G.R. No. 166429 December 19, 2005 the construction of the facilities.
the construction of the facilities. Still, in his Separate Opinion, Justice Panganiban,
REPUBLIC OF THE PHILIPPINES, Represented by Executive Secretary Eduardo
R. Ermita, the DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS
(DOTC), and the MANILA INTERNATIONAL AIRPORT AUTHORITY
(MIAA), Petitioners,
vs.
HON. HENRICK F. GINGOYON, In his capacity as Presiding Judge of the
Regional Trial Court, Branch 117, Pasay City and PHILIPPINE INTERNATIONAL
AIR TERMINALS CO., INC., Respondents.
DECISION
TINGA, J.:
The Ninoy Aquino International Airport Passenger Terminal III (NAIA 3) was
conceived, designed and constructed to serve as the countrys show window to the
world. Regrettably, it has spawned controversies. Regrettably too, despite the
apparent completion of the terminal complex way back it has not yet been operated.
This has caused immeasurable economic damage to the country, not to mention its
deplorable discredit in the international community.
In the first case that reached this Court, Agan v. PIATCO,1 the contracts which the
Government had with the contractor were voided for being contrary to law and public
policy. The second case now before the Court involves the matter of just
compensation due the contractor for the terminal complex it built. We decide the case
on the basis of fairness, the same norm that pervades both the Courts 2004
Resolution in the first case and the latest expropriation law.
The present controversy has its roots with the promulgation of the Courts decision
in Agan v. PIATCO,2 promulgated in 2003 (2003 Decision). This decision nullified the
"Concession Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy
Aquino International Airport Passenger Terminal III" entered into between the
Philippine Government (Government) and the Philippine International Air Terminals
Co., Inc. (PIATCO), as well as the amendments and supplements thereto. The
agreement had authorized PIATCO to build a new international airport terminal (NAIA
3), as well as a franchise to operate and maintain the said terminal during the
concession period of 25 years. The contracts were nullified, among others, that
Paircargo Consortium, predecessor of PIATCO, did not possess the requisite financial
capacity when it was awarded the NAIA 3 contract and that the agreement was
contrary to public policy.3
At the time of the promulgation of the 2003 Decision, the NAIA 3 facilities had already
been built by PIATCO and were nearing completion.4 However, the ponencia was
silent as to the legal status of the NAIA 3 facilities following the nullification of the
contracts, as well as whatever rights of PIATCO for reimbursement for its expenses in
joined by Justice Callejo, declared as follows:
Should government pay at all for reasonable expenses incurred in the
construction of the Terminal? Indeed it should, otherwise it will be unjustly
enriching itself at the expense of Piatco and, in particular, its funders,
contractors and investors both local and foreign. After all, there is no question
that the State needs and will make use of Terminal III, it being part and parcel of the
critical infrastructure and transportation-related programs of government.5
PIATCO and several respondents-intervenors filed their respective motions for the
reconsideration of the 2003 Decision. These motions were denied by the Court in
its Resolution dated 21 January 2004 (2004 Resolution).6However, the Court this time
squarely addressed the issue of the rights of PIATCO to refund, compensation or
reimbursement for its expenses in the construction of the NAIA 3 facilities. The holding
of the Court on this crucial point follows:
This Court, however, is not unmindful of the reality that the structures
comprising the NAIA IPT III facility are almost complete and that funds have
been spent by PIATCO in their construction. For the government to take over
the said facility, it has to compensate respondent PIATCO as builder of the said
structures. The compensation must be just and in accordance with law and
equity for the government can not unjustly enrich itself at the expense of
PIATCO and its investors.7
After the promulgation of the rulings in Agan, the NAIA 3 facilities have remained in
the possession of PIATCO, despite the avowed intent of the Government to put the
airport terminal into immediate operation. The Government and PIATCO conducted
several rounds of negotiation regarding the NAIA 3 facilities.8 It also appears that
arbitral proceedings were commenced before the International Chamber of Commerce
International Court of Arbitration and the International Centre for the Settlement of
Investment Disputes,9 although the Government has raised jurisdictional questions
before those two bodies.10
Then, on 21 December 2004, the Government11 filed a Complaint for expropriation
with the Pasay City Regional Trial Court (RTC), together with an Application for
Special Raffle seeking the immediate holding of a special raffle. The Government
sought upon the filing of the complaint the issuance of a writ of possession authorizing
it to take immediate possession and control over the NAIA 3 facilities.
The Government also declared that it had deposited the amount of
3,002,125,000.0012 (3 Billion)13 in Cash with the Land Bank of the Philippines,
representing the NAIA 3 terminals assessed value for taxation purposes.14
The case15 was raffled to Branch 117 of the Pasay City RTC, presided by respondent
judge Hon. Henrick F. Gingoyon (Hon. Gingoyon). On the same day that
the Complaint was filed, the RTC issued an Order16 directing the issuance of a writ of
possession to the Government, authorizing it to "take or enter upon the possession" of
the NAIA 3 facilities. Citing the case of City of Manila v. Serrano,17 the RTC noted that
it had the ministerial duty to issue the writ of possession upon the filing of a complaint
for expropriation sufficient in form and substance, and upon deposit made by the
government of the amount equivalent to the assessed value of the property subject to
expropriation. The RTC found these requisites present, particularly noting that "[t]he
case record shows that [the Government has] deposited the assessed value of the
[NAIA 3 facilities] in the Land Bank of the Philippines, an authorized depositary, as
shown by the certification attached to their complaint." Also on the same day, the RTC
issued a Writ of Possession. According to PIATCO, the Government was able to take
possession over the NAIA 3 facilities immediately after the Writ of Possession was
issued.18
However, on 4 January 2005, the RTC issued another Order designed to supplement
its 21 December 2004 Orderand the Writ of Possession. In the 4 January 2005 Order,
now assailed in the present petition, the RTC noted that its earlier issuance of its writ
of possession was pursuant to Section 2, Rule 67 of the 1997 Rules of Civil
Procedure. However, it was observed that Republic Act No. 8974 (Rep. Act No. 8974),
otherwise known as "An Act to Facilitate the Acquisition of Right-of-Way, Site or
Location for National Government Infrastructure Projects and For Other Purposes"
and its Implementing Rules and Regulations (Implementing Rules) had amended Rule
67 in many respects.
There are at least two crucial differences between the respective procedures under
Rep. Act No. 8974 and Rule 67. Under the statute, the Government is required to
make immediate payment to the property owner upon the filing of the complaint to be
entitled to a writ of possession, whereas in Rule 67, the Government is required only
to make an initial deposit with an authorized government depositary. Moreover, Rule
67 prescribes that the initial deposit be equivalent to the assessed value of the
property for purposes of taxation, unlike Rep. Act No. 8974 which provides, as the
relevant standard for initial compensation, the market value of the property as stated
in the tax declaration or the current relevant zonal valuation of the Bureau of Internal
Revenue (BIR), whichever is higher, and the value of the improvements and/or
structures using the replacement cost method.
their direct operation" of the airport terminal, pending expropriation proceedings and
full payment of just compensation. However, the Government was prohibited "from
performing acts of ownership like awarding concessions or leasing any part of [NAIA
3] to other parties."19
The very next day after the issuance of the assailed 4 January 2005 Order, the
Government filed an Urgent Motion for Reconsideration, which was set for hearing on
10 January 2005. On 7 January 2005, the RTC issued anotherOrder, the second now
assailed before this Court, which appointed three (3) Commissioners to ascertain the
amount of just compensation for the NAIA 3 Complex. That same day, the
Government filed a Motion for Inhibitionof Hon. Gingoyon.
The RTC heard the Urgent Motion for Reconsideration and Motion for Inhibition on 10
January 2005. On the same day, it denied these motions in an Omnibus Order dated
10 January 2005. This is the third Order now assailed before this Court. Nonetheless,
while the Omnibus Order affirmed the earlier dispositions in the 4 January 2005Order,
it excepted from affirmance "the superfluous part of the Order prohibiting the plaintiffs
from awarding concessions or leasing any part of [NAIA 3] to other parties."20
Thus, the present Petition for Certiorari and Prohibition under Rule 65 was filed on 13
January 2005. The petition prayed for the nullification of the RTC orders dated 4
January 2005, 7 January 2005, and 10 January 2005, and for the inhibition of Hon.
Gingoyon from taking further action on the expropriation case. A concurrent prayer for
the issuance of a temporary restraining order and preliminary injunction was granted
by this Court in a Resolution dated 14 January 2005.21
The Government, in imputing grave abuse of discretion to the acts of Hon. Gingoyon,
raises five general arguments, to wit:
(i) that Rule 67, not Rep. Act No. 8974, governs the present expropriation
proceedings;
(ii) that Hon. Gingoyon erred when he ordered the immediate release of the amount of
US$62.3 Million to PIATCO considering that the assessed value as alleged in the
complaint was only 3 Billion;

Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974 and Section 10 of (iii) that the RTC could not have prohibited the Government from enjoining the
the Implementing Rules, the RTC made key qualifications to its earlier performance of acts of ownership;
issuances. First, it directed the Land Bank of the Philippines, Baclaran Branch (LBP-
Baclaran), to immediately release the amount of US$62,343,175.77 to PIATCO, an
amount which the RTC characterized as that which the Government "specifically made (iv) that the appointment of the three commissioners was erroneous; and
available for the purpose of this expropriation;" and such amount to be deducted from
the amount of just compensation due PIATCO as eventually determined by the (v) that Hon. Gingoyon should be compelled to inhibit himself from the expropriation
RTC. Second, the Government was directed to submit to the RTC a Certificate of case.22
Availability of Funds signed by authorized officials to cover the payment of just
compensation. Third, the Government was directed "to maintain, preserve and
safeguard" the NAIA 3 facilities or "perform such as acts or activities in preparation for
Before we delve into the merits of the issues raised by the Government, it is essential
to consider the crucial holding of the Court in its 2004 Resolution in Agan, which we
repeat below:
This Court, however, is not unmindful of the reality that the structures comprising the
NAIA IPT III facility are almost complete and that funds have been spent by PIATCO
in their construction. For the government to take over the said facility, it has to
compensate respondent PIATCO as builder of the said structures. The
compensation must be just and in accordance with law and equity for the
government can not unjustly enrich itself at the expense of PIATCO and its
investors.23
This pronouncement contains the fundamental premises which permeate this decision
of the Court. Indeed, Agan, final and executory as it is, stands as governing law in this
case, and any disposition of the present petition must conform to the conditions laid
down by the Court in its 2004 Resolution.
The 2004 Resolution Which Is
Law of This Case Generally
Permits Expropriation
The pronouncement in the 2004 Resolution is especially significant to this case
in two aspects, namely: (i) that PIATCO must receive payment of just
compensation determined in accordance with law and equity; and (ii) that the
government is barred from taking over NAIA 3 until such just compensation is
paid. The parties cannot be allowed to evade the directives laid down by this Court
through any mode of judicial action, such as the complaint for eminent domain.
It cannot be denied though that the Court in the 2004 Resolution prescribed
mandatory guidelines which the Government must observe before it could acquire the
NAIA 3 facilities. Thus, the actions of respondent judge under review, as well as the
arguments of the parties must, to merit affirmation, pass the threshold test of whether
such propositions are in accord with the 2004 Resolution.
The Government does not contest the efficacy of this pronouncement in the
2004 Resolution,24 thus its application
to the case at bar is not a matter of controversy. Of course, questions such as what is
the standard of "just compensation" and which particular laws and equitable principles
are applicable, remain in dispute and shall be resolved forthwith.
The Government has chosen to resort to expropriation, a remedy available under the
law, which has the added benefit of an integrated process for the determination of just
compensation and the payment thereof to PIATCO. We appreciate that the case at
bar is a highly unusual case, whereby the Government seeks to expropriate a building
complex constructed on land which the State already owns.25 There is an inherent
illogic in the resort to eminent domain on property already owned by the State. At first
blush, since the State already owns the property on which NAIA 3 stands, the proper
remedy should be akin to an action for ejectment.
However, the reason for the resort by the Government to expropriation proceedings is
understandable in this case. The 2004 Resolution, in requiring the payment of just
compensation prior to the takeover by the Government of
NAIA 3, effectively precluded it from acquiring possession or ownership of the NAIA 3
through the unilateral exercise of its rights as the owner of the ground on which the
facilities stood. Thus, as things stood after the 2004 Resolution, the right of the
Government to take over the NAIA 3 terminal was preconditioned by lawful order on
the payment of just compensation to PIATCO as builder of the structures.
The determination of just compensation could very well be agreed upon by the parties
without judicial intervention, and it appears that steps towards that direction had been
engaged in. Still, ultimately, the Government resorted to its inherent power of eminent
domain through expropriation proceedings. Is eminent domain appropriate in the first
place, with due regard not only to the law on expropriation but also to the Courts 2004
Resolution in Agan?
The right of eminent domain extends to personal and real property, and the NAIA 3
structures, adhered as they are to the soil, are considered as real property. 26 The
public purpose for the expropriation is also beyond dispute. It should also be noted
that Section 1 of Rule 67 (on Expropriation) recognizes the possibility that the property
sought to be expropriated may be titled in the name of the
Republic of the Philippines, although occupied by private individuals, and in such case
an averment to that effect should be made in the complaint. The instant expropriation
complaint did aver that the NAIA 3 complex "stands on a parcel of land owned by the
Bases Conversion Development Authority, another agency of [the Republic of the
Philippines]."27
Admittedly, eminent domain is not the sole judicial recourse by which the Government
may have acquired the NAIA 3 facilities while satisfying the requisites in the 2004
Resolution. Eminent domain though may be the most effective, as well as the
speediest means by which such goals may be accomplished. Not only does it enable
immediate possession after satisfaction of the requisites under the law, it also has a
built-in procedure through which just compensation may be ascertained. Thus, there
should be no question as to the propriety of eminent domain proceedings in this case.
Still, in applying the laws and rules on expropriation in the case at bar, we are impelled
to apply or construe these rules in accordance with the Courts prescriptions in the
2004 Resolution to achieve the end effect that the Government may validly take over
the NAIA 3 facilities. Insofar as this case is concerned, the 2004 Resolution is effective
not only as a legal precedent, but as the source of rights and prescriptions that must
be guaranteed, if not enforced, in the resolution of this petition. Otherwise, the integrity
and efficacy of the rulings of this Court will be severely diminished.
It is from these premises that we resolve the first question, whether Rule 67 of the
Rules of Court or Rep. Act No. 8974 governs the expropriation proceedings in this
case.
Application of Rule 67 Violates
the 2004 Agan Resolution
The Government insists that Rule 67 of the Rules of Court governs the expropriation
proceedings in this case to the exclusion of all other laws. On the other hand, PIATCO
claims that it is Rep. Act No. 8974 which does apply. Earlier, we had adverted to the
basic differences between the statute and the procedural rule. Further elaboration is in
order.
Rule 67 outlines the procedure under which eminent domain may be exercised by the
Government. Yet by no means does it serve at present as the solitary guideline
through which the State may expropriate private property. For example, Section 19 of
the Local Government Code governs as to the exercise by local government units of
the power of eminent domain through an enabling ordinance. And then there is Rep.
Act No. 8974, which covers expropriation proceedings intended for national
government infrastructure projects.
Rep. Act No. 8974, which provides for a procedure eminently more favorable to the
property owner than Rule 67, inescapably applies in instances when the national
government expropriates property "for national government infrastructure
projects."28 Thus, if expropriation is engaged in by the national government for
purposes other than national infrastructure projects, the assessed value standard and
the deposit mode prescribed in Rule 67 continues to apply.
Under both Rule 67 and Rep. Act No. 8974, the Government commences
expropriation proceedings through the filing of a complaint. Unlike in the case of local
governments which necessitate an authorizing ordinance before expropriation may be
accomplished, there is no need under Rule 67 or Rep. Act No. 8974 for legislative
authorization before the Government may proceed with a particular exercise of
eminent domain. The most crucial difference between Rule 67 and Rep. Act No. 8974
concerns the particular essential step the Government has to undertake to be entitled
to a writ of possession.
The first paragraph of Section 2 of Rule 67 provides:
SEC. 2. Entry of plaintiff upon depositing value with authorized government
depository. Upon the filing of the complaint or at any time thereafter and after due
notice to the defendant, the plaintiff shall have the right to take or enter upon the
possession of the real property involved if he deposits with the authorized
government depositary an amount equivalent to the assessed value of the
property for purposes of taxation to be held by such bank subject to the orders
of the court. Such deposit shall be in money, unless in lieu thereof the court
authorizes the deposit of a certificate of deposit of a government bank of the
Republic of the Philippines payable on demand to the authorized government
depositary.
In contrast, Section 4 of Rep. Act No. 8974 relevantly states:
SEC. 4. Guidelines for Expropriation Proceedings. Whenever it is necessary to
acquire real property for the right-of-way, site or location for any national government
infrastructure project through expropriation, the appropriate proceedings before the
proper court under the following guidelines:
a) Upon the filing of the complaint, and after due notice to the defendant, the
implementing agency shall immediately pay the owner of the property the amount
equivalent to the sum of (1) one hundred percent (100%) of the value of the property
based on the current relevant zonal valuation of the Bureau of Internal Revenue (BIR);
and (2) the value of the improvements and/or structures as determined under Section
7 hereof;
...
c) In case the completion of a government infrastructure project is of utmost urgency
and importance, and there is no existing valuation of the area concerned, the
implementing agency shall immediately pay the owner of the property its proffered
value taking into consideration the standards prescribed in Section 5 hereof.
Upon completion with the guidelines abovementioned, the court shall immediately
issue to the implementing agency an order to take possession of the property and
start the implementation of the project.
Before the court can issue a Writ of Possession, the implementing agency shall
present to the court a certificate of availability of funds from the proper official
concerned.
...
As can be gleaned from the above-quoted texts, Rule 67 merely requires the
Government to deposit with an authorized government depositary the assessed value
of the property for expropriation for it to be entitled to a writ of possession. On the
other hand, Rep. Act No. 8974 requires that the Government make a direct payment
to the property owner before the writ may issue. Moreover, such payment is based on
the zonal valuation of the BIR in the case of land, the value of the improvements or
structures under the replacement cost method,29 or if no such valuation is available
and in cases of utmost urgency, the proffered value of the property to be seized.
It is quite apparent why the Government would prefer to apply Rule 67 in lieu of Rep.
Act No. 8974. Under Rule 67, it would not be obliged to immediately pay any amount
to PIATCO before it can obtain the writ of possession since all it need do is deposit the
amount equivalent to the assessed value with an authorized government depositary.
Hence, it devotes considerable effort to point out that Rep. Act No. 8974 does not
apply in this case, notwithstanding the undeniable reality that NAIA 3 is a national
government project. Yet, these efforts fail, especially considering the controlling effect
of the 2004 Resolution in Agan on the adjudication of this case.
It is the finding of this Court that the staging of expropriation proceedings in this case
with the exclusive use of Rule 67 would allow for the Government to take over the
NAIA 3 facilities in a fashion that directly rebukes our 2004 Resolution in Agan. This
Court cannot sanction deviation from its own final and executory orders.
Section 2 of Rule 67 provides that the State "shall have the right to take or enter upon
the possession of the real property involved if [the plaintiff] deposits with the
authorized government depositary an amount equivalent to the assessed value of the
property for purposes of taxation to be held by such bank subject to the orders of the
court."30It is thus apparent that under the provision, all the Government need do to
obtain a writ of possession is to deposit the amount equivalent to the assessed value
with an authorized government depositary.
Would the deposit under Section 2 of Rule 67 satisfy the requirement laid down in the
2004 Resolution that "[f]or the government to take over the said facility, it has to
compensate respondent PIATCO as builder of the said structures"? Evidently not.
If Section 2 of Rule 67 were to apply, PIATCO would be enjoined from receiving a
single centavo as just compensation before the Government takes over the NAIA 3
facility by virtue of a writ of possession. Such an injunction squarely contradicts the
letter and intent of the 2004 Resolution. Hence, the position of the Government
sanctions its own disregard or violation the prescription laid down by this Court that
there must first be just compensation paid to PIATCO before the Government may
take over the NAIA 3 facilities.
Thus, at the very least, Rule 67 cannot apply in this case without violating the 2004
Resolution. Even assuming that Rep. Act No. 8974 does not govern in this case, it
does not necessarily follow that Rule 67 should then apply. After all, adherence to the
letter of Section 2, Rule 67 would in turn violate the Courts requirement in the 2004
Resolution that there must first be payment of just compensation to PIATCO before
the Government may take over the property.
It is the plain intent of Rep. Act No. 8974 to supersede the system of deposit under
Rule 67 with the scheme of "immediate payment" in cases involving national
government infrastructure projects. The following portion of the Senate deliberations,
cited by PIATCO in its Memorandum, is worth quoting to cogitate on the purpose
behind the plain meaning of the law:
THE CHAIRMAN (SEN. CAYETANO). "x x x Because the Senate believes that, you
know, we have to pay the landowners immediately not by treasury bills but by
cash.
Since we are depriving them, you know, upon payment, no, of possession, we
might as well pay them as much, no, hindi lang 50 percent.
xxx
THE CHAIRMAN (REP. VERGARA). Accepted.
xxx
THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really in favor of the
landowners, e.
THE CHAIRMAN (REP. VERGARA). Thats why we need to really secure the
availability of funds.
xxx
THE CHAIRMAN (SEN. CAYETANO). No, no. Its the same. It says here: iyong
first paragraph, diba? Iyong zonal talagang magbabayad muna. In other
words, you know, there must be a payment kaagad. (TSN, Bicameral Conference
on the Disagreeing Provisions of House Bill 1422 and Senate Bill 2117, August 29,
2000, pp. 14-20)
xxx
THE CHAIRMAN (SEN. CAYETANO). Okay, okay, no. Unang-una, it is not
deposit, no. Its payment."
REP. BATERINA. Its payment, ho, payment." (Id., p. 63)31
It likewise bears noting that the appropriate standard of just compensation is a
substantive matter. It is well within the province of the legislature to fix the standard,
which it did through the enactment of Rep. Act No. 8974. Specifically, this prescribes
the new standards in determining the amount of just compensation in expropriation
cases relating to national government infrastructure projects, as well as the manner of
payment thereof. At the same time, Section 14 of the Implementing Rules recognizes
the continued applicability of Rule 67 on procedural aspects when it provides "all
matters regarding defenses and objections to the complaint, issues on uncertain
ownership and conflicting claims, effects of appeal on the rights of the parties, and
such other incidents affecting the complaint shall be resolved under the provisions on
expropriation of Rule 67 of the Rules of Court."32
Given that the 2004 Resolution militates against the continued use of the norm under
Section 2, Rule 67, is it then possible to apply Rep. Act No. 8974? We find that it is,
and moreover, its application in this case complements rather than contravenes the
prescriptions laid down in the 2004 Resolution.
Rep. Act No. 8974 Fits
to the Situation at Bar
and Complements the
2004 Agan Resolution
Rep. Act No. 8974 is entitled "An Act To Facilitate The Acquisition Of Right-Of-Way,
Site Or Location For National Government Infrastructure Projects And For Other
Purposes." Obviously, the law is intended to cover expropriation proceedings intended
for national government infrastructure projects. Section 2 of Rep. Act No. 8974
explains what are considered as "national government projects."
Sec. 2. National Government Projects. The term "national government projects" shall
refer to all national government infrastructure, engineering works and service
contracts, including projects undertaken by government-owned and controlled
corporations, all projects covered by Republic Act No. 6957, as amended by Republic
Act No. 7718, otherwise known as the Build-Operate-and-Transfer Law, and other
related and necessary activities, such as site acquisition, supply and/or installation of
equipment and materials, implementation, construction, completion, operation,
maintenance, improvement, repair and rehabilitation, regardless of the source of
funding.
As acknowledged in the 2003 Decision, the development of NAIA 3 was made
pursuant to a build-operate-and-transfer arrangement pursuant to Republic Act No.
6957, as amended,33 which pertains to infrastructure or development projects normally
financed by the public sector but which are now wholly or partly implemented by the
private sector.34 Under the build-operate-and-transfer scheme, it is the project
proponent which undertakes the construction, including the financing, of a given
infrastructure facility.35 In Tatad v. Garcia,36 the Court acknowledged that the operator
of the EDSA Light Rail Transit project under a BOT scheme was the owner of the
facilities such as "the rail tracks, rolling stocks like the coaches, rail stations, terminals
and the power plant."37
There can be no doubt that PIATCO has ownership rights over the facilities which it
had financed and constructed. The 2004 Resolution squarely recognized that right
when it mandated the payment of just compensation to PIATCO prior to the takeover
by the Government of NAIA 3. The fact that the Government resorted to eminent
domain proceedings in the first place is a concession on its part of PIATCOs
ownership. Indeed, if no such right is recognized, then there should be no impediment
for the Government to seize control of NAIA 3 through ordinary ejectment
proceedings.
Since the rights of PIATCO over the NAIA 3 facilities are established, the nature of
these facilities should now be determined. Under Section 415(1) of the Civil Code,
these facilities are ineluctably immovable or real property, as they constitute buildings,
roads and constructions of all kinds adhered to the soil.38 Certainly, the NAIA 3
facilities are of such nature that they cannot just be packed up and transported by
PIATCO like a traveling circus caravan.
Thus, the property subject of expropriation, the NAIA 3 facilities, are real property
owned by PIATCO. This point is critical, considering the Governments insistence that
the NAIA 3 facilities cannot be deemed as the "right-of-way", "site" or "location" of a
national government infrastructure project, within the coverage of Rep. Act No. 8974.
There is no doubt that the NAIA 3 is not, under any sensible contemplation, a "right-of-
way." Yet we cannot agree with the Governments insistence that neither could NAIA 3
be a "site" or "location". The petition quotes the definitions provided in Blacks Law
Dictionary of "location" as the specific place or position of a person or thing and site
as pertaining to a place or location or a piece of property set aside for specific
use."39 Yet even Blacks Law Dictionary provides that "[t]he term [site] does not of
itself necessarily mean a place or tract of land fixed by definite boundaries."40 One
would assume that the Government, to back up its contention, would be able to point
to a clear-cut rule that a "site" or "location" exclusively refers to soil, grass, pebbles
and weeds. There is none.
Indeed, we cannot accept the Governments proposition that the only properties that
may be expropriated under Rep. Act No. 8974 are parcels of land. Rep. Act No. 8974
contemplates within its coverage such real property constituting land, buildings, roads
and constructions of all kinds adhered to the soil. Section 1 of Rep. Act No. 8974,
which sets the declaration of the laws policy, refers to "real property acquired for
national government infrastructure projects are promptly paid just
compensation."41 Section 4 is quite explicit in stating that the scope of the law relates
to the acquisition of "real property," which under civil law includes buildings, roads and
constructions adhered to the soil.
It is moreover apparent that the law and its implementing rules commonly provide for a
rule for the valuation of improvements and/or structures thereupon separate from that
of the land on which such are constructed. Section 2 of Rep. Act No. 8974 itself
recognizes that the improvements or structures on the land may very well be the
subject of expropriation proceedings. Section 4(a), in relation to Section 7 of the law
provides for the guidelines for the valuation of the improvements or structures to be
expropriated. Indeed, nothing in the law would prohibit the application of Section 7,
which provides for the valuation method of the improvements and or structures in the
instances wherein it is necessary for the Government to expropriate only the
improvements or structures, as in this case.
The law classifies the NAIA 3 facilities as real properties just like the soil to which they
are adhered. Any sub-classifications of real property and divergent treatment based
thereupon for purposes of expropriation must be based on substantial distinctions,
otherwise the equal protection clause of the Constitution is violated. There may be
perhaps a molecular distinction between soil and the inorganic improvements adhered
thereto, yet there are no purposive distinctions that would justify a variant treatment for
purposes of expropriation. Both the land itself and the improvements thereupon are
susceptible to private ownership independent of each other, capable of pecuniary
estimation, and if taken from the owner, considered as a deprivation of property. The
owner of improvements seized through expropriation suffers the same degree of loss
as the owner of land seized through similar means. Equal protection demands that all
persons or things similarly situated should be treated alike, both as to rights conferred
and responsibilities imposed. For purposes of expropriation, parcels of land are
similarly situated as the buildings or improvements constructed thereon, and a
disparate treatment between those two classes of real property infringes the equal
protection clause.
Even as the provisions of Rep. Act No. 8974 call for that laws application in this case,
the threshold test must still be met whether its implementation would conform to the
dictates of the Court in the 2004 Resolution. Unlike in the case of Rule 67, the
application of Rep. Act No. 8974 will not contravene the 2004 Resolution, which
requires the payment of just compensation before any takeover of the NAIA 3 facilities
by the Government. The 2004 Resolution does not particularize the extent such
payment must be effected before the takeover, but it unquestionably requires at least
some degree of payment to the private property owner before a writ of possession
may issue. The utilization of Rep. Act No. 8974 guarantees compliance with this bare
minimum requirement, as it assures the private property owner the payment of, at the
very least, the proffered value of the property to be seized. Such payment of the
proffered value to the owner, followed by the issuance of the writ of possession in
favor of the Government, is precisely the schematic under Rep. Act No. 8974, one
which facially complies with the prescription laid down in the 2004 Resolution.
Clearly then, we see no error on the part of the RTC when it ruled that Rep. Act No.
8974 governs the instant expropriation proceedings.
The Proper Amount to be Paid
under Rep. Act No. 8974
Then, there is the matter of the proper amount which should be paid to PIATCO by the
Government before the writ of possession may issue, consonant to Rep. Act No.
8974.
At this juncture, we must address the observation made by the Office of the Solicitor
General in behalf of the Government that there could be no "BIR zonal valuations" on
the NAIA 3 facility, as provided in Rep. Act No. 8974, since zonal valuations are only
for parcels of land, not for airport terminals. The Court agrees with this point, yet does
not see it as an impediment for the application of Rep. Act No. 8974.
It must be clarified that PIATCO cannot be reimbursed or justly compensated for the
value of the parcel of land on which NAIA 3 stands. PIATCO is not the owner of the
land on which the NAIA 3 facility is constructed, and it should not be entitled to just
compensation that is inclusive of the value of the land itself. It would be highly
disingenuous to compensate PIATCO for the value of land it does not own. Its
entitlement to just compensation should be limited to the value of the improvements
and/or structures themselves. Thus, the determination of just compensation cannot
include the BIR zonal valuation under Section 4 of Rep. Act No. 8974.
Under Rep. Act No. 8974, the Government is required to "immediately pay" the owner
of the property the amount equivalent to the sum of (1) one hundred percent (100%) of
the value of the property based on the current relevant zonal valuation of the [BIR];
and (2) the value of the improvements and/or structures as determined under Section
7. As stated above, the BIR zonal valuation cannot apply in this case, thus the amount
subject to immediate payment should be limited to "the value of the improvements
and/or structures as determined under Section 7," with Section 7 referring to the
"implementing rules and regulations for the equitable valuation of the improvements
and/or structures on the land." Under the present implementing rules in place, the
valuation of the improvements/structures are to be based using "the replacement cost
method."42 However, the replacement cost is only one of the factors to be considered
in determining the just compensation.
In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also mandated that the
payment of just compensation should be in accordance with equity as well. Thus, in
ascertaining the ultimate amount of just compensation, the duty of the trial court is to
ensure that such amount conforms not only to the law, such as Rep. Act No. 8974, but
to principles of equity as well.
Admittedly, there is no way, at least for the present, to immediately ascertain the value
of the improvements and structures since such valuation is a matter for factual
determination.43 Yet Rep. Act No. 8974 permits an expedited means by which the
Government can immediately take possession of the property without having to await
precise determination of the valuation. Section 4(c) of Rep. Act No. 8974 states that
"in case the completion of a government infrastructure project is of utmost urgency
and importance, and there is no existing valuation of the area concerned, the
implementing agency shall immediately pay the owner of the property its proferred
value, taking into consideration the standards prescribed in Section 5 [of the
law]."44 The "proffered value" may strike as a highly subjective standard based solely
on the intuition of the government, but Rep. Act No. 8974 does provide relevant
standards by which "proffered value" should be based, 45 as well as the certainty
of judicial determination of the propriety of the proffered value.46
In filing the complaint for expropriation, the Government alleged to have deposited the
amount of 3 Billion earmarked for expropriation, representing the assessed value of
the property. The making of the deposit, including the determination of the amount of
the deposit, was undertaken under the erroneous notion that Rule 67, and not Rep.
Act No. 8974, is the applicable law. Still, as regards the amount, the Court sees no
impediment to recognize this sum of 3 Billion as the proffered value under Section
4(b) of Rep. Act No. 8974. After all, in the initial determination of the proffered value,
the Government is not strictly required to adhere to any predetermined standards,
although its proffered value may later be subjected to judicial review using the
standards enumerated under Section 5 of Rep. Act No. 8974.
How should we appreciate the questioned order of Hon. Gingoyon, which pegged the
amount to be immediately paid to PIATCO at around $62.3 Million? The Order dated 4
January 2005, which mandated such amount, proves problematic in that regard. While
the initial sum of 3 Billion may have been based on the assessed value, a standard
which should not however apply in this case, the RTC cites without qualification
Section 4(a) of Rep. Act No. 8974 as the basis for the amount of $62.3 Million, thus
leaving the impression that the BIR zonal valuation may form part of the basis for just
compensation, which should not be the case. Moreover, respondent judge made no
attempt to apply the enumerated guidelines for determination of just compensation
under Section 5 of Rep. Act No. 8974, as required for judicial review of the proffered
value.
The Court notes that in the 10 January 2005 Omnibus Order, the RTC noted that the
concessions agreement entered into between the Government and PIATCO stated
that the actual cost of building NAIA 3 was "not less than" US$350 Million. 47 The RTC
then proceeded to observe that while Rep. Act No. 8974 required the immediate
payment to PIATCO the amount equivalent to 100% of the value of NAIA 3, the
amount deposited by the Government constituted only 18% of this value. At this point,
no binding import should be given to this observation that the actual cost of building
NAIA 3 was "not less than" US$350 Million, as the final conclusions on the amount of
just compensation can come only after due ascertainment in accordance with the
standards set under Rep. Act No. 8974, not the declarations of the parties. At the
same time, the expressed linkage between the BIR zonal valuation and the amount of
just compensation in this case, is revelatory of erroneous thought on the part of the
RTC.
We have already pointed out the irrelevance of the BIR zonal valuation as an
appropriate basis for valuation in this case, PIATCO not being the owner of the land
on which the NAIA 3 facilities stand. The subject order is flawed insofar as it fails to
qualify that such standard is inappropriate.
It does appear that the amount of US$62.3 Million was based on the certification
issued by the LBP-Baclaran that the Republic of the Philippines maintained a total
balance in that branch amounting to such amount. Yet the actual representation of the
$62.3 Million is not clear. The Land Bank Certification expressing such amount does
state that it was issued upon request of the Manila International Airport Authority
"purportedly as guaranty deposit for the expropriation complaint."48 The Government
claims in its Memorandum that the entire amount was made available as a guaranty
fund for the final and executory judgment of the trial court, and not merely for the
issuance of the writ of possession.49 One could readily conclude that the entire amount
of US$62.3 Million was intended by the Government to answer for whatever
guaranties may be required for the purpose of the expropriation complaint.
Still, such intention the Government may have had as to the entire US$62.3 Million is
only inferentially established. In ascertaining the proffered value adduced by the
Government, the amount of 3 Billion as the amount deposited characterized in the
complaint as "to be held by [Land Bank] subject to the [RTCs] orders,"50 should be
deemed as controlling. There is no clear evidence that the Government intended to
offer US$62.3 Million as the initial payment of just compensation, the wording of the
