Mangondato19 as the basis for computing the amount of just
compensation in this action. The CA found that "the award of damages is not
excessive because the ₱1000 per square meter as the fair market value was
sustained in a case involving a lot adjoining the property in question which case
involved an expropriation by [petitioner] of portion of Lot 1 of the subdivision plan
(LRC) PSD 116159 which is adjacent to Lots 2 and 3 of the same subdivision plan
which is the subject of the instant controversy." 20
Just compensation has been understood to be the just and complete equivalent of
the loss21 and is ordinarily determined by referring to the value of the land and its
character at the time it was taken by the expropriating authority. 22 There is a
"taking" in this sense when the owners are actually deprived or dispossessed of
their property, where there is a practical destruction or a material impairment of
the value of their property, or when they are deprived of the ordinary use thereof.
There is a "taking" in this context when the expropriator enters private property not
only for a momentary period but for 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. 23Moreover, "taking" of the
property for purposes of eminent domain entails that the entry into the property
must be under warrant or color of legal authority.24
Under the factual backdrop of this case, the last element of taking mentioned, i.e.,
that the entry into the property is under warrant or color of legal authority, is
patently lacking. Petitioner justified its nonpayment of the indemnity due
respondents upon its mistaken belief that the property formed part of the public
dominion.
This situation is on all fours with that in the Mangondato case. NAPOCOR in that
case took the property of therein respondents in 1979, using it to build its Aqua I
Hydroelectric Plant Project, without paying any compensation, allegedly under the
mistaken belief that it was public land. It was only in 1990, after more than a
decade of beneficial use, that NAPOCOR recognized therein respondents’
ownership and negotiated for the voluntary purchase of the property.
In Mangondato, this Court held:
The First Issue: Date of Taking or Date of Suit?
The general rule in determining "just compensation" in eminent domain is the value
of the property as of the date of the filing of the complaint, as follows:
"Sec. 4. Order of Condemnation. When such a motion is overruled or when any
party fails to defend as required by this rule, the court may enter an order of
condemnation declaring that the plaintiff has a lawful right to take the property
sought to be condemned, for the public use or purpose described in the complaint,
upon the payment of just compensation to be determined as of the date of the
filing of the complaint. x x x" (Italics supplied).
Normally, the time of the taking coincides with the filing of the complaint for
expropriation. Hence, many ruling of this Court have equated just compensation
with the value of the property as of the time of filing of the complaint consistent
with the above provision of the Rules. So too, where the institution of the action
precedes entry to the property, the just compensation is to be ascertained as of the
time of filing of the complaint.
The general rule, however, admits of an exception: where this Court fixed the value
of the property as of the date it was taken and not the date of the commencement
of the expropriation proceedings.
In the old case of Provincial Government of Rizal vs. Caro de Araullo, the Court ruled
that "x x x the owners of the land have no right to recover damages for this
unearned increment resulting from the construction of the public improvement
(lengthening of Taft Avenue from Manila to Pasay) from which the land was taken.
To permit them to do so would be to allow them to recover more than the value of
the land at the time it was taken, which is the true measure of the damages, or just
compensation, and would discourage the construction of important public
improvements."
In subsequent cases, the Court, following the above doctrine, invariably held that
the time of taking is the critical date in determining lawful or just compensation.
Justifying this stance, Mr. Justice (later Chief Justice) Enrique Fernando, speaking for
the Court in Municipality of La Carlota vs. The Spouses Felicidad Baltazar and
Vicente Gan, said, "x x x the owner as is the constitutional intent, is paid what he is
entitled to according to the value of the property so devoted to public use as of the
date of taking. From that time, he had been deprived thereof. He had no choice but
to submit. He is not, however, to be despoiled of such a right. No less than the
fundamental law guarantees just compensation. It would be injustice to him
certainly if from such a period, he could not recover the value of what was lost.
There could be on the other hand, injustice to the expropriator if by a delay in the
collection, the increment in price would accrue to the owner. The doctrine to which
this Court has been committed is intended precisely to avoid either contingency
fraught with unfairness."
Simply stated, the exception finds the application where the owner would be given
undue incremental advantages arising from the use to which the government
devotes the property expropriated -- as for instance, the extension of a main
thoroughfare as was in the case in Caro de Araullo. In the instant case, however, it is
difficult to conceive of how there could have been an extra-ordinary increase in the
value of the owner’s land arising from the expropriation, as indeed the records do
not show any evidence that the valuation of P1,000.00 reached in 1992 was due to
increments directly caused by petitioner’s use of the land. Since the petitioner is
claiming an exception to Rule 67, Section 4, it has the burden in proving its claim
that its occupancy and use -- not ordinary inflation and increase in land values --
was the direct cause of the increase in valuation from 1978 to 1992.
Side Issue: When is there "Taking" of Property?
But there is yet another cogent reason why this petition should be denied and why
the respondent Court should be sustained. An examination of the undisputed
factual environment would show that the "taking" was not really made in 1978.
This Court has defined the elements of "taking" as the main ingredient in the
exercise of power of eminent domain, in the following words:
"A number of circumstances must be present in "taking" of property for purposes of
eminent domain: (1) the expropriator must enter a private property; (2) the
entrance into private property must be for more than a momentary period; (3) the
entry into the property should be under warrant or color of legal authority; (4) the
property must be devoted to a public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for public use must be in
such a way to oust the owner and deprive him of all beneficial enjoyment of the
property."(Italics supplied)
In this case, the petitioner’s entrance in 1978 was without intent to expropriate or
was not made under warrant or color of legal authority, for it believed the property
was public land covered by Proclamation No. 1354. When the private respondent
raised his claim of ownership sometime in 1979, the petitioner flatly refused the
claim for compensation, nakedly insisted that the property was public land and
wrongly justified its possession by alleging it had already paid "financial assistance"
to Marawi City in exchange for the rights over the property. Only in 1990, after
more than a decade of beneficial use, did the petitioner recognize private
respondent’s ownership and negotiate for the voluntary purchase of the property.