Land Bank Certification notwithstanding, and credence should be given to the
consistent position of the Government on that aspect.
In any event, for the RTC to be able to justify the payment of US$62.3 Million to
PIATCO and not 3 Billion Pesos, he would have to establish that the higher amount
represents the valuation of the structures/improvements, and not the BIR zonal
valuation on the land wherein NAIA 3 is built. The Order dated 5 January 2005 fails to
establish such integral fact, and in the absence of contravening proof, the proffered
value of 3 Billion, as presented by the Government, should prevail.
Strikingly, the Government submits that assuming that Rep. Act No. 8974 is
applicable, the deposited amount of 3 Billion should be considered as the proffered
value, since the amount was based on comparative values made by the City
Assessor.51 Accordingly, it should be deemed as having faithfully complied with the
requirements of the statute.52 While the Court agrees that 3 Billion should be
considered as the correct proffered value, still we cannot deem the Government as
having faithfully complied with Rep. Act No. 8974. For the law plainly requires direct
payment to the property owner, and not a mere deposit with the authorized
government depositary. Without such direct payment, no writ of possession may be
obtained.
Writ of Possession May Not Be Implemented Until Actual Receipt by PIATCO of
Proferred Value
The Court thus finds another error on the part of the RTC. The RTC authorized the
issuance of the writ of possession to the Government notwithstanding the fact that no
payment of any amount had yet been made to PIATCO, despite the clear command of
Rep. Act No. 8974 that there must first be payment before the writ of possession can
issue. While the RTC did direct the LBP-Baclaran to immediately release the amount
of US$62 Million to PIATCO, it should have likewise suspended the writ of possession,
nay, withdrawn it altogether, until the Government shall have actually paid PIATCO.
This is the inevitable consequence of the clear command of Rep. Act No. 8974 that
requires immediate payment of the initially determined amount of just compensation
should be effected. Otherwise, the overpowering intention of Rep. Act No. 8974 of
ensuring payment first before transfer of repossession would be eviscerated.
Rep. Act No. 8974 represents a significant change from previous expropriation laws
such as Rule 67, or even Section 19 of the Local Government Code. Rule 67 and the
Local Government Code merely provided that the Government deposit the initial
amounts53 antecedent to acquiring possession of the property with, respectively, an
authorized
Government depositary54 or the proper court.55 In both cases, the private owner does
not receive compensation prior to the deprivation of property. On the other hand, Rep.
Act No. 8974 mandates immediate payment of the initial just compensation prior to the
issuance of the writ of possession in favor of the Government.
Rep. Act No. 8974 is plainly clear in imposing the requirement of immediate
prepayment, and no amount of statutory deconstruction can evade such requisite. It
enshrines a new approach towards eminent domain that reconciles the inherent
unease attending expropriation proceedings with a position of fundamental equity.
While expropriation proceedings have always demanded just compensation in
exchange for private property, the previous deposit requirement impeded immediate
compensation to the private owner, especially in cases wherein the determination
of the final amount of compensation would prove highly disputed. Under the new
modality prescribed by Rep. Act No. 8974, the private owner sees immediate
monetary recompense with the same degree of speed as the taking of his/her
property.
While eminent domain lies as one of the inherent powers of the State, there is no
requirement that it undertake a prolonged procedure, or that the payment of the
private owner be protracted as far as practicable. In fact, the expedited procedure of
payment, as highlighted under Rep. Act No. 8974, is inherently more fair, especially to
the layperson who would be hard-pressed to fully comprehend the social value of
expropriation in the first place. Immediate payment placates to some degree whatever
ill-will that arises from expropriation, as well as satisfies the demand of basic fairness.
The Court has the duty to implement Rep. Act No. 8974 and to direct compliance with
the requirement of immediate payment in this case. Accordingly, the Writ of
Possession dated 21 December 2004 should be held in abeyance, pending proof of
actual payment by the Government to PIATCO of the proffered value of the NAIA 3
facilities, which totals 3,002,125,000.00.
Rights of the Government
upon Issuance of the Writ
of Possession
Once the Government pays PIATCO the amount of the proffered value of 3 Billion, it
will be entitled to the Writ of Possession. However, the Government questions the
qualification imposed by the RTC in its 4 January 2005 Orderconsisting of the
prohibition on the Government from performing acts of ownership such as awarding
concessions or leasing any part of NAIA 3 to other parties. To be certain, the RTC, in
its 10 January 2005 Omnibus Order, expressly stated that it was not affirming "the
superfluous part of the Order [of 4 January 2005] prohibiting the plaintiffs from
awarding concessions or leasing any part of NAIA [3] to other parties."56 Still, such
statement was predicated on the notion that since the Government was not yet the
owner of NAIA 3 until final payment of just compensation, it was obviously
incapacitated to perform such acts of ownership.
In deciding this question, the 2004 Resolution in Agan cannot be ignored, particularly
the declaration that "[f]or the government to take over the said facility, it has to
compensate respondent PIATCO as builder of the said structures." The obvious
import of this holding is that unless PIATCO is paid just compensation, the
Government is barred from "taking over," a phrase which in the strictest sense could
encompass even a bar of physical possession of NAIA 3, much less operation of the
facilities.
There are critical reasons for the Court to view the 2004 Resolution less stringently,
and thus allow the operation by the Government of NAIA 3 upon the effectivity of the
Writ of Possession. For one, the national prestige is diminished every day that passes
with the NAIA 3 remaining mothballed. For another, the continued non-use of the
facilities contributes to its physical deterioration, if it has not already. And still for
another, the economic benefits to the Government and the country at large are
beyond dispute once the NAIA 3 is put in operation.
Rep. Act No. 8974 provides the appropriate answer for the standard that governs the
extent of the acts the Government may be authorized to perform upon the issuance of
the writ of possession. Section 4 states that "the court shall immediately issue to the
implementing agency an order to take possession of the property and start the
implementation of the project." We hold that accordingly, once the Writ of
Possession is effective, the Government itself is authorized to perform the acts that
are essential to the operation of the NAIA 3 as an international airport terminal upon
the effectivity of the Writ of Possession. These would include the repair, reconditioning
and improvement of the complex, maintenance of the existing facilities and equipment,
installation of new facilities and equipment, provision of services and facilities
pertaining to the facilitation of air traffic and transport, and other services that are
integral to a modern-day international airport.
The Governments position is more expansive than that adopted by the Court. It
argues that with the writ of possession, it is enabled to perform acts de jure on the
expropriated property. It cites Republic v. Tagle,57 as well as the statement therein that
"the expropriation of real property does not include mere physical entry or occupation
of land," and from them concludes that "its mere physical entry and occupation of the
property fall short of the taking of title, which includes all the rights that may be
exercised by an owner over the subject property."
This conclusion is indeed lifted directly from statements in Tagle,58 but not from
the ratio decidendi of that case.Tagle concerned whether a writ of possession in favor
of the Government was still necessary in light of the fact that it was already in actual
possession of the property. In ruling that the Government was entitled to the writ of
possession, the Court in Tagle explains that such writ vested not only physical
possession, but also the legal right to possess the property. Continues the Court, such
legal right to possess was particularly important in the case, as there was a pending
suit against the Republic for unlawful detainer, and the writ of possession would serve
to safeguard the Government from eviction.59
At the same time, Tagle conforms to the obvious, that there is no transfer of ownership
as of yet by virtue of the writ of possession. Tagle may concede that the Government
is entitled to exercise more than just the right of possession by virtue of the writ of
possession, yet it cannot be construed to grant the Government the entire panoply of
rights that are available to the owner. Certainly, neither Tagle nor any other case or
law, lends support to the Governments proposition that it acquires beneficial or
equitable ownership of the expropriated property merely through the writ of
possession.
Indeed, this Court has been vigilant in defense of the rights of the property owner who
has been validly deprived of possession, yet retains legal title over the expropriated
property pending payment of just compensation. We reiterated the various doctrines of
such import in our recent holding in Republic v. Lim:60
The recognized rule is that title to the property expropriated shall pass from the owner
to the expropriator only upon full payment of the just compensation. Jurisprudence
on this settled principle is consistent both here and in other democratic jurisdictions.
In Association of Small Landowners in the Philippines, Inc. et al., vs. Secretary of
Agrarian Reform[61 ], thus:
"Title to property which is the subject of condemnation proceedings does not
vest the condemnor until the judgment fixing just compensation is entered and
paid, but the condemnors title relates back to the date on which the petition under the
Eminent Domain Act, or the commissioners report under the Local Improvement Act,
is filed.
x x x Although the right to appropriate and use land taken for a canal is
complete at the time of entry, title to the property taken remains in the owner
until payment is actually made. (Emphasis supplied.)
In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that
title to property does not pass to the condemnor until just compensation had actually
been made. In fact, the decisions appear to be uniform to this effect. As early as 1838,
in Rubottom v. McLure, it was held that actual payment to the owner of the
condemned property was a condition precedent to the investment of the title to
the property in the State albeit not to the appropriation of it to public
use. In Rexford v. Knight, the Court of Appeals of New York said that the construction
upon the statutes was that the fee did not vest in the State until the payment of the
compensation although the authority to enter upon and appropriate the land was
complete prior to the payment. Kennedy further said that both on principle and
authority the rule is . . . that the right to enter on and use the property is
complete, as soon as the property is actually appropriated under the authority
of law for a public use, but that the title does not pass from the owner without
his consent, until just compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes,
that:
If the laws which we have exhibited or cited in the preceding discussion are
attentively examined it will be apparent that the method of expropriation
adopted in this jurisdiction is such as to afford absolute reassurance that no
piece of land can be finally and irrevocably taken from an unwilling owner until
compensation is paid...."(Emphasis supplied.)
Clearly, without full payment of just compensation, there can be no transfer of title
from the landowner to the expropriator. Otherwise stated, the Republics acquisition of
ownership is conditioned upon the full payment of just compensation within a
reasonable time.
Significantly, in Municipality of Bian v. Garcia[62 ] this Court ruled that the
expropriation of lands consists of two stages, to wit:
"x x x The first is concerned with the determination of the authority of the plaintiff to
exercise the power of eminent domain and the propriety of its exercise in the context
of the facts involved in the suit. It ends with an order, if not of dismissal of the action,
"of condemnation declaring that the plaintiff has a lawful right to take the property
sought to be condemned, for the public use or purpose described in the complaint,
upon the payment of just compensation to be determined as of the date of the filing of
the complaint" x x x.
The second phase of the eminent domain action is concerned with the determination
by the court of "the just compensation for the property sought to be taken." This is
done by the court with the assistance of not more than three (3) commissioners. x x x.
It is only upon the completion of these two stages that expropriation is said to have
been completed. In Republic v. Salem Investment Corporation[63 ] , we ruled that, "the
process is not completed until payment of just compensation." Thus, here, the failure
of the Republic to pay respondent and his predecessors-in-interest for a period of 57
years rendered the expropriation process incomplete.
Lim serves fair warning to the Government and its agencies who consistently refuse to
pay just compensation due to the private property owner whose property had been
expropriated. At the same time, Lim emphasizes the fragility of the rights of the
Government as possessor pending the final payment of just compensation, without
diminishing the potency of such rights. Indeed, the public policy, enshrined foremost in
the Constitution, mandates that the Government must pay for the private property it
expropriates. Consequently, the proper judicial attitude is to guarantee compliance
with this primordial right to just compensation.
Final Determination of Just
Compensation Within 60 Days
The issuance of the writ of possession does not write finis to the expropriation
proceedings. As earlier pointed out, expropriation is not completed until payment to
the property owner of just compensation. The proffered value stands as merely a
provisional determination of the amount of just compensation, the payment of which is
sufficient to transfer possession of the property to the Government. However, to
effectuate the transfer of ownership, it is necessary for the Government to pay the
property owner the final just compensation.
In Lim, the Court went as far as to countenance, given the exceptional circumstances
of that case, the reversion of the validly expropriated property to private ownership
due to the failure of the Government to pay just compensation in that case. 64 It was
noted in that case that the Government deliberately refused to pay just compensation.
The Court went on to rule that "in cases where the government failed to pay just
compensation within five (5) years from the finality of the judgment in the expropriation
proceedings, the owners concerned shall have the right to recover possession of their
property."65
Rep. Act No. 8974 mandates a speedy method by which the final determination of just
compensation may be had. Section 4 provides:
In the event that the owner of the property contests the implementing agencys
proffered value, the court shall determine the just compensation to be paid the owner
within sixty (60) days from the date of filing of the expropriation case. When the
decision of the court becomes final and executory, the implementing agency shall pay
the owner the difference between the amount already paid and the just compensation
as determined by the court.
We hold that this provision should apply in this case. The sixty (60)-day period
prescribed in Rep. Act No. 8974 gives teeth to the laws avowed policy "to ensure that
owners of real property acquired for national government infrastructure projects
are promptly paid just compensation."66 In this case, there already has been
irreversible delay in the prompt payment of PIATCO of just compensation, and it is no
longer possible for the RTC to determine the just compensation due PIATCO within
sixty (60) days from the filing of the complaint last 21 December 2004, as
contemplated by the law. Still, it is feasible to effectuate the spirit of the law by
requiring the trial court to make such determination within sixty (60) days from finality
of this decision, in accordance with the guidelines laid down in Rep. Act No. 8974
and its Implementing Rules.
Of course, once the amount of just compensation has been finally determined, the
Government is obliged to pay PIATCO the said amount. As shown in Lim and other
like-minded cases, the Governments refusal to make such payment is indubitably
actionable in court.
Appointment of Commissioners
The next argument for consideration is the claim of the Government that the RTC
erred in appointing the three commissioners in its 7 January 2005 Order without prior
consultation with either the Government or PIATCO, or without affording the
Government the opportunity to object to the appointment of these commissioners. We
can dispose of this argument without complication.
It must be noted that Rep. Act No. 8974 is silent on the appointment of commissioners
tasked with the ascertainment of just compensation.67 This protocol though is
sanctioned under Rule 67. We rule that the appointment of commissioners under Rule
67 may be resorted to, even in expropriation proceedings under Rep. Act No. 8974,
since the application of the provisions of Rule 67 in that regard do not conflict with the
statute. As earlier stated, Section 14 of the Implementing Rules does allow such other
incidents affecting the complaint to be resolved under the provisions on expropriation
of Rule 67 of the Rules of Court. Even without Rule 67, reference during trial to a
commissioner of the examination of an issue of fact is sanctioned under Rule 32 of the
Rules of Court.
But while the appointment of commissioners under the aegis of Rule 67 may be
sanctioned in expropriation proceedings under Rep. Act No. 8974, the standards to be
observed for the determination of just compensation are provided not in Rule 67 but in
the statute. In particular, the governing standards for the determination of just
compensation for the NAIA 3 facilities are found in Section 10 of the Implementing
Rules for Rep. Act No. 8974, which provides for the replacement cost method in the
valuation of improvements and structures.68
Nothing in Rule 67 or Rep. Act No. 8974 requires that the RTC consult with the parties
in the expropriation case on who should be appointed as commissioners. Neither does
the Court feel that such a requirement should be imposed in this case. We did rule
in Municipality of Talisay v. Ramirez69 that "there is nothing to prevent [the trial court]
from seeking the recommendations of the parties on [the] matter [of appointment of
commissioners], the better to ensure their fair representation." 70 At the same time,
such solicitation of recommendations is not obligatory on the part of the court, hence
we cannot impute error on the part of the RTC in its exercise of solitary discretion in
the appointment of the commissioners.
What Rule 67 does allow though is for the parties to protest the appointment of any of
these commissioners, as provided under Section 5 of the Rule. These objections
though must be made filed within ten (10) days from service of the order of
appointment of the commissioners.71 In this case, the proper recourse of the
Government to challenge the choice of the commissioners is to file an objection with
the trial court, conformably with Section 5, Rule 67, and not as it has done, assail the
same through a special civil action for certiorari. Considering that the expropriation
proceedings in this case were effectively halted seven (7) days after
the Order appointing the commissioners,72 it is permissible to allow the parties to file
their objections with the RTC within five (5) days from finality of this decision.
Insufficient Ground for Inhibition of Respondent Judge
The final argument for disposition is the claim of the Government is that Hon.
Gingoyon has prejudged the expropriation case against the Governments cause and,
thus, should be required to inhibit himself. This grave charge is predicated on facts
which the Government characterizes as "undeniable." In particular, the Government
notes that the 4 January 2005 Order was issued motu proprio, without any preceding
motion, notice or hearing. Further, such order, which directed the payment of US$62
Million to PIATCO, was attended with error in the computation of just compensation.
The Government also notes that the said Order was issued even before summons had
been served on PIATCO.
The disqualification of a judge is a deprivation of his/her judicial power73 and should
not be allowed on the basis of mere speculations and surmises. It certainly cannot be
predicated on the adverse nature of the judges rulings towards the movant for
inhibition, especially if these rulings are in accord with law. Neither could inhibition be
justified merely on the erroneous nature of the rulings of the judge. We emphasized
in Webb v. People:74
To prove bias and prejudice on the part of respondent judge, petitioners harp on the
alleged adverse and erroneous rulings of respondent judge on their various
motions. By themselves, however, they do not sufficiently prove bias and
prejudice to disqualify respondent judge. To be disqualifying, the bias and
prejudice must be shown to have stemmed from an extrajudicial source and
result in an opinion on the merits on some basis other than what the judge
learned from his participation in the case. Opinions formed in the course of judicial
proceedings, although erroneous, as long as they are based on the evidence
presented and conduct observed by the judge, do not prove personal bias or prejudice
on the part of the judge. As a general rule, repeated rulings against a litigant, no
matter how erroneous and vigorously and consistently expressed, are not a
basis for disqualification of a judge on grounds of bias and prejudice. Extrinsic
evidence is required to establish bias, bad faith, malice or corrupt purpose, in
addition to the palpable error which may be inferred from the decision or order
itself. Although the decision may seem so erroneous as to raise doubts
concerning a judge's integrity, absent extrinsic evidence, the decision itself
would be insufficient to establish a case against the judge. The only exception
to the rule is when the error is so gross and patent as to produce an ineluctable
inference of bad faith or malice.75
The Governments contentions against Hon. Gingoyon are severely undercut by the
fact that the 21 December 2004Order, which the 4 January 2005 Order sought to
rectify, was indeed severely flawed as it erroneously applied the provisions of Rule 67
of the Rules of Court, instead of Rep. Act No. 8974, in ascertaining compliance with
the requisites for the issuance of the writ of possession. The 4 January
2005 Order, which according to the Government establishes Hon. Gingoyons bias,
was promulgated precisely to correct the previous error by applying the correct
provisions of law. It would not speak well of the Court if it sanctions a judge for
wanting or even attempting to correct a previous erroneous order which precisely is
the right move to take.
Neither are we convinced that the motu proprio issuance of the 4 January 2005 Order,
without the benefit of notice or hearing, sufficiently evinces bias on the part of Hon.
Gingoyon. The motu proprio amendment by a court of an erroneous order previously
issued may be sanctioned depending on the circumstances, in line with the long-
recognized principle that every court has inherent power to do all things reasonably
necessary for the administration of justice within the scope of its jurisdiction. 76 Section
5(g), Rule 135 of the Rules of Court further recognizes the inherent power of courts "to
amend and control its process and orders so as to make them conformable to law and
justice,"77 a power which Hon. Gingoyon noted in his 10 January 2005 Omnibus
Order.78 This inherent power includes the right of the court to reverse itself, especially
when in its honest opinion it has committed an error or mistake in judgment, and that
to adhere to its decision will cause injustice to a party litigant. 79
Certainly, the 4 January 2005 Order was designed to make the RTCs previous order
conformable to law and justice, particularly to apply the correct law of the case. Of
course, as earlier established, this effort proved incomplete, as the 4 January
2005 Order did not correctly apply Rep. Act No. 8974 in several respects. Still, at
least, the 4 January 2005 Order correctly reformed the most basic premise of the case
that Rep. Act No. 8974 governs the expropriation proceedings.
Nonetheless, the Government belittles Hon. Gingoyons invocation of Section 5(g),
Rule 135 as "patently without merit". Certainly merit can be seen by the fact that the 4
January 2005 Order reoriented the expropriation proceedings towards the correct
governing law. Still, the Government claims that the unilateral act of the RTC did not
conform to law or justice, as it was not afforded the right to be heard.
The Court would be more charitably disposed towards this argument if not for the fact
that the earlier order with the 4 January 2005 Order sought to correct was itself issued
without the benefit of any hearing. In fact, nothing either in Rule 67 or Rep. Act No.
8975 requires the conduct of a hearing prior to the issuance of the writ of possession,
which by design is available immediately upon the filing of the complaint provided that
the requisites attaching thereto are present. Indeed, this expedited process for the
obtention of a writ of possession in expropriation cases comes at the expense of the
rights of the property owner to be heard or to be deprived of possession. Considering
these predicates, it would be highly awry to demand that an order modifying the earlier
issuance of a writ of possession in an expropriation case be barred until the staging of
a hearing, when the issuance of the writ of possession itself is not subject to hearing.
Perhaps the conduct of a hearing under these circumstances would be prudent.
However, hearing is not mandatory, and the failure to conduct one does not establish
the manifest bias required for the inhibition of the judge.
The Government likewise faults Hon. Gingoyon for using the amount of US$350
Million as the basis for the 100% deposit under Rep. Act No. 8974. The Court has
noted that this statement was predicated on the erroneous belief that the BIR zonal
valuation applies as a standard for determination of just compensation in this case.
Yet this is manifest not of bias, but merely of error on the part of the judge. Indeed, the
Government was not the only victim of the errors of the RTC in the assailed orders.
PIATCO itself was injured by the issuance by the RTC of the writ of possession, even
though the former had yet to be paid any amount of just compensation. At the same
time, the Government was also prejudiced by the erroneous ruling of the RTC that the
amount of US$62.3 Million, and not 3 Billion, should be released to PIATCO.
The Court has not been remiss in pointing out the multiple errors committed by the
RTC in its assailed orders, to the prejudice of both parties. This attitude of error
towards all does not ipso facto negate the charge of bias. Still, great care should be
had in requiring the inhibition of judges simply because the magistrate did err.
Incompetence may be a ground for administrative sanction, but not for inhibition,
which requires lack of objectivity or impartiality to sit on a case.
The Court should necessarily guard against adopting a standard that a judge should
be inhibited from hearing the case if one litigant loses trust in the judge. Such loss of
trust on the part of the Government may be palpable, yet inhibition cannot be
grounded merely on the feelings of the party-litigants. Indeed, every losing litigant in
any case can resort to claiming that the judge was biased, and he/she will gain a
sympathetic ear from friends, family, and people who do not understand the judicial
process. The test in believing such a proposition should not be the vehemence of the
litigants claim of bias, but the Courts judicious estimation, as people who know better
than to believe any old cry of "wolf!", whether such bias has been irrefutably exhibited.
The Court acknowledges that it had been previously held that "at the very first sign of
lack of faith and trust in his actions, whether well-grounded or not, the judge has no
other alternative but to inhibit himself from the case."80 But this doctrine is qualified by
the entrenched rule that "a judge may not be legally prohibited from sitting in a
litigation, but when circumstances appear that will induce doubt to his honest
actuations and probity in favor of either party, or incite such state of mind, he should
conduct a careful self-
examination. He should exercise his discretion in a way that the people's faith in the
Courts of Justice is not impaired."81 And a self-assessment by the judge that he/she is
not impaired to hear the case will be respected by the Court absent any evidence to
the contrary. As held in Chin v. Court of Appeals:
An allegation of prejudgment, without more, constitutes mere conjecture and is not
one of the "just and valid reasons" contemplated in the second paragraph of Rule 137
of the Rules of Court for which a judge may inhibit himself from hearing the case. We
have repeatedly held that mere suspicion that a judge is partial to a party is not
enough. Bare allegations of partiality and prejudgment will not suffice in the absence
of clear and convincing evidence to overcome the presumption that the judge will
undertake his noble role to dispense justice according to law and evidence and
without fear or favor. There should be adequate evidence to prove the allegations, and
there must be showing that the judge had an interest, personal or otherwise, in the
prosecution of the case. To be a disqualifying circumstance, the bias and prejudice
must be shown to have stemmed from an extrajudicial source and result in an opinion
on the merits on some basis other than what the judge learned from his participation in
the case.82
The mere vehemence of the Governments claim of bias does not translate to clear
and convincing evidence of impairing bias. There is no sufficient ground to direct the
inhibition of Hon. Gingoyon from hearing the expropriation case.
In conclusion, the Court summarizes its rulings as follows:
(1) The 2004 Resolution in Agan sets the base requirement that has to be observed
before the Government may take over the NAIA 3, that there must be payment to
PIATCO of just compensation in accordance with law and equity. Any ruling in the
present expropriation case must be conformable to the dictates of the Court as
pronounced in the Agan cases.
(2) Rep. Act No. 8974 applies in this case, particularly insofar as it requires the
immediate payment by the Government of at least the proffered value of the NAIA 3
facilities to PIATCO and provides certain valuation standards or methods for the
determination of just compensation.
(3) Applying Rep. Act No. 8974, the implementation of Writ of Possession in favor of
the Government over NAIA 3 is held in abeyance until PIATCO is directly paid the
amount of 3 Billion, representing the proffered value of NAIA 3 under Section 4(c) of
the law.
(4) Applying Rep. Act No. 8974, the Government is authorized to start the
implementation of the NAIA 3 Airport terminal project by performing the acts that are
essential to the operation of the NAIA 3 as an international airport terminal upon the
effectivity of the Writ of Possession, subject to the conditions above-stated. As
prescribed by the Court, such authority encompasses "the repair, reconditioning and
improvement of the complex, maintenance of the existing facilities and equipment,
installation of new facilities and equipment, provision of services and facilities if they so choose, objections to the appointment of the commissioners decreed
pertaining to the facilitation of air traffic and transport, and other services that are therein.
integral to a modern-day international airport."83 The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED.
No pronouncement as to costs.
SO ORDERED.
(5) The RTC is mandated to complete its determination of the just compensation
within sixty (60) days from finality of this Decision. In doing so, the RTC is obliged to
comply with "law and equity" as ordained in Again and the standard set under
Implementing Rules of Rep. Act No. 8974 which is the "replacement cost method" as
the standard of valuation of structures and improvements. G.R. No. G.R. No. 150936 August 18, 2004