A Deed of Sale with provisional payment and subject to negotiations for the correct
price was then executed. Clearly, this is not the intent nor the expropriation
contemplated by law. This is a simple attempt at a voluntary purchase and sale.
Obviously, the petitioner neglected and/or refused to exercise the power of
eminent domain.
Only in 1992, after the private respondent sued to recover possession and
petitioner filed its Complaint to expropriate, did petitioner manifest its intention to
exercise the power of eminent domain. Thus the respondent Court correctly held:
"If We decree that the fair market value of the land be determined as of 1978, then
We would be sanctioning a deceptive scheme whereby NAPOCOR, for any reason
other than for eminent domain would occupy another’s property and when later
pressed for payment, first negotiate for a low price and then conveniently
expropriate the property when the land owner refuses to accept its offer claiming
that the taking of the property for the purpose of the eminent domain should be
reckoned as of the date when it started to occupy the property and that the value
of the property should be computed as of the date of the taking despite the
increase in the meantime in the value of the property."
In Noble vs. City of Manila, the City entered into a lease-purchase agreement of a
building constructed by the petitioner’s predecessor-in-interest in accordance with
the specifications of the former. The Court held that being bound by the said
contract, the City could not expropriate the building. Expropriation could be
resorted to "only when it is made necessary by the opposition of the owner to the
sale or by the lack of any agreement as to the price." Said the Court:
"The contract, therefore, in so far as it refers to the purchase of the building, as we
have interpreted it, is in force, not having been revoked by the parties or by judicial
decision. This being the case, the city being bound to buy the building at an agreed
price, under a valid and subsisting contract, and the plaintiff being agreeable to its
sale, the expropriation thereof, as sought by the defendant, is baseless.
Expropriation lies only when it is made necessary by the opposition of the owner to
the sale or by the lack of any agreement as to the price. There being in the present
case a valid and subsisting contract, between the owner of the building and the city,
for the purchase thereof at an agreed price, there is no reason for the
expropriation." (Italics supplied)
In the instant case, petitioner effectively repudiated the deed of sale it entered into
with the private respondent when it passed Resolution No. 92-121 on May 25, 1992
authorizing its president to negotiate, inter alia, that payment "shall be effective
only after Agus I HE project has been placed in operation." It was only then that
petitioner’s intent to expropriate became manifest as private respondent disagreed
and, barely a month, filed suit.25
In the present case, to allow petitioner to use the date it constructed the tunnels as
the date of valuation would be grossly unfair. First, it did not enter the land under
warrant or color of legal authority or with intent to expropriate the same. In fact, it
did not bother to notify the owners and wrongly assumed it had the right to dig
those tunnels under their property. Secondly, the "improvements" introduced by
petitioner, namely, the tunnels, in no way contributed to an increase in the value of
the land. The trial court, therefore, as affirmed by the CA, rightly computed the
valuation of the property as of 1992, when respondents discovered the
construction of the huge underground tunnels beneath their lands and petitioner
confirmed the same and started negotiations for their purchase but no agreement
could be reached.26
As to the amount of the valuation, the RTC and the CA both used as basis the value
of the adjacent property, Lot 1 (the property involved herein being Lots 2 and 3 of
the same subdivision plan), which was valued at ₱1,000 per sq. meter as of 1990, as
sustained by this Court in Mangondato, thus:
The Second Issue: Valuation
We now come to the issue of valuation.
The fair market value as held by the respondent Court, is the amount of ₱1,000.00
per square meter. In an expropriation case where the principal issue is the
determination of just compensation, as is the case here, a trial before
Commissioners is indispensable to allow the parties to present evidence on the
issue of just compensation. Inasmuch as the determination of just compensation in
eminent domain cases is a judicial function and factual findings of the Court of
Appeals are conclusive on the parties and reviewable only when the case falls
within the recognized exceptions, which is not the situation obtaining in this
petition, we see no reason to disturb the factual findings as to valuation of the
subject property. As can be gleaned from the records, the court-and-the-parties-
appointed commissioners did not abuse their authority in evaluating the evidence
submitted to them nor misappreciate the clear preponderance of evidence. The
amount fixed and agreed to by the respondent appellate Court is not grossly
exorbitant. To quote:
"Commissioner Ali comes from the Office of the Register of Deeds who may well be
considered an expert, with a general knowledge of the appraisal of real estate and
the prevailing prices of land in the vicinity of the land in question so that his opinion
on the valuation of the property cannot be lightly brushed aside.
"The prevailing market value of the land is only one of the determinants used by the
commissioners’ report the other being as herein shown:
 xxx
xxx
"Commissioner Doromal’s report, recommending P300.00 per square meter, differs
from the 2 commissioners only because his report was based on the valuation as of
1978 by the City Appraisal Committee as clarified by the latter’s chairman in
response to NAPOCOR’s general counsel’s query."
In sum, we agree with the Court of Appeals that petitioner has failed to show why it
should be granted an exemption from the general rule in determining just
compensation provided under Section 4 of Rule 67. On the contrary, private
respondent has convinced us that, indeed, such general rule should in fact be
observed in this case.27
Petitioner has not shown any error on the part of the CA in reaching such a
valuation. Furthermore, these are factual matters that are not within the ambit of
the present review.
WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals in
C.A.-G.R. CV No. 57792 dated June 8, 2005 is AFFIRMED.
No costs.
SO ORDERED.
NPC VS. TARCELO
DECISION
DEL CASTILLO, J.:
Execution must always conform to that decreed in the dispositive part of the
decision, because the only portion thereof that may be the subject of execution is
that which is precisely ordained or decreed in the dispositive portion; whatever is in
the body of the decision can only be considered as part of the reasons or
conclusions and serves as a guide in determining the ratio decidendi.1
This Petition for Review on Certiorari2 seeks to set aside the January 20, 2011
Decision3 of the Court of Appeals (CA) and August 9, 2011 Resolution4 in CA-G.R. SP
No. 112054, which denied the herein petitioner's Petition for Certiorari and Motion
for Reconsideration, respectively, thus affirming the dispositions of the Regional
Trial Court of Batangas City, Branch VII (Batangas City RTC) in Civil Case No. 5785.
Factual Antecedents
Civil Case No. 5785
Respondents Felicisimo Tarcelo (Tarcelo) and the heirs of Comia Santos (Santos
heirs) are the owners of two lots measuring 4,404 and 2,611 square meters,
respectively, which are situated in Brgy. Tabangao-Ambulong, Batangas City.
Sometime in 2000, petitioner National Power Corporation (NPC) filed Civil Case No.
5785 with the Batangas City RTC, seeking to expropriate portions of Tarcelo and the
Santos heirs’ lots to the extent of 1,595.91 square meters which are affected by the
construction and maintenance of NPC’s 1,200 MW Ilijan Natural Gas Pipeline
Project. In other words, NPC’s natural gas pipeline shall traverse respondents’ lands
to such extent.
On July 29, 2002, the Batangas City RTC issued an order of condemnation, thus
authorizing NPC to take possessionof the subject lots. Thereafter, it appointed three
commissioners who in turn submitted their respective Reports5 and
recommendations on the amount of just compensation to be paid to respondents.
On November 7, 2005, the Batangas City RTC rendered a Decision6 fixing just
compensation for the subject lots at ₱1,000.00 per square meter, thus:
In the Commissioner’s Report filed by Chairman of the Board Emelinda C. Atienza,
she recommended x x x the amount of ₱1,120.00 per square meter as just
compensation for the properties involvedin this case. She based her findings on the
following:
Property of Felicisimo Tarcelo7
1. The subject property is classified as agricultural land;
2. It is approximately 420 meters away from Shell Refinery and
approximately 40 meters away from the Barangay Road;
3. Adjoining boundary owners property [sic] are also classified as
agricultural lands.
Property of the Heirs of Santos Comia8
 1. The subject property is classified as agricultural land;
2. It is approximately 560 meters away from Shell Refinery and
approximately 140 meters away from the Barangay Road;
3. Adjoining boundary owners property [sic] are also classified as
agricultural lands.
Commissioners Alberto M. Nuique and Eladio Taupa of the National Power
Corporation (NPC) also submitted their own Commissioner’s Report. They
recommended that the amount of ₱475.00 per square meter be made as the
payment of the affected portion of the subject property which is 10% of the fair
market value pursuant to Republic Act No. 6395 as amended. Commissioners Taupa
and Nuique recommended the amount of ₱475.00 per square meter because only a
right-of-way easement will be acquired. According to the Supreme Court in the case
of NPC v. Manubay Agro Industrial Dev. Corp., G.R. No. 150936, August 18, 2004,
even if what is acquired is only an easement of right of way, still, the plaintiff should
pay the full value of the property and not a mere easement fee.
Based on the foregoing, the court fixes the just compensation for the subject
properties situated in Brgy. Tabangao-Ambulong, Batangas City at ONE THOUSAND
PESOS (₱1,000.00)per square meter.
WHEREFORE, plaintiff National Power Corporation is ordered to pay the defendants
the amount of ₱1,000.00 per square meter.
Upon payment of just compensation to the defendants, subject to the deductions of
the sums due the Government for unpaid real estate taxes and other imposts, the
plaintiff shall have a lawful right to enter, take possession and acquire easement of
right-of-way over the portions of the properties together with the improvements
sought to be expropriated for the purpose stated, free from any and all liens and
encumbrances.
Finally, the plaintiff is directed topay the corresponding Commissioner’s fees per
meeting or the following sums:
Chairman Emelinda C. Atienza - ₱1,000.00
Members Alberto M. Nuique - P 800.00
and Eladio Taupa - P 800.00
SO ORDERED.9
CA-G.R. CV No. 86712
NPC filed an appeal – docketed as CA-G.R. CV No. 86712 – with the CA. On June 26,
2007, the appellate court issued a Decision,10 stating as follows:
At bar, it cannot be gainsaid thatthe construction of underground pipeline is a
simple case ofmere passage of gas pipeline. It will surely cause damage and
prejudice to the agricultural potentials of appellees’ property. Deep excavation will
have to be done whereby plants and trees will be uprooted. A possible leakage
could certainly do harm and adversely restrict the agricultural and economic activity
of the land. This is not to mention that it will create an environmental health hazard
dangerous to the occupant’s life and limb.
Hence, defendants-appellees are entitled for [sic] justcompensation to [sic] the
fullmarket value of their property notjust ten percent (10%) of it.
xxxx
Taking all the consideration [sic] of the subject property, Commissioners Taupa and
Nuique placed the value of the property at ₱475.00 per square meter based on the
Land Bank valuation and Cuervo Appraisers, Inc. and the Provincial/City Appraisal
Committees of Batangas, Laguna and Lipa City, while Commissioner Atienza valued
the property at ₱1,120.00 per square meter, based on the average value per
findings of the Committee composed of the City Assessor, City Treasurer, City
Engineer under Resolution No. 9-99 dated June 18, 1999 that the subject property
will cost ₱1,000.00 to ₱1,300.00 per square meter, and the opinion value of her
Team’s survey and Report which revealed that the prevailing price of agricultural
land in Tabangao-Ambulong, Batangas City is NINE HUNDRED THIRTY PESOS
(₱930.00) per square meter.