(6) There was no grave abuse of discretion attending the RTC Order appointing the NATIONAL POWER CORPORATION, petitioner,
commissioners for the purpose of determining just compensation. The provisions on vs.
commissioners under Rule 67 shall apply insofar as they are not inconsistent with MANUBAY AGRO-INDUSTRIAL DEVELOPMENT CORPORATION, respondents.
Rep. Act No. 8974, its Implementing Rules, or the rulings of the Court in Agan.

(7) The Government shall pay the just compensation fixed in the decision of the trial
court to PIATCO immediately upon the finality of the said decision.
DECISION
(8) There is no basis for the Court to direct the inhibition of Hon. Gingoyon.

All told, the Court finds no grave abuse of discretion on the part of the RTC to warrant
the nullification of the questioned orders. Nonetheless, portions of these orders should
be modified to conform with law and the pronouncements made by the Court herein.
PANGANIBAN, J.:

WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4
How much just compensation should be paid for an easement of a right of way over a
January 2005 and 10 January 2005 of the lower court. Said orders are AFFIRMED
parcel of land that will be traversed by high-powered transmission lines? Should such
with the following MODIFICATIONS:
compensation be a simple easement fee or the full value of the property? This is the
question to be answered in this case.
1) The implementation of the Writ of Possession dated 21 December 2005 is HELD IN
ABEYANCE, pending payment by petitioners to PIATCO of the amount of Three
The Case
Billion Two Million One Hundred Twenty Five Thousand Pesos (3,002,125,000.00),
representing the proffered value of the NAIA 3 facilities;
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to
reverse and set aside the November 23, 2001 Decision2 of the Court of Appeals (CA)
2) Petitioners, upon the effectivity of the Writ of Possession, are authorized start the
in CA-GR CV No. 60515. The CA affirmed the June 24, 1998 Decision3 of the
implementation of the Ninoy Aquino International Airport Pasenger Terminal III project
Regional Trial Court4 (RTC) of Naga City (Branch 26), directing the National Power
by performing the acts that are essential to the operation of the said International
Corporation (NPC) to pay the value of the land expropriated from respondent for the
Airport Passenger Terminal project;
use thereof in NPCs Leyte-Luzon HVDC Power Transmission Project.

3) RTC Branch 117 is hereby directed, within sixty (60) days from finality of this
The Facts
Decision, to determine the just compensation to be paid to PIATCO by the
Government.
The CA summarized the antecedents of the case as follows:
The Order dated 7 January 2005 is AFFIRMED in all respects subject to the
qualification that the parties are given ten (10) days from finality of this Decision to file, "In 1996, [Petitioner] NATIONAL POWER CORPORATION, a government-
owned and controlled corporation created for the purpose of undertaking the
development and generation of hydroelectric power, commenced its 350 KV
Leyte-Luzon HVDC Power Transmission Project. The project aims to
transmit the excess electrical generating capacity coming from Leyte
Geothermal Plant to Luzon and various load centers in its vision to
interconnect the entire country into a single power grid. Apparently, the
project is for a public purpose.
"In order to carry out this project, it is imperative for the [petitioners]
transmission lines to cross over certain lands owned by private individuals
and entities. One of these lands, [where] only a portion will be traversed by
the transmission lines, is owned by [respondent] MANUBAY AGRO-
INDUSTRIAL DEVELOPMENT CORPORATION.
"Hence, on 03 December 1996, [petitioner] filed a complaint for
expropriation before the Regional Trial Court of Naga City against
[respondent] in order to acquire an easement of right of way over the land
which the latter owns. The said land is situated at Km. 8, Barangay Pacol,
Naga City, Camarines Sur and described with more particularity, as follows:
TCT/OCT NO. TOTAL AREA AREA CLASS.
IN SQ.M. AFFECTED IN SQ. M. OF LAND
17795 490,232
17797 40,848
17798 5,279
TOTAL
"On 02 January 1997, [respondent] filed its answer. Thereafter, the court a
quo issued an order dated 20 January 1997 authorizing the immediate
issuance of a writ of possession and directing Ex-Officio Provincial Sheriff to
immediately place [petitioner] in possession of the subject land.
"Subsequently, the court a quo directed the issuance of a writ of
condemnation in favor of [petitioner] through an order dated 14 February
1997. Likewise, for the purpose of determining the fair and just
compensation due to [respondent], the court appointed three commissioners
composed of one representative of the petitioner, one for the respondent
and the other from the court, namely: OIC-Branch Clerk of Court Minda B.
Teoxon as Chairperson and Philippine National Bank-Naga City Loan
Appraiser Mr. Isidro Virgilio Bulao, Jr. and City Assessor Ramon R. Albeus
as members.
"On 03 and 06 March 1997, respectively, Commissioners Ramon Albeus
and Isidro Bulao, Jr. took their oath of office before OIC Branch Clerk of
Court and Chairperson Minda B. Teoxon.
"Accordingly, the commissioners submitted their individual
appraisal/valuation reports. The commissioner for the [petitioner],
Commissioner Albeus, finding the subject land irregular and sloppy,
classified the same as low density residential zone and recommended the
price of P115.00 per square meter. On the other hand, Commissioner
Bulao, commissioner for the [respondent], recommended the price
of P550.00 per square meter. The courts Commissioner and Chairperson of
the Board Minda Teoxon, on the other hand, found Commissioner Albeus
appraisal low as compared to the BIR Zonal Valuation and opted to adopt
the price recommended by Commissioner Bulao. On the assumption that
the subject land will be developed into a first class subdivision, she
recommended the amount of P550.00 per square meter as just
compensation for the subject property, or the total amount
of P12,628,940.50 for the entire area affected."5
Taking into consideration the condition, the surroundings and the potentials of
respondents expropriated property, the RTC approved Chairperson Minda B.
Teoxons recommended amount of P550 per square meter as just compensation for
the property. The trial court opined that the installation thereon of the 350 KV Leyte-
Luzon HVDC Power Transmission Project would impose a limitation on the use of the
land for 21,386.16
an indefinite period of time, thereby justifying the payment of the full value of
Agri.
the property.
1,358.17 Agri.
Further, the RTC held that it was not bound by the provision cited by petitioner --
6 7
Section 3-A217.38
of Republic
Agri. Act 6395 , as amended by Presidential Decree 938. This law
prescribes as just compensation for the acquired easement of a right of way over an
expropriated property
22,961.71an easement fee in an amount not exceeding 10 percent of the
market value of such property. The trial court relied on the earlier pronouncements of
this Court that the determination of just compensation in eminent domain cases is a
judicial function. Thus, valuations made by the executive branch or the legislature are
at best initial or preliminary only.
Ruling of the Court of Appeals
Affirming the RTC, the CA held that RA 6395, as amended by PD No. 938, did not
preclude expropriation. Section 3-A thereof allowed the power company to acquire not
just an easement of a right of way, but even the land itself. Such easement was
deemed by the appellate court to be a "taking" under the power of eminent domain.
The CA observed that, given their nature, high-powered electric lines traversing
respondents property would necessarily diminish -- if not damage entirely -- the value
and the use of the affected property; as well as endanger lives and limbs because of
the high-tension current conveyed through the lines. Respondent was therefore
deemed entitled to a just compensation, which should be neither more nor less than
the monetary equivalent of the property taken. Accordingly, the appellate found the
award of P550 per square meter to be proper and reasonable.
Hence, this Petition.8
Issues
In its Memorandum, petitioner submits this lone issue for our consideration:
"Whether or not the Honorable Court of Appeals gravely erred in affirming
the Decision dated June 24, 1998 of the Regional Trial Court, Branch 26,
Naga City considering that its Decision dated November 23, 2001 is not in
accord with law and the applicable decisions of this Honorable Court." 9
The Courts Ruling
The Petition is devoid of merit.
Sole Issue:
Just Compensation
Petitioner contends that the valuation of the expropriated property -- fixed by the trial
court and affirmed by the CA -- was too high a price for the acquisition of an easement
of a mere aerial right of way, because respondent would continue to own and use the
subject land anyway. Petitioner argues that in a strict sense, there is no "taking" of
property, but merely an imposition of an encumbrance or a personal
easement/servitude under Article 61410 of the Civil Code. Such encumbrance will not
result in ousting or depriving respondent of the beneficial enjoyment of the property.
And even if there was a "taking," petitioner points out that the loss is limited only to a
portion of the aerial domain above the property of respondent. Hence, the latter should
be compensated only for what it would actually lose.
We are not persuaded.
Petitioner averred in its Complaint in Civil Case No. RTC 96-3675 that it had sought to
acquire an easement of a right of way over portions of respondents land -- a total area
of 22,961.71 square meters.11 In its prayer, however, it also sought authority to enter
the property and demolish all improvements existing thereon, in order to commence
and undertake the construction of its Power Transmission Project.
In other words, the expropriation was not to be limited to an easement of a right of
way. In its Answer, respondent alleged that it had already authorized petitioner to take
possession of the affected portions of the property and to install electric towers
thereon.12 The latter did not controvert this material allegation.
Granting arguendo that what petitioner acquired over respondents property was
purely an easement of a right of way, still, we cannot sustain its view that it should pay
only an easement fee, and not the full value of the property. The acquisition of such an
easement falls within the purview of the power of eminent domain. This conclusion
finds support in similar cases in which the Supreme Court sustained the award of just
compensation for private property condemned for public use. 13 Republic v.
PLDT14 held thus:
"x x x. Normally, of course, the power of eminent domain results in the
taking or appropriation of title to, and possession of, the expropriated
property; but no cogent reason appears why the said power may not be
availed of to impose only a burden upon the owner of condemned property,
without loss of title and possession. It is unquestionable that real property
may, through expropriation, be subjected to an easement of right of way." 15
True, an easement of a right of way transmits no rights except the easement itself,
and respondent retains full ownership of the property. The acquisition of such
easement is, nevertheless, not gratis. As correctly observed by the CA, considering
the nature and the effect of the installation power lines, the limitations on the use of
the land for an indefinite period would deprive respondent of normal use of the
property. For this reason, the latter is entitled to payment of a just compensation,
which must be neither more nor less than the monetary equivalent of the land. 16
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 takers gain, but the owners
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.17
In eminent domain or expropriation proceedings, the just compensation to which the
owner of a condemned property is entitled is generally 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 given and
received therefor."18 Such amount is not limited to the assessed value of the property
or to the schedule of market values determined by the provincial or city appraisal
committee. However, these values may serve as factors to be considered in the
judicial valuation of the property.19
The parcels of land sought to be expropriated are undeniably undeveloped, raw
agricultural land. But a dominant portion thereof has been reclassified by the
Sangguniang Panlungsod ng Naga -- per Zoning Ordinance No. 94-076 dated August
10, 1994 -- as residential, per the August 8, 1996 certification of Zoning Administrator
Juan O. Villegas Jr.20 The property is also covered by Naga City Mayor Jesse M.
Robredos favorable endorsement of the issuance of a certification for land use
conversion by the Department of Agrarian Reform (DAR) on the ground that the
locality where the property was located had become highly urbanized and would have
greater economic value for residential or commercial use.21
The nature and character of the land at the time of its taking is the principal criterion abuse their authority in evaluating the evidence submitted to them; neither did they
for determining how much just compensation should be given to the landowner.22 All misappreciate the clear preponderance of evidence. The amount fixed and agreed to
the facts as to the condition of the property and its surroundings, as well as its by the trial court and respondent appellate court has not been grossly exorbitant or
improvements and capabilities, should be considered.23 otherwise unjustified.26

In fixing the valuation at P550 per square meter, the trial court had considered the Majority Report of
Report of the commissioners and the proofs submitted by the parties. These Commissioners Sufficient
documents included the following: (1) the established fact that the property of
respondent was located along the Naga-Carolina provincial road; (2) the fact that it
Deserving scant consideration is petitioners contention that the Report adopted by the
was about 500 meters from the Kayumanggi Resort and 8 kilometers from the Naga
RTC and affirmed by the CA was not the same one submitted by the board of
City Central Business District; and a half kilometer from the main entrance of the fully
commissioners, but was only that of its chairperson. As correctly pointed out by the
developed Naga City Sports Complex -- used as the site of the Palarong Pambansa --
trial court, the commissioners Report was actually a decision of the majority of the
and the San Francisco Village Subdivision, a first class subdivision where lots were
board. Note that after reviewing the Reports of the other commissioners, Chairperson
priced atP2,500 per square meter; (3) the fair market value of P650 per square meter
Teoxon opted to adopt the recommendation of Commissioner Bulao. There has been
proffered by respondent, citing its recently concluded sale of a portion of the same
no claim that fraud or prejudice tainted the majority Report. In fact, on December 19,
property to Metro Naga Water District at a fixed price of P800 per square meter; (4)
1997, the trial court admitted the commissioners Report without objection from any of
the BIR zonal valuation of residential lots in Barangay Pacol, Naga City, fixed at a
the parties.27
price of P220 per square meter as of 1997; and (5) the fact that the price of P430 per
square meter had been determined by the RTC of Naga City (Branch 21)24 as just
compensation for the Mercados adjoining property, which had been expropriated by Under Section 8 of Rule 67 of the Rules of Court, the court may "accept the report and
NPC for the same power transmission project. render judgment in accordance therewith; or for cause shown, it may recommit the
same to the commissioners for further report of facts, or it may set aside the report
and appoint new commissioners, or it may accept the report in part and reject it in
The chairperson of the Board of Commissioners, in adopting the recommendation of
part; x x x." In other words, the reports of commissioners are merely advisory and
Commissioner Bulaos, made a careful study of the property. Factors considered in
recommendatory in character, as far as the courts are concerned. 28
arriving at a reasonable estimate of just compensation for respondent were the
location; the most profitable likely use of the remaining area; and the size, shape,
accessibility as well as listings of other properties within the vicinity. Averments Thus, it hardly matters whether the commissioners have unanimously agreed on their
pertaining to these factors were supported by documentary evidence. recommended valuation of the property. It has been held that the report of only two
commissioners may suffice, even if the third commissioner dissents. 29 As a court is not
bound by commissioners reports it may make such order or render such judgment as
On the other hand, the commissioner for petitioner -- City Assessor Albeus --
shall secure for the plaintiff the property essential to the exercise of the latters right of
recommended a price of P115 per square meter in his Report dated June 30, 1997.
condemnation; and for the defendant, just compensation for the property expropriated.
No documentary evidence, however, was attached to substantiate the opinions of the
For that matter, the court may even substitute its own estimate of the value as
banks and the realtors, indicated in the commissioners Report and computation of the
gathered from the evidence on record.30
market value of the property.

WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. No

The price of P550 per square meter appears to be the closest approximation of the
pronouncement as to costs.
market value of the lots in the adjoining, fully developed San Francisco Village
Subdivision. Considering that the parcels of land in question are still undeveloped raw
land, it appears to the Court that the just compensation of P550 per square meter is SO ORDERED.
justified.

Inasmuch as the determination of just compensation in eminent domain cases is a

judicial function,25 and the trial court apparently did not act capriciously or arbitrarily in
setting the price at P550 per square meter -- an award affirmed by the CA -- we see
no reason to disturb the factual findings as to the valuation of the property. Both the
Report of Commissioner Bulao and the commissioners majority Report were based
on uncontroverted facts supported by documentary evidence and confirmed by their
ocular inspection of the property. As can be gleaned from the records, they did not
 herein represented by DR. SABINO SANTOS and PURIFICACION SANTOS
IMPERIAL, respondents.

DECISION

VITUG, J.:

Petitioner instituted expropriation proceedings on 19 September 1969 before the

Regional Trial Court ("RTC") of Bulacan, docketed Civil Cases No. 3839-M, No. 3840-
M, No. 3841-M and No. 3842-M, covering a total of 544,980 square meters of
contiguous land situated along MacArthur Highway, Malolos, Bulacan, to be utilized
for the continued broadcast operation and use of radio transmitter facilities for the
"Voice of the Philippines" project. Petitioner, through the Philippine Information
Agency ("PIA"), took over the premises after the previous lessee, the "Voice of
America," had ceased its operations thereat. Petitioner made a deposit of
P517,558.80, the sum provisionally fixed as being the reasonable value of the
property. On 26 February 1979, or more than nine years after the institution of the
expropriation proceedings, the trial court issued this order -

"WHEREFORE, premises considered, judgment is hereby rendered:

"Condemning the properties of the defendants in Civil Cases Nos. 3839-M to 3842-M
located at KM 43, MacArthur Highway, Malolos, Bulacan and covered by several
transfer certificates of title appearing in the Commissioners Appraisal Report
consisting of the total area of 544,980 square meters, as indicated in plan, Exhibit A,
for plaintiff, also marked as Exhibit I for the defendants, and as Appendix A attached
to the Commissioners Appraisal Report, for the purpose stated by the plaintiff in its
complaint;

"Ordering the plaintiff to pay the defendants the just compensation for said property
which is the fair market value of the land condemned, computed at the rate of six
pesos (P6.00) per square meter, with legal rate of interest from September 19, 1969,
until fully paid; and

"Ordering the plaintiff to pay the costs of suit, which includes the aforesaid fees of
commissioners, Atty. Victorino P. Evangelista and Mr. Pablo Domingo."1

The bone of contention in the instant controversy is the 76,589-square meter property
previously owned by Luis Santos, predecessor-in-interest of herein respondents,
G.R. No. 146587 July 2, 2002 which forms part of the expropriated area.