In pronouncing the just compensation in this case, We fix the rate of the subject
property at SEVEN HUNDREDNINETY SEVEN [sic] and FIFTY CENTAVOS (₱797.50) per
square meter by averaging ₱475.00 and ₱1,120.00 of the commissioner’s report.
This is nearest to and in consonance with the ruling that in expropriation
proceedings, the owner of the property condemned is generally entitled to the fair
market value, that is the sum of money which a person desirous but not compelled
to buy, and an owner willing but not compelled to sell.
IN VIEW OF ALL THE FOREGOING, appealed decision dated November 7, 2005 is
AFFIRMEDwith MODIFICATIONthat the just compensation in this case is lowered
from ONE THOUSAND PESOS (₱1,000.00) to SEVEN HUNDRED NINETY SEVEN and
FIFTY CENTAVOS (₱797.50) per square meter. No pronouncement as to costs.
SO ORDERED.11
The above Decision ofthe appellate court became final and executory, and entry of
judgment was done accordingly.12
Respondents moved for execution.13 In a March 6, 2009 Order,14 the Batangas City
RTC granted their respective motions, and a Writ of Execution15 was issued.
On May 14, 2009, a Notice of Garnishment16 was served on the Manager of the
Land Bank of the Philippines, NPC Branch, Quezon City for the satisfaction of the
amount of ₱5,594,462.50 representing justcompensation for the wholeof
respondents’ 4,404- and 2,611-square meter lots – or 7,015 square meters – and
not merely the supposedly affected portions thereof totaling 1,595.91 square
meters as NPC originally sought to acquire.
On May 29, 2009, NPC filed an Urgent Omnibus Motion17 seeking to quash the Writ
of Execution and Notice of Garnishment, which it claimed were inconsistent with
the Batangas City RTC’s November 7, 2005 Decision and the CA’s June 26, 2007
Decision in CA-G.R. CV No. 86712 where just compensation was fixed at ₱1,000.00
per square meter only for the affected area of 1,591.91 square meters, and not for
the whole of respondents’ respective lots. It argued that the appeal in CA-G.R. CV
No. 86712 resolved only the issue of whether respondents should be paid the full
marketvalue of the affected 1,595.91-square meter area or just a 10% easement fee
therefor; it did not decide whether NPC should pay just compensation for the entire
area of 7,015 square meters.
On September 24, 2009,the Batangas City RTC issued an Order18 denying
NPC’s Urgent Omnibus Motion, declaring that –
The cases cited by plaintiff are not in point. These cases involved either the
construction and maintenance of electric transmission lines x x x or the widening of
road component x x x. None of the cited cases involved underground natural gas
pipelines, as in this case. It does not take an expert to be able to infer that there is a
world of difference on the probable effects of the two (2) kinds of projects on the
properties upon which these are imposed. In the case of transmission lines, the NPC
imposes a limitation on the property owner’s use of their property in that below
said transmission lines no plant higher than three (3) meters is planted. In the case
of underground pipelines, similar, if not more burdensome restrictions, are imposed
for the reason that the ground under which the natural gas pipelines are located
could not be cultivated in view of the dangers that might result from accidental
injury or damage to the pipelines.
Moreover, there is the possible inestimable damage that an unpredictable natural
disaster such as an earthquake of tectonic origin, the precise date and time of
occurrence of which are yet beyond the powers of man to accurately foretell, could
inflict on the underground natural gas pipelines and consequently, on all things,
living and non-living, that exist in the vicinity of the defendants’ properties.
Moreover, the ruling that just compensation should be paid for the entire area of
the owner’s property and not justthe affected portion thereof is not without
precedent. In NPC vs. Court of Appeals (436 SCRA 195, 201 [August 12, 2001]), the
Supreme Court [noted] that "Pobre’s property suffered permanent injury because
of the noise, water, air, and land pollution generated by NPC’s geothermal plants[;
t]he construction and operation of the geothermal plants drastically changed the
topography of the property making it no longer viable as a resort-subdivision[; and
t]he chemicals emitted by the geothermal plants damaged the natural resources in
the property and endangered the lives of the residents. Accordingly, the Supreme
Court held that "NPC did not only take the 8,311.60 square meter portion of the
property but also the remaining area of the 68,969 square-meter property. NPC had
rendered Pobre’s entire property useless as a resort-subdivision. The property has
become useful only to NPC. NPC must therefore take Pobre’s entire property and
pay for it. x x x
In the case at bar, it was not disputed that the subject properties are agricultural
lands. In order to be usefulto its owners, suchagricultural lands must be cultivated
to yield a harvest ofagricultural produce. But when such lands are burdened with an
easement even of the non-apparent kind, but which to all intents and purposes
restrict, nay, preclude the very activity that would render it useful to its owners
because the existence of such easement poses an undeniable danger to the life and
limb of the occupants, then such lands cease to be useful to the property owners
and useful only to the entity that imposed the easement upon the land. The
Honorable Court of Appeals recognized this fact when it declared that:
"At bar, it cannot be gainsaid that the construction of underground pipeline is a
simple case of mere passage of gas pipeline. It will surely causedamage and
prejudice to the agricultural potentials of appellees’ property. Deep excavation will
have to be done whereby plants and trees will be uprooted. A possible leakage
could certainly do harm and adversely restrict the agricultural and economic
activityof the land. This is not to mention that it will create anenvironmental health
hazard dangerous to the occupant’s life and limb.
Hence, defendants-appellees are entitled for [sic] just compensation to the full
market value of their property not just ten percent of it.
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." x x x
Thus, the argument of defendant heirs of Santos Comia is well taken that as to
them, the entire area of their property, and not just the affected portion thereof,
had become useless to them. It is [useful only] to plaintiff NPC. The same holds true
for the entire property owned by defendant Felicisimo Tarcelo. Therefore, NPC
must pay for the full market value of the entire properties owned by defendant
Felicisimo Tarcelo and defendant heirs of Santos Comia.
WHEREFORE, the Omnibus Motion is DENIED. As the Writ of Execution dated March
9, 2009 and Notice ofGarnishment dated May 14, 2009 are consistent with the
Decision of the Court of Appeals dated June 28, 2007, this Court’s Sheriff is hereby
ordered to forthwith enforce the Writ of Execution dated March 9, 2009 and Notice
of Garnishment dated May 14, 2009 and to submit immediately a written report on
his proceedings thereon.
SO ORDERED.19
NPC filed a Motion for Reconsideration,20 which was deniedin an October 23, 2009
Order21 on the ground that it did not contain a notice of hearing and was thus a
mere scrap of paper that did not toll the running of the period to appeal and
therefore rendered the Batangas City RTC’s September 24, 2009 Order final and
executory.
Ruling of the Court of Appeals
Seeking to set aside the September 24, 2009 and October 23, 2009 Orders of the
Batangas City RTC as well as itsMarch 9, 2009 Writ ofExecution and May 14, 2009
Notice of Garnishment, NPC filed a Petition for Certiorari22 with the CA, which was
docketed as CA-G.R. SP No. 112054. It pleaded liberality in the application of the
rule on motions and insisted that the assailed writ of execution and notice of
garnishment were inconsistent with the CA’s June 26, 2007 Decision in CA-G.R. CV
No. 86712 in which just compensation was fixed at ₱1,000.00 per square meter only
for the affected area of 1,595.91 square meters, and not for the whole of
respondents’ respective lots. It reiterated that since the trial court’s dispositions
were irregular and inconsistent with the Decision in CA-G.R. CV No. 86712, justice
dictated that the technical rules on motions should give way to considerations of
equity; that in CA-G.R. CV No. 86712, the only question that had to be resolved was
whether NPC should pay the full market value of the 1,595.91-square meter
affectedarea or merely a 10% easement fee for the use thereof – and not whether it
should pay for the entire 7,015 square meters owned by respondents. Finally, it
maintained that the inclusion of the whole property instead of only the affected
portions thereof would render the execution process in Civil Case No. 5785 unjust
and inequitable.
On January 20, 2011, the CA rendered the assailed Decision containing the following
decretal portion:
WHEREFORE, the instant petition for certiorari is DENIED. Accordingly, the assailed
Orders of the public respondent Regional Trial Court of Batangas City, in Civil Case
No. 5785, STAND. SO ORDERED.23
The CA held that there was nothing in the November 7, 2005 Decision of the
Batangas City RTC to indicate thatNPC was being ordered to pay just compensation
only for the 1,595.91-square meter portion ofrespondents’ properties; on the
contrary, the trial court held that –
Based on the foregoing, the court fixes the justcompensation for the subject
propertiessituated in Brgy. Tabangao-Ambulong, Batangas City at ONE THOUSAND
PESOS (₱1,000.00) per square meter.24 (Emphasis supplied)
– which meant that in the fixing of the amount of just compensation, the trial court
did not confine itself to the 1,595.91-square meter portion but ratherto the subject
properties in their entirety and without qualification. It added that the trial court’s
citation of National Power Corporation v. Manubay Agro-Industrial Development
Corporation25strengthened the view that the trial court intended for respondents to
be paid compensation for the whole of their properties,as it was held in said cited
case that just compensation should be "neither morenor less than the monetary
equivalent of the land;"26 the trial court’s judgment may be clarified by referring to
other portions thereof, and not by reading them separately from the whole decision
– in other words, the "decision should be taken as a whole and considered in its
entirety to get the truemeaning and intent of any particular portion thereof." 27
The CA noted that even in the June 26, 2007 Decision inCA-G.R. CV No. 86712, it
was acknowledged that –
At bar, it cannot be gainsaid thatthe construction of underground pipeline is a
simple case of mere passage of gas pipeline. It will surely cause damage and
prejudice to the agricultural potentials of appellees’ property. Deep excavation will
have to be done whereby plants and trees will be uprooted. A possible leakage
could certainly do harm and adversely restrict the agricultural and economic activity
of the land. This is not to mention that it will create an environmental health hazard
dangerous to the occupant’s life and limb.
Hence, defendants-appellees are entitled for [sic] justcompensation to [sic] the
fullmarket value of their property not just ten percent (10%) of it. 28
It added that in the September 24, 2009 Order of the BatangasCity RTC, it was made
clear that NPC should pay for the entire area of respondents’ properties, and not
just the affectedportions thereof when it held that –
x x x. In the case of underground pipelines, similar, if not more burdensome
restrictions, are imposed for the reason that the ground under which the natural
gas pipelines are located could not be cultivated in view of the dangers that might
result from accidental injury or damage to the pipelines. Moreover, there is the
possible inestimable damage that an unpredictable natural disaster such as an
earthquake of tectonic origin, the precise date and time of occurrence of which are
yet beyond the powers of man to accurately foretell, could inflict on the
underground natural gas pipelines and consequently, on all things, living and non-
living, that exist in the vicinity of the defendants’ properties.