REPUBLIC OF THE PHILIPPINES, represented by the General Manager of the
PHILIPPINE INFORMATION AGENCY (PIA), petitioner,
vs.
THE HONORABLE COURT OF APPEALS and the HEIRS OF LUIS SANTOS as
It would appear that the national government failed to pay to herein respondents the
compensation pursuant to the foregoing decision, such that a little over five years
later, or on 09 May 1984, respondents filed a manifestation with a motion seeking
payment for the expropriated property. On 07 June 1984, the Bulacan RTC, after
ascertaining that the heirs remained unpaid in the sum of P1,058,655.05, issued a writ
of execution served on the plaintiff, through the Office of the Solicitor General, for the
implementation thereof. When the order was not complied with, respondents again
filed a motion urging the trial court to direct the provincial treasurer of Bulacan to
release to them the amount of P72,683.55, a portion of the sum deposited by
petitioner at the inception of the expropriation proceedings in 1969, corresponding to
their share of the deposit. The trial court, in its order of 10 July 1984, granted the
motion.
In the meantime, President Joseph Ejercito Estrada issued Proclamation No.
22,2 transferring 20 hectares of the expropriated property to the Bulacan State
University for the expansion of its facilities and another 5 hectares to be used
exclusively for the propagation of the Philippine carabao. The remaining portion was
retained by the PIA. This fact notwithstanding, and despite the 1984 court order, the
Santos heirs remained unpaid, and no action was taken on their case until 16
September 1999 when petitioner filed its manifestation and motion to permit the
deposit in court of the amount of P4,664,000.00 by way of just compensation for the
expropriated property of the late Luis Santos subject to such final computation as
might be approved by the court. This time, the Santos heirs, opposing the
manifestation and motion, submitted a counter-motion to adjust the compensation
from P6.00 per square meter previously fixed in the 1979 decision to its current zonal
valuation pegged at P5,000.00 per square meter or, in the alternative, to cause the
return to them of the expropriated property. On 01 March 2000, the Bulacan RTC
ruled in favor of respondents and issued the assailed order, vacating its decision of 26
February 1979 and declaring it to be unenforceable on the ground of prescription -
"WHEREFORE, premises considered, the court hereby:
"1) declares the decision rendered by this Court on February 26, 1979 no
longer enforceable, execution of the same by either a motion or an
independent action having already prescribed in accordance with Section 6,
Rule 39 of both the 1964 Revised Rules of Court and the 1997 Rules of Civil
Procedure;
"2) denies the plaintiffs Manifestation and Motion to Permit Plaintiff to
Deposit in Court Payment for Expropriated Properties dated September 16,
1999 for the reason stated in the next preceding paragraph hereof; and
"3) orders the return of the expropriated property of the late defendant Luis
Santos to his heirs conformably with the ruling of the Supreme Court in
Government of Sorsogon vs. Vda. De Villaroya, 153 SCRA 291, without
prejudice to any case which the parties may deem appropriate to institute in
relation with the amount already paid to herein oppositors and the purported
transfer of a portion of the said realty to the Bulacan State University
pursuant to Proclamation No. 22 issued by President Joseph Ejercito." 3
Petitioner brought the matter up to the Court of Appeals but the petition was outrightly
denied. It would appear that the denial was based on Section 4, Rule 65, of the 1997
Rules of Civil Procedure which provided that the filing of a motion for reconsideration
in due time after filing of the judgment, order or resolution interrupted the running of
the sixty-day period within which to file a petition for certiorari; and that if a motion for
reconsideration was denied, the aggrieved party could file the petition only within the
remaining period, but which should not be less than five days in any event, reckoned
from the notice of such denial. The reglementary period, however, was later modified
by A.M. No. 00-2-03 S.C., now reading thusly:
"Sec. 4. When and where petition filed. --- The petition shall be filed not later than sixty
(60) days from notice of the judgment, order or resolution. In case a motion for
reconsideration or new trial is timely filed, whether such motion is required or not, the
sixty (60) day period shall be counted from notice of the denial of said motion."
The amendatory provision, being curative in nature, should be made applicable to all
cases still pending with the courts at the time of its effectivity.
In Narzoles vs. NLRC,4 the Court has said:
"The Court has observed that Circular No. 39-98 has generated tremendous confusion
resulting in the dismissal of numerous cases for late filing. This may have been
because, historically, i.e., even before the 1997 revision to the Rules of Civil
Procedure, a party had a fresh period from receipt of the order denying the motion for
reconsideration to file a petition for certiorari. Were it not for the amendments brought
about by Circular No. 39-98, the cases so dismissed would have been resolved on the
merits. Hence, the Court deemed it wise to revert to the old rule allowing a party a
fresh 60-day period from notice of the denial of the motion for reconsideration to file a
petition for certiorari. x x x
"The latest amendments took effect on September 1, 2000, following its publication in
the Manila Bulletin on August 4, 2000 and in the Philippine Daily Inquirer on August 7,
2000, two newspapers of general circulation.
"In view of its purpose, the Resolution further amending Section 4, Rule 65, can only
be described as curative in nature, and the principles governing curative statutes are
applicable.
"Curative statutes are enacted to cure defects in a prior law or to validate legal
proceedings which would otherwise be void for want of conformity with certain legal
requirements. (Erectors, Inc. vs. National Labor Relations Commission, 256 SCRA
629 [1996].) They are intended to supply defects, abridge superfluities and curb
certain evils. They are intended to enable persons to carry into effect that which they
have designed or intended, but has failed of expected legal consequence by reason of
some statutory disability or irregularity in their own action. They make valid that which,
before the enactment of the statute was invalid. Their purpose is to give validity to acts
done that would have been invalid under existing laws, as if existing laws have been
complied with. (Batong Buhay Gold Mines, Inc. vs. Dela Serna, 312 SCRA 22 [1999].)
Curative statutes, therefore, by their very essence, are retroactive. (Municipality of defendant asserts title or interest in the property, not to prove a right to possession,
San Narciso, Quezon vs. Mendez, Sr., 239 SCRA 11 [1994].)"5 but to prove a right to compensation for the taking.9

At all events, petitioner has a valid point in emphasizing the "public nature" of the Obviously, however, the power is not without its limits: first, the taking must be for
expropriated property. The petition being imbued with public interest, the Court has public use, and second, that just compensation must be given to the private owner of
resolved to give it due course and to decide the case on its merits. the property.10 These twin proscriptions have their origin in the recognition of the
necessity for achieving balance between the State interests, on the one hand, and
private rights, upon the other hand, by effectively restraining the former and affording
Assailing the finding of prescription by the trial court, petitioner here posited that a
protection to the latter.11 In determining "public use," two approaches are utilized -
motion which respondents had filed on 17 February 1984, followed up by other
the first is public employment or the actual use by the public, and thesecond is public
motions subsequent thereto, was made within the reglementary period that thereby
advantage or benefit.12 It is also useful to view the matter as being subject to constant
interrupted the 5-year prescriptive period within which to enforce the 1979 judgment.
growth, which is to say that as society advances, its demands upon the individual so
Furthermore, petitioner claimed, the receipt by respondents of partial compensation in
increases, and each demand is a new use to which the resources of the individual
the sum of P72,683.55 on 23 July 1984 constituted partial compliance on the part of
may be devoted.13
petitioners and effectively estopped respondents from invoking prescription expressed
in Section 6, Rule 39, of the Rules of Court.6
The expropriated property has been shown to be for the continued utilization by the
PIA, a significant portion thereof being ceded for the expansion of the facilities of the
In opposing the petition, respondents advanced the view that pursuant to Section 6,
Bulacan State University and for the propagation of the Philippine carabao,
Rule 39, of the Rules of Court, the failure of petitioner to execute the judgment, dated
themselves in line with the requirements of public purpose. Respondents question the
26 February 1979, within five years after it had become final and executory, rendered
public nature of the utilization by petitioner of the condemned property, pointing out
it unenforceable by mere motion. The motion for payment, dated 09 May 1984, as well
that its present use differs from the purpose originally contemplated in the 1969
as the subsequent disbursement to them of the sum of P72,683.55 by the provincial
expropriation proceedings. The argument is of no moment. The property has assumed
treasurer of Bulacan, could not be considered as having interrupted the five-year
a public character upon its expropriation. Surely, petitioner, as the condemnor and as
period, since a motion, to be considered otherwise, should instead be made by the
the owner of the property, is well within its rights to alter and decide the use of that
prevailing party, in this case by petitioner. Respondents maintained that the
property, the only limitation being that it be for public use, which, decidedly, it is.
P72,683.55 paid to them by the provincial treasurer of Bulacan pursuant to the 1984
order of the trial court was part of the initial deposit made by petitioner when it first
entered possession of the property in 1969 and should not be so regarded as a partial In insisting on the return of the expropriated property, respondents would exhort on
payment. Respondents further questioned the right of PIA to transfer ownership of a the pronouncement in Provincial Government of Sorsogon vs. Vda. de
portion of the property to the Bulacan State University even while the just Villaroya14 where the unpaid landowners were allowed the alternative remedy of
compensation due the heirs had yet to be finally settled. recovery of the property there in question. It might be borne in mind that the case
involved the municipal government of Sorsogon, to which the power of eminent
domain is not inherent, but merely delegated and of limited application. The grant of
The right of eminent domain is usually understood to be an ultimate right of the
the power of eminent domain to local governments under Republic Act No.
sovereign power to appropriate any property within its territorial sovereignty for a
716015 cannot be understood as being the pervasive and all-encompassing power
public purpose.7 Fundamental to the independent existence of a State, it requires no
vested in the legislative branch of government. For local governments to be able to
recognition by the Constitution, whose provisions are taken as being merely
wield the power, it must, by enabling law, be delegated to it by the national legislature,
confirmatory of its presence and as being regulatory, at most, in the due exercise of
but even then, this delegated power of eminent domain is not, strictly speaking, a
the power. In the hands of the legislature, the power is inherent, its scope matching
power of eminent, but only of inferior, domain or only as broad or confined as the real
that of taxation, even that of police power itself, in many respects. It reaches to every
authority would want it to be.16
form of property the State needs for public use and, as an old case so puts it, all
separate interests of individuals in property are held under a tacit agreement or
implied reservation vesting upon the sovereign the right to resume the possession of Thus, in Valdehueza vs. Republic17 where the private landowners had remained
the property whenever the public interest so requires it.8 unpaid ten years after the termination of the expropriation proceedings, this Court
ruled -
The ubiquitous character of eminent domain is manifest in the nature of the
expropriation proceedings. Expropriation proceedings are not adversarial in the "The points in dispute are whether such payment can still be made and, if so, in what
conventional sense, for the condemning authority is not required to assert any amount. Said lots have been the subject of expropriation proceedings. By final and
conflicting interest in the property. Thus, by filing the action, the condemnor in effect executory judgment in said proceedings, they were condemned for public use, as part
merely serves notice that it is taking title and possession of the property, and the of an airport, and ordered sold to the government. x x x It follows that both by virtue of
the judgment, long final, in the expropriation suit, as well as the annotations upon their just value to be computed from the time the property is taken to the time when
title certificates, plaintiffs are not entitled to recover possession of their expropriated compensation is actually paid or deposited with the court.26 In fine, between the taking
lots - which are still devoted to the public use for which they were expropriated - but of the property and the actual payment, legal interests accrue in order to place the
only to demand the fair market value of the same. owner in a position as good as (but not better than) the position he was in before the
taking occurred.27
"Said relief may be granted under plaintiffs' prayer for: `such other remedies, which
may be deemed just and equitable under the premises'."18 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
The Court proceeded to reiterate its pronouncement in Alfonso vs. Pasay City19 where
allowance of interest on the amount found to be the value of the property as of the
the recovery of possession of property taken for public use prayed for by the unpaid
time of the taking computed, being an effective forbearance, at 12% per
landowner was denied even while no requisite expropriation proceedings were first
annum28 should help eliminate the issue of the constant fluctuation and inflation of the
instituted. The landowner was merely given the relief of recovering compensation for
value of the currency over time.29 Article 1250 of the Civil Code, providing that, in case
his property computed at its market value at the time it was taken and appropriated by
of extraordinary inflation or deflation, the value of the currency at the time of the
the State.
establishment of the obligation shall be the basis for the payment when no agreement
to the contrary is stipulated, has strict application only to contractual obligations. 30 In
The judgment rendered by the Bulacan RTC in 1979 on the expropriation proceedings other words, a contractual agreement is needed for the effects of extraordinary
provides not only for the payment of just compensation to herein respondents but inflation to be taken into account to alter the value of the currency. 31
likewise adjudges the property condemned in favor of petitioner over which parties, as
well as their privies, are bound.20 Petitioner has occupied, utilized and, for all intents
All given, the trial court of Bulacan in issuing its order, dated 01 March 2000, vacating
and purposes, exercised dominion over the property pursuant to the judgment. The
its decision of 26 February 1979 has acted beyond its lawful cognizance, the only
exercise of such rights vested to it as the condemnee indeed has amounted to at least
authority left to it being to order its execution. Verily, private respondents, although not
a partial compliance or satisfaction of the 1979 judgment, thereby preempting any
entitled to the return of the expropriated property, deserve to be paid promptly on the
claim of bar by prescription on grounds of non-execution. In arguing for the return of
yet unpaid award of just compensation already fixed by final judgment of the Bulacan
their property on the basis of non-payment, respondents ignore the fact that the right
RTC on 26 February 1979 at P6.00 per square meter, with legal interest thereon at
of the expropriatory authority is far from that of an unpaid seller in ordinary sales, to
12% per annum computed from the date of "taking" of the property, i.e., 19 September
which the remedy of rescission might perhaps apply. An in remproceeding,
1969, until the due amount shall have been fully paid.
condemnation acts upon the property.21 After condemnation, the paramount title is in
the public under a new and independent title;22 thus, by giving notice to all claimants to
a disputed title, condemnation proceedings provide a judicial process for securing WHEREFORE, the petition is GRANTED. The resolution, dated 31 July 2000, of the
better title against all the world than may be obtained by voluntary conveyance. 23 Court of Appeals dismissing the petition for certiorari, as well as its resolution of 04
January 2001 denying the motion for reconsideration, and the decision of the Regional
Trial Court of Bulacan, dated 01 March 2000, are SET ASIDE. Let the case be
Respondents, in arguing laches against petitioner did not take into account that the
forthwith remanded to the Regional Trial Court of Bulacan for the proper execution of
same argument could likewise apply against them. Respondents first instituted
its decision promulgated on 26 February 1979 which is hereby REINSTATED. No
proceedings for payment against petitioner on 09 May 1984, or five years after the
costs.
1979 judgment had become final. The unusually long delay in bringing the action to
compel payment against herein petitioner would militate against them. Consistently
with the rule that one should take good care of his own concern, respondents should SO ORDERED.
have commenced the proper action upon the finality of the judgment which, indeed,
resulted in a permanent deprivation of their ownership and possession of the
property.24

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. 25 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

G.R. No. 152230. August 9, 2005
JESUS IS LORD CHRISTIAN SCHOOL FOUNDATION, INC., Petitioners,
vs.
MUNICIPALITY (now CITY) OF PASIG, METRO MANILA, Respondent.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review of the Decision1 of the Court of Appeals (CA) in CA-
G.R. CV No. 59050, and its Resolution dated February 18, 2002, denying the motion
for reconsideration thereof. The assailed decision affirmed the order of the Regional
Trial Court (RTC) of Pasig, Branch 160, declaring the respondent Municipality (now
City) of Pasig as having the right to expropriate and take possession of the subject
property.
The Antecedents
The Municipality of Pasig needed an access road from E. R. Santos Street, a
municipal road near the Pasig Public Market, to Barangay Sto. Tomas Bukid, Pasig,
where 60 to 70 houses, mostly made of light materials, were located. The road had to
be at least three meters in width, as required by the Fire Code, so that fire trucks could
pass through in case of conflagration.2 Likewise, the residents in the area needed the
road for water and electrical outlets.3 The municipality then decided to acquire 51
square meters out of the 1,791-square meter property of Lorenzo Ching Cuanco,
Victor Ching Cuanco and Ernesto Ching Cuanco Kho covered by Transfer Certificate
of Title (TCT) No. PT-66585,4 which is abutting E. R. Santos Street.
On April 19, 1993, the Sangguniang Bayan of Pasig approved an
Ordinance5 authorizing the municipal mayor to initiate expropriation proceedings to
acquire the said property and appropriate the fund therefor. The ordinance stated that
the property owners were notified of the municipalitys intent to purchase the property
for public use as an access road but they rejected the offer.
On July 21, 1993, the municipality filed a complaint, amended on August 6, 1993,
against the Ching Cuancos for the expropriation of the property under Section 19 of
Republic Act (R.A.) No. 7160, otherwise known as the Local Government Code. The
plaintiff alleged therein that it notified the defendants, by letter, of its intention to
construct an access road on a portion of the property but they refused to sell the same
portion. The plaintiff appended to the complaint a photocopy of the letter addressed to
defendant Lorenzo Ching Cuanco.6
The plaintiff deposited with the RTC 15% of the market value of the property based on
the latest tax declaration covering the property. On plaintiffs motion, the RTC issued a
writ of possession over the property sought to be expropriated. On November 26,
1993, the plaintiff caused the annotation of a notice of lis pendens at the dorsal portion
of TCT No. PT-92579 under the name of the Jesus Is Lord Christian School
Foundation, Incorporated (JILCSFI) which had purchased the property. 7 Thereafter,
the plaintiff constructed therein a cemented road with a width of three meters; the road
was called Damayan Street.
In their answer,8 the defendants claimed that, as early as February 1993, they had
sold the said property to JILCSFI as evidenced by a deed of sale9 bearing the
signature of defendant Ernesto Ching Cuanco Kho and his wife.
When apprised about the complaint, JILCSFI filed a motion for leave to intervene as
defendant-in-intervention, which motion the RTC granted on August 26, 1994.10
In its answer-in-intervention, JILCSFI averred, by way of special and affirmative
defenses, that the plaintiffs exercise of eminent domain was only for a particular class
and not for the benefit of the poor and the landless. It alleged that the property sought
to be expropriated is not the best portion for the road and the least burdensome to it.
The intervenor filed a crossclaim against its co-defendants for reimbursement in case
the subject property is expropriated.11 In its amended answer, JILCSFI also averred
that it has been denied the use and enjoyment of its property because the road was
constructed in the middle portion and that the plaintiff was not the real party-in-
interest. The intervenor, likewise, interposed counterclaims against the plaintiff for
moral damages and attorneys fees.12
During trial, Rolando Togonon, the plaintiffs messenger, testified on direct
examination that on February 23, 1993, he served a letter of Engr. Jose Reyes, the
Technical Assistant to the Mayor on Infrastructure, to Lorenzo Ching Cuanco at his
store at No. 18 Alkalde Jose Street, Kapasigan, Pasig. A lady received the same and
brought it inside the store. When she returned the letter to him, it already bore the
signature of Luz Bernarte. He identified a photocopy of the letter as similar to the one
he served at the store. On cross-examination, he admitted that he never met Luz
Bernarte. 13
Edgardo del Rosario, a resident of Sto. Tomas Bukid since 1982 declared that he
would pass through a wooden bridge to go to E. R. Santos Street. At times, the bridge
would be slippery and many had met accidents while walking along the bridge.
Because of this, they requested Mayor Vicente Eusebio to construct a road therein.
He attested that after the construction of the cemented access road, the residents had
water and electricity.14
Augusto Paz of the City Engineers Office testified that, sometime in 1992, the plaintiff
constructed a road perpendicular from E. R. Santos Street to Sto. Tomas Bukid; he
was the Project Engineer for the said undertaking. Before the construction of the road,
the lot was raw and they had to put filling materials so that vehicles could use it.
According to him, the length of the road which they constructed was 70 meters long
and 3 meters wide so that a fire truck could pass through. He averred that there is no
other road through which a fire truck could pass to go to Sto. Tomas Bukid. 15
Danilo Caballero averred that he had been a resident of Sto. Tomas Bukid for seven
years. From his house, he could use three streets to go to E. R. Santos Street,
namely, Catalina Street, Damayan Street and Bagong Taon Street. On cross-
examination, he admitted that no vehicle could enter Sto. Tomas Bukid except through
the newly constructed Damayan Street.20
Eduardo Villanueva, Chairman of the Board of Trustees and President of JILCSFI,
testified that the parcel of land was purchased for purposes of constructing a school
building and a church as worship center. He averred that the realization of these
projects was delayed due to the passing of the ordinance for expropriation. 21
The intervenor adduced documentary evidence that on February 27, 1993, Lorenzo
Ching Cuanco and the co-owners agreed to sell their property covered by TCT No.
PT-66585 for 1,719,000.00.22 It paid a down payment of 1,000,000.00 for the
property. After payment of the total purchase price, the Ching Cuancos executed a
Deed of Absolute Sale23 over the property on December 13, 1993. On December 21,
1993, TCT No. PT-92579 was issued in the name of JILCSFI.24 It declared the
property for taxation purposes under its name.25
On September 3, 1997, the RTC issued an Order in favor of the plaintiff, the
dispositive portion of which reads:
WHEREFORE, in view of the foregoing and in accordance with Section 4, Rule 67 of
the Revised Rules of Court, the Court Resolves to DECLARE the plaintiff as having a
lawful right to take the property in question for purposes for which the same is
expropriated.

The plaintiff and intervenor are hereby directed to submit at least two (2) names of
Manuel Tembrevilla, the Fire Marshall, averred that he had seen the new road, that is,
their recommended commissioners for the determination of just compensation within
Damayan Street, and found that a fire truck could pass through it. He estimated the
ten (10) days from receipt hereof.
houses in the area to be around 300 to 400. Tembrevilla also stated that Damayan
Street is the only road in the area.16
SO ORDERED.26
Finally, Bonifacio Maceda, Jr., Tax Mapper IV, testified that, according to their records,
JILCSFI became the owner of the property only on January 13, 1994. 17 The RTC held that, as gleaned from the declaration in Ordinance No. 21, there was
substantial compliance with the definite and valid offer requirement of Section 19 of
R.A. No. 7160, and that the expropriated portion is the most convenient access to the
The plaintiff offered in evidence a photocopy of the letter of Engr. Jose Reyes
interior of Sto. Tomas Bukid.
addressed to Lorenzo Ching Cuanco to prove that the plaintiff made a definite and
valid offer to acquire the property to the co-owners. However, the RTC rejected the
same letter for being a mere photocopy.18 Dissatisfied, JILCSFI elevated the case to the CA on the following assignment of
errors:
For the defendant-intervenor, Normita del Rosario, owner of the property located
across the subject property, testified that there are other roads leading to E. R. Santos First Assignment of Error
Street. She asserted that only about ten houses of the urban poor are using the new
road because the other residents are using an alternative right-of-way. She averred
that she did not actually occupy her property; but there were times that she visited it. 19
THE LOWER COURT SERIOUS[LY] ERRED WHEN IT RULED THAT PLAINTIFF-
APPELLEE SUBSTANTIALLY COMPLIED WITH THE LAW WHEN IT
EXPROPRIATED JILS PROPERTY TO BE USED AS A RIGHT OF WAY.
Second Assignment of Error
THE LOWER COURT ERRED IN DISREGARDING JILS EVIDENCE PROVING
THAT THERE WAS NO PUBLIC NECESSITY TO WARRANT THE EXPROPRIATION
OF THE SUBJECT PROPERTY.27
The Court of Appeals Decision
In a Decision dated March 13, 2001, the CA affirmed the order of the RTC.28 The CA
agreed with the trial court that the plaintiff substantially complied with Section 19 of
R.A. No. 7160, particularly the requirement that a valid and definite offer must be
made to the owner. The CA declared that the letter of Engr. Reyes, inviting Lorenzo
Ching Cuanco to a conference to discuss with him the road project and the price of the
lot, was a substantial compliance with the "valid and definite offer" requirement under
said Section 19. In addition, the CA noted that there was also constructive notice to
the defendants of the expropriation proceedings since a notice of lis pendens was
annotated at the dorsal portion of TCT No. PT-92579 on November 26, 1993.29
Finally, the CA upheld the public necessity for the subject property based on the
findings of the trial court that the portion of the property sought to be expropriated
appears to be, not only the most convenient access to the interior of Sto. Tomas
Bukid, but also an easy path for vehicles entering the area, particularly fire trucks.
Moreover, the CA took into consideration the provision of Article 33 of the Rules and
Regulations Implementing the Local Government Code, which regards the
"construction or extension of roads, streets, sidewalks" as public use, purpose or
welfare.30
On April 6, 2001, JILCSFI filed a motion for reconsideration of the said decision
alleging that the CA erred in relying on the photocopy of Engr. Reyes letter to Lorenzo
Ching Cuanco because the same was not admitted in evidence by the trial court for
being a mere photocopy. It also contended that the CA erred in concluding that
constructive notice of the expropriation proceeding, in the form of annotation of the
notice of lis pendens, could be considered as a substantial compliance with the
requirement under Section 19 of the Local Government Code for a valid and definite
offer. JILCSFI also averred that no inspection was ever ordered by the trial court to be
conducted on the property, and, if there was one, it had the right to be present thereat
since an inspection is considered to be part of the trial of the case. 31
The CA denied the motion for reconsideration for lack of merit. It held that it was not
precluded from considering the photocopy32 of the letter, notwithstanding that the
same was excluded by the trial court, since the fact of its existence was duly
established by corroborative evidence. This corroborative evidence consisted of the
testimony of the plaintiffs messenger that he personally served the letter to Lorenzo
Ching Cuanco, and Municipal Ordinance No. 21 which expressly stated that the
property owners were already notified of the expropriation proceeding. The CA noted
that JILCSFI failed to adduce controverting evidence, thus the presumption of
regularity was not overcome.33
The Present Petition
In this petition, petitioner JILCSFI raises the following issues: (1) whether the
respondent complied with the requirement, under Section 19 of the Local Government
Code, of a valid and definite offer to acquire the property prior to the filing of the
complaint; (2) whether its property which is already intended to be used for public
purposes may still be expropriated by the respondent; and (3) whether the requisites
for an easement for right-of-way under Articles 649 to 657 of the New Civil Code may
be dispensed with.
The petitioner stresses that the law explicitly requires that a valid and definite offer be
made to the owner of the property and that such offer was not accepted. It argues
that, in this case, there was no evidence to show that such offer has been made either
to the previous owner or the petitioner, the present owner. The petitioner contends
that the photocopy of the letter of Engr. Reyes, notifying Lorenzo Ching Cuanco of the
respondents intention to construct a road on its property, cannot be considered
because the trial court did not admit it in evidence. And assuming that such letter is
admissible in evidence, it would not prove that the offer has been made to the
previous owner because mere notice of intent to purchase is not equivalent to an offer
to purchase. The petitioner further argues that the offer should be made to the proper
party, that is, to the owner of the property. It noted that the records in this case show
that as of February 1993, it was already the owner of the property. Assuming,
therefore, that there was an offer to purchase the property, the same should have
been addressed to the petitioner, as present owner.34
The petitioner maintains that the power of eminent domain must be strictly construed
since its exercise is necessarily in derogation of the right to property ownership. All the
requirements of the enabling law must, therefore, be strictly complied with.
Compliance with such requirements cannot be presumed but must be proved by the
local government exercising the power. The petitioner adds that the local government
should, likewise, comply with the requirements for an easement of right-of-way; hence,
the road must be established at a point least prejudicial to the owner of the property.
Finally, the petitioner argues that, if the property is already devoted to or intended to
be devoted to another public use, its expropriation should not be allowed. 35
For its part, the respondent avers that the CA already squarely resolved the issues
raised in this petition, and the petitioner failed to show valid and compelling reason to
reverse the CAs findings. Moreover, it is not the function of the Supreme Court to
weigh the evidence on factual issues all over again.36 The respondent contends that
the Ching Cuancos were deemed to have admitted that an offer to purchase has been
made and that they refused to accept such offer considering their failure to specifically
deny such allegation in the complaint. In light of such admission, the exclusion of the
photocopy of the letter of Engr. Reyes, therefore, is no longer significant.37
The Ruling of the Court establish that it has complied with all the requirements provided by law for the valid
exercise of the power of eminent domain.
The petition is meritorious.
The grant of the power of eminent domain to local government units is grounded on
Section 19 of R.A. No. 7160 which reads:
At the outset, it must be stressed that only questions of law may be raised by the
parties and passed upon by the Supreme Court in petitions for review
on certiorari.38 Findings of fact of the CA, affirming those of the trial court, are final and SEC. 19. Eminent Domain. A local government unit may, through its chief executive
conclusive and may not be reviewed on appeal.39 and acting pursuant to an ordinance, exercise the power of eminent domain for public
use, or purpose, or welfare for the benefit of the poor and the landless, upon payment
of just compensation, pursuant to the provisions of the Constitution and pertinent
Nonetheless, where it is shown that the conclusion is a finding grounded on
laws; Provided, however, That the power of eminent domain may not be exercised
speculations, surmises or conjectures or where the judgment is based on
unless a valid and definite offer has been previously made to the owner, and such
misapprehension of facts, the Supreme Court may reexamine the evidence on
offer was not accepted: Provided, further, That the local government unit may
record.40
immediately take possession of the property upon the filing of the expropriation
proceedings and upon making a deposit with the proper court of at least fifteen
Eminent Domain: Nature and Scope percent (15%) of the fair market value of the property based on the current tax
declaration of the property to be expropriated: Provided, finally, That the amount to be
paid for the expropriated property shall be determined by the proper court based on
The right of eminent domain is usually understood to be an ultimate right of the the fair market value at the time of the taking of the property.
sovereign power to appropriate any property within its territorial sovereignty for a
public purpose. The nature and scope of such power has been comprehensively
described as follows: The Court declared that the following requisites for the valid exercise of the power of
eminent domain by a local government unit must be complied with:
It is an indispensable attribute of sovereignty; a power grounded in the primary duty
of government to serve the common need and advance the general welfare. Thus, the 1. An ordinance is enacted by the local legislative council authorizing the local chief
right of eminent domain appertains to every independent government without the executive, in behalf of the local government unit, to exercise the power of eminent
necessity for constitutional recognition. The provisions found in modern constitutions domain or pursue expropriation proceedings over a particular private property.
of civilized countries relating to the taking of property for the public use do not by
implication grant the power to the government, but limit the power which would,
2. The power of eminent domain is exercised for public use, purpose or welfare, or for
otherwise, be without limit. Thus, our own Constitution provides that "[p]rivate property
the benefit of the poor and the landless.
shall not be taken for public use without just compensation." Furthermore, the due
process and equal protection clauses act as additional safeguards against the
arbitrary exercise of this governmental power.41 3. There is payment of just compensation, as required under Section 9, Article III of
the Constitution, and other pertinent laws.
Strict Construction and Burden of Proof
4. A valid and definite offer has been previously made to the owner of the property
sought to be expropriated, but said offer was not accepted. 47
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. 42 It is one of the
harshest proceedings known to the law. Consequently, when the sovereign delegates Valid and Definite Offer
the power to a political unit or agency, a strict construction will be given against the
agency asserting the power.43 The authority to condemn is to be strictly construed in
Article 35 of the Rules and Regulations Implementing the Local Government Code
favor of the owner and against the condemnor.44 When the power is granted, the
provides:
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.45
ARTICLE 35. Offer to Buy and Contract of Sale. (a) The offer to buy private property
for public use or purpose shall be in writing. It shall specify the property sought to be
Corollarily, the respondent, which is the condemnor, has the burden of proving all the
acquired, the reasons for its acquisition, and the price offered.
essentials necessary to show the right of condemnation. 46 It has the burden of proof to
(b) If the owner or owners accept the offer in its entirety, a contract of sale shall be
executed and payment forthwith made.
(c) If the owner or owners are willing to sell their property but at a price higher than
that offered to them, the local chief executive shall call them to a conference for the
purpose of reaching an agreement on the selling price. The chairman of the
appropriation or finance committee of the sanggunian, or in his absence, any member
of thesanggunian duly chosen as its representative, shall participate in the conference.
When an agreement is reached by the parties, a contract of sale shall be drawn and
executed.
offer in good faith, not merely perfunctory or pro forma offer, to acquire the property for
a reasonable price must be made to the owner or his privy.57 A single bona fide offer
that is rejected by the owner will suffice.
The expropriating authority is burdened to make known its definite and valid offer to all
the owners of the property. However, it has a right to rely on what appears in the
certificate of title covering the land to be expropriated. Hence, it is required to make its
offer only to the registered owners of the property. After all, it is well-settled that
persons dealing with property covered by a Torrens certificate of title are not required
to go beyond what appears on its face.58

(d) The contract of sale shall be supported by the following documents:
(1) Resolution of the sanggunian authorizing the local chief executive to enter into a
contract of sale. The resolution shall specify the terms and conditions to be embodied
in the contract;
In the present case, the respondent failed to prove that before it filed its complaint, it
made a written definite and valid offer to acquire the property for public use as an
access road. The only evidence adduced by the respondent to prove its compliance
with Section 19 of the Local Government Code is the photocopy of the letter
purportedly bearing the signature of Engr. Jose Reyes, to only one of the co-owners,
Lorenzo Ching Cuanco. The letter reads:

(2) Ordinance appropriating the amount specified in the contract; and

MR. LORENZO CHING CUANCO

(3) Certification of the local treasurer as to availability of funds together with a

18 Alcalde Jose Street
statement that such fund shall not be disbursed or spent for any purpose other than to
pay for the purchase of the property involved.
Capasigan, Pasig
The respondent was burdened to prove the mandatory requirement of a valid and
definite offer to the owner of the property before filing its complaint and the rejection Metro Manila
thereof by the latter.48 It is incumbent upon the condemnor to exhaust all reasonable
efforts to obtain the land it desires by agreement.49 Failure to prove compliance with
Dear Mr. Cuanco:
the mandatory requirement will result in the dismissal of the complaint.50

This refers to your parcel of land located along E. Santos Street, Barangay Palatiw,
An offer is a unilateral proposition which one party makes to the other for the
Pasig, Metro Manila embraced in and covered by TCT No. 66585, a portion of which
celebration of a contract.51 It creates a power of acceptance permitting the offeree, by
with an area of fifty-one (51) square meters is needed by the Municipal Government of
accepting the offer, to transform the offerors promise into a contractual
Pasig for conversion into a road-right of way for the benefit of several residents living
obligation.52 Corollarily, the offer must be complete, indicating with sufficient clearness
in the vicinity of your property. Attached herewith is the sketch plan for your
the kind of contract intended and definitely stating the essential conditions of the
information.
proposed contract.53 An offer would require, among other things, a clear certainty on
both the object and the cause or consideration of the envisioned contract. 54
In this connection, may we respectfully request your presence in our office to discuss
this project and the price that may be mutually agreed upon by you and the
The purpose of the requirement of a valid and definite offer to be first made to the
Municipality of Pasig.
owner is to encourage settlements and voluntary acquisition of property needed for
public purposes in order to avoid the expense and delay of a court action. 55 The law is
designed to give to the owner the opportunity to sell his land without the expense and Thank you.
inconvenience of a protracted and expensive litigation. This is a substantial right which
should be protected in every instance.56 It encourages acquisition without litigation and
spares not only the landowner but also the condemnor, the expenses and delays of Very truly yours,
litigation. It permits the landowner to receive full compensation, and the entity
acquiring the property, immediate use and enjoyment of the property. A reasonable (Sgd.)
ENGR. JOSE L. REYES Just a few cross, Your Honor, please. With the kind permission of the Honorable
Court.
Technical Asst. to the Mayor
COURT:
59
on Infrastructure
Proceed.
It bears stressing, however, that the respondent offered the letter only to prove its
desire or intent to acquire the property for a right-of-way.60 The document was not CROSS-EXAMINATION
offered to prove that the respondent made a definite and valid offer to acquire the
property. Moreover, the RTC rejected the document because the respondent failed to
BY ATTY. JOLO:
adduce in evidence the original copy thereof.61 The respondent, likewise, failed to
adduce evidence that copies of the letter were sent to and received by all the co-
owners of the property, namely, Lorenzo Ching Cuanco, Victor Ching Cuanco and Q Mr. Witness, do you know Mr. Lorenzo Ching [Cuanco]
Ernesto Kho.
A I do not know him.
The respondent sought to prove, through the testimony of its messenger, Rolando
Togonon, that Lorenzo Ching Cuanco received the original of the said letter. But
Togonon testified that he merely gave the letter to a lady, whom he failed to identify. Q As a matter of fact, you have not seen him even once, isnt not (sic)?
He stated that the lady went inside the store of Lorenzo Ching Cuanco, and later gave
the letter back to him bearing the signature purportedly of one Luz Bernarte. However, A Yes, Sir.
Togonon admitted, on cross-examination, that he did not see Bernarte affixing her
signature on the letter. Togonon also declared that he did not know and had never met
Lorenzo Ching Cuanco and Bernarte: Q This Luz Bernarte, do you know her?

Q And after you received this letter from that lady, what did you do afterwards? A I do not know her.

A I brought it with me, that letter, and then I went to Caruncho. Q As a matter of fact, you did not see Mrs. Bernarte even once?

Q So, [M]r. Witness, you are telling this Honorable Court that this letter intended to Mr. A That is correct.
Lorenzo was served at Pasig Trading which was situated at No. 18 Alkalde Jose
Street on February 23, 1993? Q And as a matter of fact, [M]r. Witness, you did not see Mrs. Luz Bernarte affixing her
signature on the bottom portion of this demand letter, marked as Exh. "C-2"?
A Yes, Maam.
A Yes, Sir.62
ATTY. TAN:
Even if the letter was, indeed, received by the co-owners, the letter is not a valid and
That is all for the witness, Your Honor. definite offer to purchase a specific portion of the property for a price certain. It is
merely an invitation for only one of the co-owners, Lorenzo Ching Cuanco, to a
conference to discuss the project and the price that may be mutually acceptable to
COURT: both parties.

Do you have any cross-examination? There is no legal and factual basis to the CAs ruling that the annotation of a notice
of lis pendens at the dorsal portion of petitioners TCT No. PT-92579 is a substantial
ATTY. JOLO: compliance with the requisite offer. A notice of lis pendensis a notice to the whole
world of the pendency of an action involving the title to or possession of real property
and a warning that those who acquire an interest in the property do so at their own risk
and that they gamble on the result of the litigation over it.63 Moreover, the lis
pendens was annotated at the dorsal portion of the title only on November 26, 1993,
long after the complaint had been filed in the RTC against the Ching Cuancos.
Neither is the declaration in one of the whereas clauses of the ordinance that "the
property owners were already notified by the municipality of the intent to purchase the
same for public use as a municipal road," a substantial compliance with the
requirement of a valid and definite offer under Section 19 of R.A. No. 7160.
Presumably, theSangguniang Bayan relied on the erroneous premise that the letter of
Engr. Reyes reached the co-owners of the property. In the absence of competent
evidence that, indeed, the respondent made a definite and valid offer to all the co-
owners of the property, aside from the letter of Engr. Reyes, the declaration in the
ordinance is not a compliance with Section 19 of R.A. No. 7160.
The respondent contends, however, that the Ching Cuancos, impliedly admitted the
allegation in its complaint that an offer to purchase the property was made to them
and that they refused to accept the offer by their failure to specifically deny such
allegation in their answer. This contention is wrong. As gleaned from their answer to
the complaint, the Ching Cuancos specifically denied such allegation for want of
sufficient knowledge to form a belief as to its correctness. Under Section 10, 64 Rule 8
of the Rules of Court, such form of denial, although not specific, is sufficient.
Public Necessity
We reject the contention of the petitioner that its property can no longer be
expropriated by the respondent because it is intended for the construction of a place
for religious worship and a school for its members. As aptly explained by this Court
in Manosca v. Court of Appeals,65 thus:
It has been explained as early as Sea v. Manila Railroad Co., that:
A historical research discloses the meaning of the term "public use" to be one of
constant growth. As society advances, its demands upon the individual increases and
each demand is a new use to which the resources of the individual may be devoted.
for "whatever is beneficially employed for the community is a public use."
Chief Justice Enrique M. Fernando states:
The taking to be valid must be for public use. There was a time when it was felt that a
literal meaning should be attached to such a requirement. Whatever project is
undertaken must be for the public to enjoy, as in the case of streets or parks.
Otherwise, expropriation is not allowable. It is not so any more. As long as the
purpose of the taking is public, then the power of eminent domain comes into play. As
just noted, the constitution in at least two cases, to remove any doubt, determines
what is public use. One is the expropriation of lands to be subdivided into small lots for
resale at cost to individuals. The other is the transfer, through the exercise of this
power, of utilities and other private enterprise to the government. It is accurate to state
then that at present whatever may be beneficially employed for the general welfare
satisfies the requirements of public use.
Chief Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land Tenure
Administration, has viewed the Constitution a dynamic instrument and one that "is not
to be construed narrowly or pedantically so as to enable it to meet adequately
whatever problems the future has in store." Fr. Joaquin Bernas, a noted
constitutionalist himself, has aptly observed that what, in fact, has ultimately emerged
is a concept of public use which is just as broad as "public welfare."
Petitioners ask: But "(w)hat is the so-called unusual interest that the expropriation of
(Felix Manalos) birthplace become so vital as to be a public use appropriate for the
exercise of the power of eminent domain" when only members of the Iglesia ni
Cristo would benefit? This attempt to give some religious perspective to the case
deserves little consideration, for what should be significant is the principal objective of,
not the casual consequences that might follow from, the exercise of the power. The
purpose in setting up the marker is essentially to recognize the distinctive contribution
of the late Felix Manalo to the culture of the Philippines, rather than to commemorate
his founding and leadership of the Iglesia ni Cristo. The practical reality that greater
benefit may be derived by members of the Iglesia ni Cristo than by most others could
well be true but such a peculiar advantage still remains to be merely incidental and
secondary in nature. Indeed, that only a few would actually benefit from the
expropriation of property, does not necessarily diminish the essence and character of
public use.
The petitioner asserts that the respondent must comply with the requirements for the
establishment of an easement of right-of-way, more specifically, the road must be
constructed at the point least prejudicial to the servient state, and that there must be
no adequate outlet to a public highway. The petitioner asserts that the portion of the
lot sought to be expropriated is located at the middle portion of the petitioners entire
parcel of land, thereby splitting the lot into two halves, and making it impossible for the
petitioner to put up its school building and worship center.
The subject property is expropriated for the purpose of constructing a road. The
respondent is not mandated to comply with the essential requisites for an easement of
right-of-way under the New Civil Code. Case law has it that in the absence of
legislative restriction, the grantee of the power of eminent domain may determine the
location and route of the land to be taken66 unless such determination is capricious
and wantonly injurious.67 Expropriation is justified so long as it is for the public good
and there is genuine necessity of public character.68 Government may not capriciously
choose what private property should be taken.69
The respondent has demonstrated the necessity for constructing a road from E. R.
Santos Street to Sto. Tomas Bukid. The witnesses, who were residents of Sto. Tomas
Bukid, testified that although there were other ways through which one can enter the
vicinity, no vehicle, however, especially fire trucks, could enter the area except
through the newly constructed Damayan Street. This is more than sufficient to
establish that there is a genuine necessity for the construction of a road in the area.
After all, absolute necessity is not required, only reasonable and practical necessity
will suffice.70

Nonetheless, the respondent failed to show the necessity for constructing the road
particularly in the petitioners property and not elsewhere.71 We note that the whereas
clause of the ordinance states that the 51-square meter lot is the shortest and most
suitable access road to connect Sto. Tomas Bukid to E. R. Santos Street. The
respondents complaint also alleged that the said portion of the petitioners lot has
been surveyed as the best possible ingress and egress. However, the respondent
failed to adduce a preponderance of evidence to prove its claims.