Moreover, the ruling that just compensation should be paid for the entire area of
the owner’s property and not justthe affected portion thereof is not without
precedent. In NPC vs. Court of Appeals (436 SCRA 195, 201 [August 12, 2001]), the
Supreme Court [noted] that "Pobre’s property suffered permanent injury because
of the noise, water, air, and land pollution generated by NPC’s geothermal plants[;
t]he construction and operation of the geothermal plants drastically changed the
topography of the property making it no longer viable as a resort-subdivision[; and
t]he chemicals emitted by the geothermal plants damaged the natural resources in
the property and endangered the lives of the residents. Accordingly, the Supreme
Court held that "NPC did not only take the 8,311.60 square meter portion of the
property but also the remaining area of the 68,969 square-meter property. NPC had
rendered Pobre’s entire property useless as a resort-subdivision. The property has
become useful only to NPC. NPC must therefore take Pobre’s entire property and
pay for it. x x x
In the case at bar, it was not disputed that the subject properties are agricultural
lands. In order to be usefulto its owners, suchagricultural lands must be cultivated
to yield a harvest ofagricultural produce. But when such lands are burdened with an
easement even of the non-apparent kind, but which to all intents and purposes
restrict, nay, preclude the very activity that would render it useful to its owners
because the existence of such easement poses an undeniable danger to the life and
limb of the occupants, then such lands cease to be useful to the property owners
and useful only to the entity that imposed the easement upon the land. The
Honorable Court of Appeals recognized this fact when it declared that:
"At bar, it cannot be gainsaid that the construction of underground pipeline is a
simple case of mere passage of gas pipeline.1âwphi1 It will surely causedamage and
prejudice to the agricultural potentials of appellees’ property. Deep excavation will
have to be done whereby plants and trees will be uprooted. A possible leakage
could certainly do harm and adversely restrict the agricultural and economic
activityof the land. This is not to mention that it will create an environmental health
hazard dangerous to the occupant’s life and limb.
Hence, defendants-appellees are entitled for (sic) just compensation to [sic] the full
market value of their property not just ten percent of it.29
Finally, the CA found nothing wrong with the trial court’s October 23, 2009 Order
denying NPC’s Motion for Reconsideration (of the trial court’s September 24, 2009
Order), since the saidmotion lacked the required notice of hearing; it was properly
treated as a pro formamotion, a mere scrap of paper, and in the absence of merit
and compelling reasons, the Rule pertaining to motions may not be relaxed for
NPC’s benefit.
NPC filed its Motion for Reconsideration,30 which was denied by the appellate court
in an August 9, 2011 Resolution. Hence, the instant Petition.
Issues
The Petition is grounded on the following:
I
THE COURT OF APPEALS ERRED IN UPHOLDING THE TRIAL COURT’S ORDERS
APPROVING THE NOTICE OF GARNISHMENT WHICH DEMANDED PAYMENT OF JUST
COMPENSATION FOR THE ENTIRE PROPERTY OF RESPONDENTS INSTEAD OF THE
AFFECTED PORTIONS ONLY INACCORDANCE WITHTHE COMPLAINT AND THE TRIAL
COURT’S DECISION.
II
THE COURT OF APPEALS ERRED IN UPHOLDING THE ORDER OF THE TRIAL COURT
WHICH DENIEDPETITIONER’S MOTION FOR RECONSIDERATION IN COMPLETE
DISREGARD OF LIBERALITY ENUNCIATED IN SEVERAL DECISIONS OF THIS
HONORABLE COURT.31
Petitioner’s Arguments
In its Petition and Consolidated Reply,32 NPC argues that while there is no dispute as
to its liability torespondents, the Sheriff’s computation as reflected in the Notice of
Garnishment is erroneous inthat it is being made to pay for more than what was
adjudged; justcompensation should be limited to the value of that portion so taken,
and not the entire property of which such portion forms part. It cites cases where
the computation and payment of just compensation was limited to the value of the
affected portions only.33 It continues to plead for liberality in respect to its Motion
for Reconsideration of the trial court’s September 24, 2009 Order, which was
denied via the October 23, 2009 Order for lack of the required notice of hearing.
NPC thus prays that the assailed CA dispositions – together with the September 24,
2009 and October 23, 2009 Orders and the May 14, 2009 Notice of Garnishment –
be set aside. Respondents’ Arguments
Praying that the Petition be denied for lack of merit, the Santos heirs in their
Comment34 restate the assailed CA Decision, and add that while NPC sought a mere
right-of-way for its pipelines, the truth is that their property will be rendered
useless by the toxic fumes and hazardous substances that could beemitted by such
pipelines; that their situation is akin tothat of the landowner in the case of National
Power Corporation v. Manubay Agro-Industrial Development Corporation,35 who
was adjudged to be entitled to the full value of the property, and not a mere
easement fee; and thatNPC cannot claim liberality in the application of the Rule on
motions36 because there exist no special or compelling circumstances to warrant
the relaxation of the rule, and NPC’s failure is the result of fault and negligence on
itspart, and it has not shown to the satisfaction of the court that it is entitled to
leniency.
On the other hand, respondent Tarcelo argues in his Comment 37 that there is no
inconsistency between the trial court’s November 7, 2005 Decision and the June 26,
2007 Decision of the CA inCA-G.R. CV No. 86712 on the one hand, and the trial
court’s September 24, 2009 and October 23, 2009 Orders and the March 9, 2009
Writ of Execution and May 14, 2009 Notice of Garnishment on the other; that the
trial court and the CA treated respondents’ properties as a whole or in their entirety
in resolving the cases before them; thatNPC already knew beforehand that it is
being ordered to pay just compensation for the entirety of respondents’ properties
and not mere portionsthereof; and finally, that the trial court correctly denied
NPC’s Motion for Reconsideration of the September 24, 2009 Order for lack of a
notice of hearing.