On this point, the trial court made the following findings:

The contention of the defendants that there is an existing alley that can serve the
purpose of the expropriator is not accurate. An inspection of the vicinity reveals that
the alley being referred to by the defendants actually passes thru Bagong Taon St. but
only about one-half (1/2) of its entire length is passable by vehicle and the other half is
merely a foot-path. It would be more inconvenient to widen the alley considering that
its sides are occupied by permanent structures and its length from the municipal road
to the area sought to be served by the expropriation is considerably longer than the
proposed access road. The area to be served by the access road is composed of
compact wooden houses and literally a slum area. As a result of the expropriation of
the 51-square meter portion of the property of the intervenor, a 3-meter wide road
open to the public is created. This portion of the property of the intervenor is the most
convenient access to the interior of Sto. Tomas Bukid since it is not only a short cut to
the interior of the Sto. Tomas Bukid but also an easy path for vehicles entering the
area, not to mention the 3-meter wide road requirement of the Fire Code.72

However, as correctly pointed out by the petitioner, there is no showing in the record
that an ocular inspection was conducted during the trial. If, at all, the trial court
conducted an ocular inspection of the subject property during the trial, the petitioner
was not notified thereof. The petitioner was, therefore, deprived of its right to due
process. It bears stressing that an ocular inspection is part of the trial as evidence is
thereby received and the parties are entitled to be present at any stage of the
trial.73 Consequently, where, as in this case, the petitioner was not notified of any
ocular inspection of the property, any factual finding of the court based on the said
inspection has no probative weight. The findings of the trial court based on the
conduct of the ocular inspection must, therefore, be rejected.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision and
Resolution of the Court of Appeals are REVERSED AND SET ASIDE. The RTC is
ordered to dismiss the complaint of the respondent without prejudice to the refiling
thereof.

SO ORDERED.
G.R. No. 197329 September 8, 2014 SO ORDERED.6

NATIONAL POWER CORPORATION, Petitioner, It appears that the above July 12, 1994 Order was notassailed by appeal or otherwise;
vs. nor did NPC commence any other expropriation proceeding.
LUIS SAMAR and MAGDALENA SAMAR, Respondents.
Civil Case No. IR-2678
DECISION
On December 5, 1994, respondents filed with the same trial court a
DEL CASTILLO, J.: Complaint,7 docketed as Civil Case No. IR-2678, for compensation and damages
against NPC relative to the subject lot which NPC took over but for which it failed to
pay just compensation on account of the dismissal of Civil Case No. IR-2243. The
This Petition for Review on Certiorari1 seeks to set aside the June 17, 2011
Complaint contained the following prayer:
Decision2 of the Court of Appeals (CA) in CA-G.R. CV No. 82231 which denied the
herein petitioner's appeal and affirmed the February 21, 2003 Decision3of the Regional
Trial Court (RTC) of Iriga City, Fifth Judicial Region, Branch 34 in Civil Case No. IR- WHEREFORE, considering the above premises, it is most respectfully prayed for the
2678. Honorable Court to:

Factual Antecedents 1. Order the defendant to compensate the plaintiff of [sic] the lot they are
now occupying in accordance with the current market value existing in the
place;
Civil Case No. IR-2243

2. Order the defendant to pay the plaintiff moral and actual damages and
Sometime in 1990, petitioner National Power Corporation (NPC) filed Civil Case No.
unrealized profits in the amount of not less than 150,000.00;
IR-2243 with the RTC, seeking to expropriate respondent spouses Luis and
Magdalena Samars 1,020-square meter lot covered by Tax Declaration No. 30573
and situated in San Jose (Baras),Nabua, Camarines Sur which NPC needed for the 3. Order the defendant to pay the exemplary damages of [sic] the amount of
construction of a transmission line. In an August 29, 1990 Order, 4 the RTC directed 10,000.00 and to pay the cost of suit;
the issuance of a Writ of Condemnation in favor of NPC. Accordingly, NPC entered
the subject lot and constructed its transmission line,denominated as Tower No. 83.
Plaintiffs pray for other reliefs which are just and equitable under the premises.8

However, on July 12, 1994, the trial court issued another Order5 dismissing Civil Case
As agreed by the parties during pre-trial, a panel ofcommissioners composed of one
No. IR-2243 without prejudice for failure to prosecute, as follows:
representative each from the parties, and a third from the court was constituted for
the purpose of determining the value of the subject lot.
In the Order dated 14 August 1991, Atty. Raymundo Nagrampa was designated as the
representative of his clients in the Committee of Appraisers to appraise the reasonable
After conducting their appraisal, the commissioners submitted their individual reports.
value of the land together with the Courts and plaintiffs representatives, namely, the
Atty. Wenifredo Pornillos, commissioner for the respondents, recommended a
Branch Clerk of Court and Mr. Lorenzo Orense, respectively for the purpose of fixing
valuation within the range of 1,000.00 to 1,500.00 per square meter. Lorenzo C.
the amount with which the plaintiff may be compensated for the land in question.
Orense, commissioner for NPC, did notset an amount, although he stated that the lot
should be valued at the prevailing market prices of agricultural, and not residential,
After almost three (3) years since the said order was issued, the Committee has not lands within the area. The court representative, Esteban D. Colarina, proposed a
met nor deliberated on said matter and the parties in this case have not exerted efforts 1,100.00 per square meter valuation.9
in pursuing their claims despite so long a time.
Ruling of the Regional Trial Court
Hence, this case is hereby dismissed without prejudice for failure to prosecute within a
reasonable period of time.
On February 21, 2003, the RTC rendered a Decision10 pegging the value of the
subject lot at 1,000.00 per square meter, thus:
WHEREFORE, premises considered, judgment is hereby rendered ordering defendant
National Power Corporation to pay plaintiffs the total sum of 1,020,000.00,
representing the value of plaintiffs land expropriated by the defendant. All other claims
in the complaint and in the answer with counterclaim are hereby dismissed.
SO ORDERED.11
Ruling of the Court of Appeals
NPC filed an appeal with the CA claiming that pursuant to Section 4, Rule 67 of the
1964 Rules of Court,12 just compensation for the lot should have been computed
based on its value at the time of the taking or the filing of the expropriation case (Civil
Case No. IR-2243) in 1990, and prayed thatthe case be remanded to the lower court
for further reception ofevidence based on said Section 4, Rule 67 of the 1964 Rules of
Court.
On June 17, 2011, the CArendered the assailed Decision containing the following
decretal portion:
WHEREFORE, premises considered, the instant appeal is DENIED. The assailed
Decision [dated] 21 February 2003 renderedby the Regional Trial Court of Iriga City,
Fifth Judicial Region, Branch 34 in Civil Case No. IR-2678 is hereby AFFIRMED.
SO ORDERED.13
The CA held that in the resolution of Civil Case No. IR-2678, the principles and rules
of procedure in eminent domain cases under Rule 67 of the 1964 Rules of Court
cannot apply; thus, the rule that just compensation shall be computed from the time of
the taking or filing of the expropriation case is inapplicable, since the case is not one
for expropriation. Instead, Civil Case No. IR-2678 should be treated as a simple case
for the recovery of damages. Finally, the CA held that the trial court properly exercised
its judicial function of ascertaining the fair market value of the property asjust
compensation.
NPC thus instituted the instant Petition.
Issues
The Petition raises the following issues:
I should be computed from the time of taking or filing of the expropriation case in 1990.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN AFFIRMING
THE COURT A QUOS DECISION DATED FEBRUARY 21, 2003 IN CIVIL CASE NO.
IR-2678 WHICH FIXED THE AMOUNT OF JUST COMPENSATION FOR THE
EXPROPRIATED PROPERTY OF RESPONDENTS AT 1,000.00PER SQUARE
METER IN CONTRAVENTION OF SECTION 4, RULE 67 OF THE REVISED RULES
OF COURT WHICH PROVIDES THAT THE JUST COMPENSATION FOR THE
EXPROPRIATED PROPERTY MUST BE DETERMINED EITHER AS OF THE DATE
OF THE TAKING OFTHE PROPERTY OR THE FILING OF THE COMPLAINT,
WHICHEVER COMES FIRST.
II
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT
REMANDING THE CASE TO THE COURT A QUOFOR THE PURPOSE OF
DETERMINING THE AMOUNT OF JUST COMPENSATION FOR THE
EXPROPRIATED PROPERTY INACCORDANCE WITH SECTION 4, RULE 67 OF
THE REVISED RULES OF COURT.14
Petitioners Arguments
In its Petition and Reply,15 NPC insists that Section 4, Rule 67 of the 1964 Rules of
Court should apply to Civil Case No. IR-2678; therefore, just compensation should be
based not on 1995 market values, but on those prevailing on the date of taking or the
filing of the expropriation casein 1990; that the dismissal without prejudice of the
expropriation case did not necessarily nullify the proceedings in said case
specifically, the August 29, 1990 Order of expropriation/writ of condemnation, which
became final and executory for failure of any of the parties to appeal the same which
proceedingsfor expropriation may continue through the present Civil CaseNo. IR-2678
for compensation and damages filed by respondents; and that the cited National
Power Corporation v. Court of Appeals16 case does not apply since the factual milieu
is different, and it does not appear that the lot was damaged by NPCs entry therein.
NPC thus prays that the assailed CA disposition be set aside and that the case be
remanded to the trial court for further proceedings todetermine the proper amount of
just compensation in accordance with Section 4, Rule 67 of the 1964 Rules of Court.
Respondents Arguments
Praying that the Petition be denied for lack of merit, the respondents in their
Comment17 plainly echo the assailed CA Decision, adding that the trial courts basis
for arriving at the proper amount of just compensation was correct as the market value
of adjacent properties were taken into account. Respondents add that by agreeing to
have the valuation determined by a panel of commissioners, NPC is bound by
whatever findings such panel makes, and it may not raise the issue that valuation
Our Ruling
The Court grants the Petition.
NPC insists that Section 4, Rule 67 ofthe 1964 Rules of Court should have been
observed in fixing the amount of just compensation for the subject lot; that the value of
the lot at the time of NPCs taking thereof or filing of Civil Case No. IR-2243 in 1990
should have been the basis for computing just compensation and not the prevailing
market value at the time of the filing or pendency of Civil Case No. IR-2678 in 1995.
NPC thus prays that Civil CaseNo. IR-2678 be remanded to the trial court for
determination of just compensation applying Section 4, Rule 67 of the 1964 Rules of
Court.
We agree with NPCs contention.
In Republic v. Court of Appeals,18 we held that:
Just compensation is based on the price or value of the property at the time it was
taken from the owner and appropriated by the government. However, if the
government takes possession before the institution of expropriation proceedings, the
value should befixed as of the time of the taking of said possession, not of the filing of
the complaint. The value at the time of the filing of the complaint should be the basis
for the determination of the value when the taking of the property involved coincides
with or is subsequent to the commencement of the proceedings.
The procedure for determining just compensation is set forth in Rule 67 of the 1997
Rules of Civil Procedure. Section 5 of Rule 67 partly states that upon the rendition of
the order of expropriation, the court shall appoint not more than three (3) competent
and disinterested persons as commissioners to ascertain and report to the court the
just compensation for the property sought to be taken. However, we held in Republic
v. Court of Appealsthat Rule 67 presupposes a prior filing of complaint for eminent
domain with the appropriate court by the expropriator. If no such complaint is filed, the
expropriator is considered to have violated procedural requirements, and hence,
waived the usual procedure prescribed in Rule 67, including the appointment of
commissioners to ascertain just compensation. In National Power Corporation v. Court
of Appeals, we clarified that when there is no action for expropriation and the case
involves only a complaint for damages or just compensation, the provisions of the
Rules of Court on ascertainment of just compensation (i.e., provisions of Rule 67) are
no longer applicable, and a trial before commissioners is dispensable x x x.
Records show that sometime in 1990, NPC filed an expropriation case docketed as
Civil Case No. IR-2243. However, in an Order dated July 12, 1994, the expropriation
case was dismissed by the RTC for failure of NPC to prosecute. Subsequently, or on
December 5, 1994, respondents filed Civil Case No. IR-2678 which is a complaint for
compensation and recovery of damages. Considering the dismissal of the
expropriation case for failure of the NPC to prosecute, it is as if no expropriation suit
was filed. Hence, pursuant to the above-quoted ruling, NPC is deemed "to have
violated procedural requirements, and hence, waived the usual procedure prescribed
in Rule 67, including the appointment of commissioners to ascertain just
compensation." Nevertheless, just compensation for the property must be based on its
value at the timeof the taking of said property, not at the time of the filing ofthe
complaint. Consequently, the RTC should have fixed the value ofthe property at the
time NPC took possession of the same in 1990, and not at the time of the filing of the
complaint for compensation and damages in 1994 or its fair market value in 1995.
In this case, the RTC formed a panel of commissioners in determining the just
compensation of the property. Although this is not required considering our
pronouncement in Republic v. Court of Appeals,19 nonetheless, its constitution is not
improper.20 "The appointment was done mainly to aid the trial court in determining just
compensation, and it was not opposed by the parties. Besides, the trial court is not
bound by the commissioners recommended valuation of the subject property. The
court has the discretion on whether to adopt the commissioners valuation or to
substitute itsown estimate of the value as gathered from the records." 21
In this case, records show that respondents representative recommended a valuation
of 1,000.00 to 1,500.00 per square meter; while the courts representative
recommended a value of 1,100.00 per square meter.Notably, NPCs representative
did not give any value; he merely opined that the subject property should be classified
as agricultural and not residential land and valued at the prevailing market values.
Significantly, the values recommended by the commissioners were those values
prevailing in 1994 and 1995, or during the time the complaint for compensation and
damages was filed. Considering that these are not the relevant values at the timeNPC
took possession of the property in 1990, it was incumbent upon the RTC to have
disregarded the same. Unfortunately, it adopted these values. Onthis score alone, we
find a need to remand this case to the RTC for further proceedings.
Moreover, we note that the RTC simply adopted the above values without citing its
basis therefor.1avvphi1 The pertinent portions of the trial courts Decision read:
Pursuant to the said Order of May 3, 1995, the Court formed a Commission chaired by
Mr. Esteban D. Colarina, an employee in Branch 34 of this Court; Atty. Wenifredo
Pornillos representing the plaintiffs; and Mr. Lorenzo C. Orense representing the
defendant NAPOCOR. These gentlemen took the required oath and functioned as a
committee, submitting however their respective individual Commissioners Report. x x
x
On July 11, 1995, Atty. Pornillos recommended that the land be valued at 1,000.00
to 1,500.00 per square meter (page 58). On July 13, 1995, Mr. Esteban D. Colarina
submitted his report recommending 1,100.00 as the fair market value of the property
per square meter. Attached to said report was the affidavit of Mr. Nicasio V. Dio, then
the Assistant CityAssessor of Iriga City pegging the value of the said land at
1,500.00 to 1,800.00 per square meter. On August 3, 1995, Mr. Lorenzo Orense of
the NAPOCOR submitted his Commissioners Report wherein he recommended that
the valuation of the land be based on its agricultural value, without however naming a
price.
On the basis of past proceedings, the parties were allowed to file their respective
memoranda.1wphi1 Only the defendant NAPOCOR filed a memorandum wherein it
undertook to pay plaintiffs the value of their land, although praying that the Court
consider the land as agricultural. NAPOCOR admits that plaintiffs[] property, per Tax
Declaration No. 30573 has been classified as residential, but assails said classification
with arguments which are mere speculations.
In the light of all the postures taken by both parties which, in effect, results in a failure
to agree on how the land should be valued, this Court shall fall back on the Order of
May 3, 1995 wherein the report of the Courts representative shall be taken as a factor
in determining x x x the value of the land, including other matters germane thereto and
others that may be of judicial notice.
Finally, we hold that based on prevailing jurisprudence, respondents are entitled to
"legal interest on the price of the land from the time of the taking up to the time of full
payment"25 by the NPC.
WHEREFORE, the Petition is GRANTED. The June 17, 2011 Decision of the Court of
Appeals in CA-G.R. CV No. 82231 is REVERSED and SET ASIDE. This case is
REMANDED to the Regional Trial Court of Iriga City, Fifth Judicial Region, Branch 34
which is directed to re-convene the commissioners or appoint new commissioners to
determine, in accordance with this Decision, the just compensation of the subject
property.
SO ORDERED.

In view of the above consideration, this Court hereby fixes the fair market value of the
land in question at 1,000.00 per square meter.

WHEREFORE, premises considered, judgment is hereby rendered ordering defendant

National Power Corporation to pay the plaintiffs the total sum of 1,020,000.00,
representing the value of plaintiffs land expropriated by the defendant. All other claims
in the complaint and in the answer with counterclaim are hereby dismissed.