Our Ruling
The Court grants the Petition.
The exercise of the right of eminent domain, whether directly by the State or by its
authorized agents, is necessarily in derogation of private rights. It is one of the
harshest proceedings known to the law. x x x The authority to condemn is to be
strictly construed in favor of the owner and against the condemnor. When the
power is granted, the extent to which it may be exercised is limited to the express
terms or clear implication of the statute in which the grant is contained. 38
Corollarily, it has been held that trial courts should exercise care and
circumspection in the resolution of just compensation cases, considering that they
involve the expenditure of public funds.39
The above principles were somehow lost on both the trial and appellate courts.
The Commissioners’ Reports in Civil Case No. 5785 indicate that only the affected
areas were intended to beacquired and compensated. Thus, Commissioner
Emelinda C. Atienza’s Report containsthe following recommendation:
IV. Recommendation
Finding x x x that the valuation established herein was reasonable and fair, the
undersigned recommend [sic] thatthe amount of Php1,120.00 per square meter be
adopted to compensate the affected areas on the properties involve [sic] in the
above subject case.40 (Emphasis supplied)
On the other hand, Commissioners Alberto M. Nuique and Eladio R. Taupa’s
respective Reports uniformly state:
III. RECOMMENDATIONS
It is hereby recommended that only easement fee be made as the payment on the
affected portionof the above-mentioned parcel of agricultural land which is 10% of
the fair market value pursuant to Republic Act 6395 as amended x x x 41 (Emphasis
supplied)
The trial court itself particularly decreed in its November 7, 2005 Decision that only
the affectedportions of respondents’ properties were to be acquired and
compensated for. In the decretal portion ofits Decision, it thus held as follows:
WHEREFORE, plaintiff National Power Corporation is ordered to pay the defendants
the amount of ₱1,000.00 per square meter.
Upon payment of just compensation to the defendants, subject to the deductions of
the sums due the Government for unpaid real estate taxes and other imposts, the
plaintiff shall have a lawful right to enter, take possession and acquire easement of
right-of-way over the portions of the propertiestogether with the improvements
sought to be expropriated for the purpose stated, free from any and all liens and
encumbrances.42 (Emphasis and underscoring supplied)
The CA therefore patently erred in declaring in its assailed Decision that there is
nothing in the November 7, 2005 Decision of the Batangas City RTC to indicate that
NPC was being ordered to pay just compensation only for the 1,595.91-square
meter portion of respondents’ properties.On the contrary, the evidence is quite
clear that NPC has beenmade liable precisely to such extent only, and not more.
The Court likewise observes that contrary to the CA’s appreciation, the June 26,
2007 Decision in CA-G.R. CV No. 86712 did notparticularly declare that NPC should
pay for the entirearea of respondents’ properties. It merely stated that respondents
should be compensated for the full and fair market value of their property and not
merely paid a 10%easement fee therefor; it did not resolve the issue of whether
NPC should pay just compensation for the entire area of 7,015 square meters. It
simply said that NPC should pay for the full per-square meter value of the affected
portions, and not just a fraction thereof (or 10%). There could be no other
interpretation of the June 26, 2007 pronouncement in CAG.R. CV No. 86712 when
the CA stated therein that – At bar, it cannot be gainsaid thatthe construction of
underground pipeline is a simple case of mere passage of gas pipeline. It will surely
cause damage and prejudice to the agricultural potentials of appellees’ property.
Deep excavation will have to be done whereby plants and trees will be uprooted. A
possible leakage could certainly do harm and adversely restrict the agricultural and
economic activity of the land. This is not to mention that it will create an
environmental health hazard dangerous to the occupant’s life and limb.
Hence, defendants-appellees are entitled for (sic) just compensation to (sic) the
fullmarket value of their property notjust ten percent (10%) of it.
xxxx
Taking all the consideration [sic] ofthe subject property, Commissioners Taupa and
Nuique placed the value of the property at ₱475.00 per square meter based on the
Land Bank valuation and Cuervo Appraisers, Inc. and the Provincial/City Appraisal
Committees of Batangas, Laguna and Lipa City, while Commissioner Atienza valued
the property at ₱1,120 per square meter, based on the average value per findings
of the Committee composed of the City Assessor, City Treasurer, City Engineer
under Resolution No. 9-99 dated June 18, 1999 that the subject property will cost
₱1,000.00 to ₱1,300.00 per square meter, and the opinion value of her Team’s
surveyand Report which revealed that the prevailing price of agricultural land
inTabangao-Ambulong, Batangas City is NINE HUNDRED THIRTY PESOS (₱930.00)
per square meter.43 (Emphasis in the original; underscoring supplied)
NPC is thus correct in its observation that the issue of whether it should be made to
pay for the whole 7,015-square meter area was not at all raised. Besides, in arriving
at its judgment, the CA took into full consideration the Commissioners’ Reports,
which recommended the payment of just compensation only for the affected
portions of respondents’ properties;if it believed otherwise, the appellate court
would have so indicated, and it would have taken exception to the said reports and
arrived at its own independent consideration of the case.
It has always been the rule that "[t]he only portion of the decision that may be the
subject of execution is that which isordained or decreed in the dispositive portion.
Whatever may be found in the body of the decision can only be considered as part
of the reasons or conclusions of the court and serve only as guides to determine the
ratio decidendi."44 "[W]here there is a conflict between the dispositive portion of
the decision and the body thereof, the dispositive portion controls irrespective of
what appears in the body of the decision. While the body of the decision, order or
resolution might create some ambiguityin the manner of the court’s reasoning
preponderates, it is the dispositive portion thereof that finally invests rights upon
the parties,sets conditions for the exercise of those rights, and imposes
corresponding duties or obligation."45 Thus, with the decretal portion of the trial
court’s November 7, 2005 Decision particularly stating that NPC shall have the
lawful right to enter, take possession and acquire easement of right-ofway over the
affected portions of respondents’ properties upon the payment of just
compensation, any order executing the trial court’s Decision should be based on
such dispositive portion. "An order of execution is based on the disposition, not on
the body, of the decision."46 Execution must therefore conform to that ordained or
decreed in the dispositive part of the decision. 47 Since there is a disparity between
the dispositive portion of the trial court’s November 7, 2005 Decision asaffirmed
with modification by the final and executory June 26, 2007 Decision of the CA in CA-
G.R. CV No. 86712 – which decreed that respondents be paid just compensation
only for the affected portionsof their properties, totaling 1,595.91 square meters –
and the Notice of Garnishment – for the satisfaction of the amount of
₱5,594,462.50 representing just compensation for the whole 7,015 square meters –
the latter must be declared null and void.
It is a settled general principle that a writ of execution must conform substantially
to every essential particular of the judgment promulgated. Execution not in
harmony with the judgment is bereft of validity. It must conform, more particularly,
to that ordained or decreed in the dispositive portion of the decision.48
In the same manner, the Batangas City RTC’s September 24, 2009 and October 23,
2009 Orders are hereby declared null and void in regard only to the Notice of
Garnishment, as it countermands the decretal portion of the November 7, 2005
Decision and completely changes the tenor thereof by holding NPC liable to pay for
the value of the whole of respondents’ properties; all proceedings held for the
purpose of amending or altering the dispositive portion of the trial court’s
November 7, 2005 Decision, as affirmed with modification by the CA’s final and
executory June 26, 2007 Decision in CA-G.R. CV No. 86712, are null and void for lack
of jurisdiction.1âwphi1 This is exactly what the Court said in one case:
Moreover, petitioner is correct in saying that impleading her for the purpose of
execution is tantamount to modifying a decision that had long become final and
executory. The falloof the 1997 Decision bythe NLRC only held "respondents Pro
Agency Manila Inc., and Abdul Rahman Al Mahwes to jointly and severally pay
complainants x x x." By holding her liable despite not being ordained as such by the
decision, both the CA and NLRCviolated the doctrine on immutability of judgments.
In PH Credit Corporation v. Court of Appeals, we stressed that "respondent’s
[petitioner’s] obligation is based on the judgment rendered by the trial court. The
dispositive portion or the fallois its decisive resolution and is thus the subject of
execution. x x x. Hence the execution must conform with that which is ordained or
decreed in the dispositive portion of the decision."
In INIMACO v. NLRC, we also held thus:
None of the parties in the case before the Labor Arbiter appealed the Decision
dated March 10, 1987, hence the same became final and executory. It was,
therefore, removed from the jurisdiction of the Labor Arbiter orthe NLRC to further
alter or amend it. Thus, the proceedings held for the purpose of amending or
altering the dispositive portion of the said decision are null and void for lack of
jurisdiction. Also, the Alias Writ of Execution is null and void because it varied the
tenor of the judgment in that it sought to enforce the final judgment against
‘‘Antonio Gonzales/Industrial Management Development Corp. (INIMACO) and/or
Filipinas Carbon and Mining Corp. and Gerardo Sicat, which makes the liability
solidary.
In other words, "[o]nce a decision or order becomes final and executory, it is
removed from the power or jurisdiction of the court which rendered it to further
alter or amend it. It thereby becomes immutable and unalterable and any
amendment or alteration which substantially affects a final and executory judgment
is null and void for lack of jurisdiction, including the entire proceedings heldfor that
purpose. An order of execution which varies the tenor of the judgment or exceeds
the terms thereof is a nullity."49 (Emphasis supplied)
The failure of NPC to include a notice of hearing in its Motion for Reconsideration of
the trial court’s September 24, 2009 Order has been rendered irrelevant
considering our pronouncement that the said Order is null and void on the matter
covering the Notice of Garnishment. "A void judgment or order has no legal and
binding effect, force or efficacy for any purpose. In contemplation of law, it is non-
existent. Suchjudgment or order may be resisted in any action or proceeding
whenever it is involved. It is not even necessary to take any steps to vacate or avoid
a void judgment or final order; itmay simply be ignored."50
WHEREFORE, the Petition is GRANTED. Judgment is hereby rendered as follows:
1. The January 20, 2011Decision and August 9,2011 Resolution of the Court
of Appeals in CA-G.R. SP No. 112054 are PARTIALLY REVERSED and SET
ASIDE;
2. The September 24, 2009 and October 23, 2009 Orders of the Regional
Trial Court of Batangas City, Branch VII in Civil Case No. 5785 are declared
NULL and VOID IN PART, in that the Notice of Garnishment is nullified and
set aside;
3. Petitioner National Power Corporation is adjudged liable to PAY JUST
COMPENSATIONto respondents Felicisimo Tarcelo and the Heirs of Comia
Santos for the affected portions of their respective properties totaling
1,595.91 square meters, at ₱797.50 per square meter, subject to interest
at the rate of twelve per cent (12%) per annumfrom July 29, 2002 up to
June 30, 2013, and thereafter, six percent (6%) per annumfrom July 1, 2013
until full satisfaction, pursuant to Bangko Sentral ng Pilipinas-Monetary
Board Circular No. 799, Series of 2013 and applicable jurisprudence;
4. Petitioner National Power Corporation is DIRECTED to pay the
Commissioners' Fees as set forth in the November 7, 2005 Decision of the
Regional Trial Court ofBatangas City, Branch VII in Civil Case No. 5785.
SO ORDERED.