SO ORDERED.22

Indeed, the trial court merely recited the values fixed by each commissioner. Although
it stated in general terms that it considered other factors germane thereto and of
judicial notice, it failed to specify what these factors were. It did not even clarify
whether it considered the values recommended by the two commissioners. In
Republic v. Court of Appeals,23 we remanded the case to the trial court and directed it
to reconvene the panel of commissioners after it was shown that its valuation of just
compensation has no basis, viz:

However, we agree with the appellate court that the trial court's decision is not clear as
to its basis for ascertaining just compensation. The trial court mentioned in its decision
the valuations in the reports of the City Appraisal Committee and of the
commissioners appointed pursuant to Rule 67. But whether the trial court considered
these valuations in arriving at the just compensation, or x x x made its own
independent valuation based on the records, [is] obscure in the decision. The trial
G.R. No. 165354 January 12, 2015
court simply gave the total amount of just compensation due to the property owner
without laying down its basis. Thus, there is no way to determine whether the
adjudged just compensation is based on competent evidence. For this reason alone, a REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL POWER
remand of the case to the trial court for proper determination of just compensation is in CORPORATION, Petitioner,
order. In National Power Corporation v. Bongbong, we held that although the vs.
determination of just compensation lies within the trial court's discretion, it should not HEIRS OF SATURNINO Q. BORBON, AND COURT OF APPEALS, Respondents.
be done arbitrarily or capriciously. The decision of the trial court must be based on
established rules, correct legal principles, and competent evidence. The court is
DECISION
proscribed from basing its judgment on speculations and surmises. 24
BERSAMIN, J.:
The expropriator who has taken possession of the property subject of expropriation is
obliged to pay reasonable compensation to the landowner for the period of such
possession although the proceedings had been discontinued on the ground that the
public purpose for the expropriation had meanwhile ceased.
Antecedents
The National Power Corporation (NAPOCOR) is a government-owned and -controlled
corporation vested with authority under Republic Act No. 6395, as amended, to
undertake the development of hydro-electric generation of power, production of
electricity from any and all sources, construction, operation and maintenance of power
plants, auxiliary plants, dams, reservoirs, pipes, main transmission lines, power
stations and substations, and other works for the purpose of developing hydraulic
power from any river, lake, creek, spring and waterfalls in the Philippines and to
supply such power to the inhabitants thereof.1
In February 1993, NAPOCOR entered a property located in Barangay San Isidro,
Batangas City in order to construct and maintain transmission lines for the 230 KV
Mahabang Parang-Pinamucan Power Transmission Project.2 Respondents heirs of
Saturnino Q. Borbon owned the property, with a total area of 14,257 square meters,
which was registered under Transfer Certificate of Title No. T-9696 of the Registry of
Deeds of Batangas.3
On May 26, 1995, NAPOCOR filed a complaint for expropriation in the Regional Trial
Court in Batangas City (RTC),4seeking the acquisition of an easement of right of way
over a portion of the property involving an area of only 6,326 square meters, more or
less,5 alleging that it had negotiated with the respondents for the acquisition of the
easement but they had failed to reach any agreement; and that, nonetheless, it was
willing to deposit the amount of 9,790.00 representing the assessed value of the
portion sought to be expropriated.6 It prayed for the issuance of a writ of possession
upon deposit to enable it to enter and take possession and control of the affected
portion of the property; to demolish all improvements existing thereon; and to
commence construction of the transmission line project. It likewise prayed for the
appointment of three commissioners to determine the just compensation to be paid. 7
8
In their answer with motion to dismiss, the respondents staunchly maintained that
NAPOCOR had not negotiated with them before entering the property and that the
entry was done without their consent in the process, destroying some fruit trees
without payment, and installing five transmission line posts and five woodpoles for its
project;9 that the area being expropriated only covered the portion directly affected by
the transmission lines; that the remaining portion of the property was also affected
because the transmission line passed through the center of the land, thereby dividing
the land into three lots; that the presence of the high tension transmission line had
rendered the entire property inutile for any future use and capabilities; 10 that,
nonetheless, they tendered no objection to NAPOCORs entry provided it would pay
just compensation not only for the portion sought to be expropriated but for the entire
property whose potential was greatly diminished, if not totally lost, due to the
project;11 and that their property was classified as industrial land. Thus, they sought
the dismissal of the complaint, the payment of just compensation of 1,000.00/square
meter, and attorneys fees;12 and to be allowed to nominate their representative to the
panel of commissioners to be appointed by the trial court.13
In the pre-trial conference conducted on December 20, 1995, the parties stipulated on:
(1) the location of the property; (2) the number of the heirs of the late Saturnino Q.
Borbon; (3) the names of the persons upon whom title to the property was issued; and
(4) the ownership and possession of the property.14 In its order of that date, the RTC
directed the parties to submit the names of their nominees to sit in the panel of
commissioners within 10 days from the date of the pre-trial.15
The RTC constituted the panel of three commissioners. Two commissioners submitted
a joint report on April 8, 1999,16 in which they found that the property was classified as
industrial land located within the Industrial 2 Zone;17that although the property used to
be classified as agricultural (i.e., horticultural and pasture land), it was reclassified to
industrial land for appraisal or taxation purposes on June 30, 1994; and that the
reclassification was made on the basis of a certification issued by the Zoning
Administrator pursuant to Section 3.10 (d) of the Amended Zoning Ordinance (1989)
of the City of Batangas.18 The two commissioners appraised the value at
550.00/square meter.19However, the third commissioner filed a separate report dated
March 16, 1999,20 whereby he recommended the payment of "an easement fee of at
least ten percent (10%) of the assessed value indicated in the tax declaration21plus
cost of damages in the course of the construction, improvements affected and tower
occupancy fee."22
The parties then submitted their respective objections to the reports. On their part, the
respondents maintained that NAPOCOR should compensate them for the entire
property at the rate of 550.00/square meter because the property was already
classified as industrial land at the time NAPOCOR entered it.23 In contrast, NAPOCOR
objected to the joint report, insisting that the property was classified as agricultural
land at the time of its taking in March 1993; and clarifying that it was only seeking an
easement of right of way over a portion of the property, not the entire area thereof, so
that it should pay only 10% of the assessed value of the portion thus occupied. 24
In the judgment dated November 27, 2000,25 the RTC adopted the recommendation
contained in the joint report, and ruled thusly:
The price to be paid for an expropriated land is its value at the time of taking, which is
the date when the plaintiff actually entered the property or the date of the filing of the
complaint for expropriation. In this case, there is no evidence as to when the plaintiff
actually entered the property in question, so the reference point should be the date of
filing of the complaint, which is May 5, 1995.
On this date, the property in question was already classified as industrial. So, the Joint
Report (Exhibit "1") is credible on this point. The two Commissioners who submitted
the Joint Report are government officials who were not shown to be biased. So, that
their report should be given more weight than the minority report submitted by a
private lawyer representing the plaintiff. In view of these, the Court adopts the Joint
Report and rejects the minority report. The former fixed the just compensation at
550.00 per square meter for the whole lot of 14,257 square meters.26
Accordingly, the RTC ordered NAPOCOR to pay the respondents: (1) just
compensation for the whole area of 14,257 square meters at the rate of
550.00/square meter; (2) legal rate of interest from May 5, 1995 until full payment;
and (3) the costs of suit.27
NAPOCOR appealed (CA-G.R. No. 72069).
On April 29, 2004,28 the CA promulgated its decision, viz:
WHEREFORE, premises considered, the Decision dated November 27, 2000 of
Branch I of the Regional Trial Court of Batangas City, is hereby AFFIRMED with the
MODIFICATION that plaintiff-appellant shall pay only for the occupied 6,326 square
meters of the subject real property at the rate of 550.00 per square meter and to pay
legal interest therefrom until fully paid.
SO ORDERED.29
Hence, this appeal by NAPOCOR.
Issue
On December 3, 2012, during the pendency of the appeal, NAPOCOR filed a Motion
to Defer Proceedings stating that negotiations between the parties were going on with
a view to the amicable settlement of the case.30
On January 3, 2014, NAPOCOR filed a Manifestation and Motion to Discontinue
Expropriation Proceedings,31informing that the parties failed to reach an amicable
agreement; that the property sought to be expropriated was no longer necessary for
public purpose because of the intervening retirement of the transmission lines installed
on the respondents property;32 that because the public purpose for which such
property would be used thereby ceased to exist, the proceedings for expropriation
should no longer continue, and the State was now duty-bound to return the property to
its owners; and that the dismissal or discontinuance of the expropriation proceedings
was in accordance with Section 4, Rule 67 of the Rules of Court. Hence, NAPOCOR
prayed that the proceedings be discontinued "under such terms as the court deems
just and equitable,"33 and that the compensation to be awarded the respondents be
reduced by the equivalent of the benefit they received from the land during the time of
its occupation, for which purpose the case could be remanded to the trial court for the
determination of reasonable compensation to be paid to them.34
In light of its Manifestation and Motion to Discontinue Expropriation Proceedings,
NAPOCOR contends that the expropriation has become without basis for lack of
public purpose as a result of the retirement of the transmission lines; that if
expropriation still proceeds, the Government will be unduly burdened by payment of
just compensation for property it no longer requires; and that there is legal basis in
dismissing the proceedings, citing Metropolitan Water District v. De los
Angeles35 where the Court granted petitioners prayer for the quashal of expropriation
proceedings and the eventual dismissal of the proceedings on the ground that the land
sought to be expropriated was no longer "indispensably necessary" in the
maintenance and operation of petitioner's waterworks system.
The issue to be considered and resolved is whether or not the expropriation
proceedings should be discontinued or dismissed pending appeal.
Ruling of the Court
The dismissal of the proceedings for expropriation at the instance of NAPOCOR is
proper, but, conformably with Section 4,36 Rule 67 of the Rules of Court, the dismissal
or discontinuance of the proceedings must be upon such terms as the court deems
just and equitable.
Before anything more, we remind the parties about the nature of the power of eminent
domain. The right of eminent domain is "the ultimate right of the sovereign power to
appropriate, not only the public but the private property of all citizens within the
territorial sovereignty, to public purpose."37 But the exercise of such right is not
unlimited, for two mandatory requirements should underlie the Governments exercise
of the power of eminent domain, namely: (1) that it is for a particular public purpose;
and (2) that just compensation be paid to the property owner.38 These requirements
partake the nature of implied conditions that should be complied with to enable the
condemnor to keep the property expropriated.39
Public use, in common acceptation, means "use by the public." However, the concept
has expanded to include utility, advantage or productivity for the benefit of the
public.40 In Asia's Emerging Dragon Corporation v. Department of Transportation and
Communications,41 Justice Corona, in his dissenting opinion said that:
To be valid, the taking must be for public use. The meaning of the term "public use"
has evolved over time in response to changing public needs and exigencies. Public
use which was traditionally understood as strictly limited to actual "use by the public"
has already been abandoned. "Public use" has now been held to be synonymous with
"public interest," "public benefit," and "public convenience."
It is essential that the element of public use of the property be maintained throughout
the proceedings for expropriation. The effects of abandoning the public purpose were
explained in Mactan-Cebu International Airport Authority v. Lozada, Sr.,42 to wit:
More particularly, with respect to the element of public use, the expropriator should
commit to use the property pursuant to the purpose stated in the petition for
expropriation filed, failing which, it should file another petition for the new purpose. If
not, it is then incumbent upon the expropriator to return the said property to its private
owner, if the latter desires to reacquire the same. Otherwise, the judgment of
expropriation suffers an intrinsic flaw, as it would lack one indispensable element for
the proper exercise of the power of eminent domain, namely, the particular public
purpose for which the property will be devoted. Accordingly, the private property
owner would be denied due process of law, and the judgment would violate the
property owner's right to justice, fairness and equity.43
A review reveals that Metropolitan Water District v. De los Angeles 44 is an appropriate
precedent herein. There, the Metropolitan Water District passed a board resolution
requesting the Attorney-General to file a petition in the Court of First Instance of the
Province of Rizal praying that it be permitted to discontinue the condemnation
proceedings it had initiated for the expropriation of a parcel of land in Montalban, Rizal
to be used in the construction of the Angat Waterworks System. It claimed that the
land was no longer indispensably necessary in the maintenance and operation of its
waterworks system, and that the expropriation complaint should then be dismissed.
The Court, expounding on the power of the State to exercise the right of eminent
domain, then pronounced:
There is no question raised concerning the right of the plaintiff here to acquire the land
under the power of eminent domain.1wphi1 That power was expressly granted it by
its charter. The power of eminent domain is a right reserved to the people or
Government to take property for public use. It is the right of the state, through its
regular organization, to reassert either temporarily or permanently its dominion over
any portion of the soil of the state on account of public necessity and for the public
good. The right of eminent domain is the right which the Government or the people
retains over the estates of individuals to resume them for public use. It is the right of
the people, or the sovereign, to dispose, in case of public necessity and for the public
safety, of all the wealth contained in the state.45
Indeed, public use is the fundamental basis for the action for expropriation; hence,
NAPOCORs motion to discontinue the proceedings is warranted and should be
granted. The Court has observed in Metropolitan Water District v. De los Angeles:
It is not denied that the purpose of the plaintiff was to acquire the land in question for
public use. The fundamental basis then of all actions brought for the expropriation of
lands, under the power of eminent domain, is public use. That being true, the very
moment that it appears at any stage of the proceedings that the expropriation is not for
a public use, the action must necessarily fail and should be dismissed, for the reason
that the action cannot be maintained at all except when the expropriation is for some
public use. That must be true even during the pendency of the appeal or at any other
stage of the proceedings. If, for example, during the trial in the lower court, it should
be made to appear to the satisfaction of the court that the expropriation is not for some
public use, it would be the duty and the obligation of the trial court to dismiss the
action. And even during the pendency of the appeal, if it should be made to appear to
the satisfaction of the appellate court that the expropriation is not for public use, then it
would become the duty and the obligation of the appellate court to dismiss it.
In the present case the petitioner admits that the expropriation of the land in question
is no longer necessary for public use. Had that admission been made in the trial court
the case should have been dismissed there. It now appearing positively, by resolution
of the plaintiff, that the expropriation is not necessary for public use, the action should
be dismissed even without a motion on the part of the plaintiff. The moment it appears
in whatever stage of the proceedings that the expropriation is not for a public use the
complaint should be dismissed and all the parties thereto should be relieved from
further annoyance or litigation.46 (underscoring and emphasis supplied)
It is notable that the dismissal of the expropriation proceedings in Metropolitan Water
District v. De los Angeles was made subject to several conditions in order to address
the dispossession of the defendants of their land, and the inconvenience, annoyance
and damages suffered by the defendants on account of the proceedings. Accordingly,
the Court remanded the case to the trial court for the issuance of a writ of possession
ordering Metropolitan Water District to immediately return possession of the land to
the defendants, and for the determination of damages in favor of the defendants, the
claims for which must be presented within 30 days from the return of the record to the
court of origin and notice thereof.47
Here, NAPOCOR seeks to discontinue the expropriation proceedings on the ground
that the transmission lines constructed on the respondents property had already been
retired. Considering that the Court has consistently upheld the primordial importance
of public use in expropriation proceedings, NAPOCORs reliance on Metropolitan
Water District v. De los Angeles was apt and correct. Verily, the retirement of the
transmission lines necessarily stripped the expropriation proceedings of the element of
public use. To continue with the expropriation proceedings despite the definite
cessation of the public purpose of the project would result in the rendition of an invalid
judgment in favor of the expropriator due to the absence of the essential element of
public use.
Unlike in Metropolitan Water District v. De los Angeles where the request to
discontinue the expropriation proceedings was made upon the authority appearing in
the board resolution issued on July 14, 1930,48 counsel for NAPOCOR has not
presented herein any document to show that NAPOCOR had decided, as a corporate
body, to discontinue the expropriation proceedings. Nonetheless, the Court points to
the Memorandum dated December 13, 201249 and the Certificate of
Inspection/Accomplishment dated February 5, 200550 attached to NAPOCORs motion
attesting to the retirement of the transmission lines. Also, Metropolitan Water District v.
De los Angeles emphasized that it became the duty and the obligation of the court,
regardless of the stage of the proceedings, to dismiss the action "if it should be made
to appear to the satisfaction of the court that the expropriation is not for some public
use."51 Despite the lack of the board resolution, therefore, the Court now considers the
documents attached to NAPOCORs Manifestation and Motion to Discontinue
Expropriation Proceedings to be sufficient to establish that the expropriation sought is
no longer for some public purpose.
Accordingly, the Court grants the motion to discontinue the proceedings subject to the
conditions to be shortly mentioned hereunder, and requires the return of the property
to the respondents. Having said that, we must point out that NAPOCOR entered the
property without the owners consent and without paying just compensation to the
respondents. Neither did it deposit any amount as required by law prior to its entry.
The Constitution is explicit in obliging the Government and its entities to pay just
compensation before depriving any person of his or her property for public
use.52 Considering that in the process of installing transmission lines, NAPOCOR
destroyed some fruit trees and plants without payment, and the installation of the
transmission lines went through the middle of the land as to divide the property into
three lots, thereby effectively rendering the entire property inutile for any future use, it
would be unfair for NAPOCOR not to be made liable to the respondents for the
disturbance of their property rights from the time of entry until the time of restoration of
the possession of the property. There should be no question about the taking. In
several rulings, notably National Power Corporation v. Zabala,53 Republic v.
Libunao,54 National Power Corporation v. Tuazon,55 and National Power Corporation
v. Saludares,56 this Court has already declared that "since the high-tension electric
current passing through the transmission lines will perpetually deprive the property
owners of the normal use of their land, it is only just and proper to require Napocor to
recompense them for the full market value of their property."
There is a sufficient showing that NAPOCOR entered into and took possession of the
respondents property as early as in March 1993 without the benefit of first filing a
petition for eminent domain. For all intents and purposes, therefore, March 1993 is the
reckoning point of NAPOCORs taking of the property, instead of May 5, 1995, the
time NAPOCOR filed the petition for expropriation. The reckoning conforms to the
pronouncement in Ansaldo v. Tantuico, Jr.,57 to wit:
Normally, of course, where the institution of an expropriation action precedes the
taking of the property subject thereof, the just compensation is fixed as of the time of
the filing of the complaint. This is so provided by the Rules of Court, the assumption of
possession by the expropriator ordinarily being conditioned on its deposits with the
National or Provincial Treasurer of the value of the property as provisionally
ascertained by the court having jurisdiction of the proceedings.
There are instances, however, where the expropriating agency takes over the property
prior to the expropriation suit, as in this case although, to repeat, the case at bar is
quite extraordinary in that possession was taken by the expropriator more than 40
years prior to suit. In these instances, this Court has ruled that the just compensation
shall be determined as of the time of taking, not as of the time of filing of the action of
eminent domain.
In the context of the State's inherent power of eminent domain, there is a "taking"
when the owner is actually deprived or dispossessed of his property; when there is a
practical destruction or a material impairment of the value of his property or when he is
deprived of the ordinary use thereof. There is a "taking" in this sense when the
expropriator enters private property not only for a momentary period but for a more
permanent duration, for the purpose of devoting the property to a public use in such a
manner as to oust the owner and deprive him of all beneficial enjoyment thereof. For
ownership, after all, "is nothing without the inherent rights of possession, control and
enjoyment. Where the owner is deprived of the ordinary and beneficial use of his
property or of its value by its being diverted to public use, there is taking within the
Constitutional sense." x x x.58
In view of the discontinuance of the proceedings and the eventual return of the
property to the respondents, there is no need to pay "just compensation" to them
because their property would not be taken by NAPOCOR. Instead of full market value
of the property, therefore, NAPOCOR should compensate the respondents for the
disturbance of their property rights from the time of entry in March 1993 until the time
of restoration of the possession by paying to them actual or other compensatory
damages. This conforms with the following pronouncement in Mactan-Cebu
International Airport Authority v. Lozada, Sr.:59
In light of these premises, we now expressly hold that the taking of private property,
consequent to the Governments exercise of its power of eminent domain, is always
subject to the condition that the property be devoted to the specific public purpose for
which it was taken. Corollarily, if this particular purpose or intent is not initiated or not
at all pursued, and is peremptorily abandoned, then the former owners, if they so
desire, may seek the reversion of the property, subject to the return of the amount of
just compensation received. In such a case, the exercise of the power of eminent
domain has become improper for lack of the required factual justification.60
This should mean that the compensation must be based on what they actually lost as
a result and by reason of their dispossession of the property and of its use, including
the value of the fruit trees, plants and crops destroyed by NAPOCORs construction of
the transmission lines. Considering that the dismissal of the expropriation proceedings
is a development occurring during the appeal, the Court now treats the dismissal of
the expropriation proceedings as producing the effect of converting the case into an
action for damages. For that purpose, the Court remands the case to the court of
origin for further proceedings, with instruction to the court of origin to enable the
parties to fully litigate the action for damages by giving them the opportunity to re-
define the factual and legal issues by the submission of the proper pleadings on the
extent of the taking, the value of the compensation to be paid to the respondents by
NAPOCOR, and other relevant matters as they deem fit. Trial shall be limited to
matters the evidence upon which had not been heretofore heard or adduced. The
assessment and payment of the correct amount of filing fees due from the
respondents shall be made in the judgment, and such amount shall constitute a first
lien on the recovery. Subject to these conditions, the court of origin shall treat the case
as if originally filed as an action for damages.
WHEREFORE, the Court DISMISSES the expropriation proceedings due to the
intervening cessation of the need for public use; REMANDS the records to the
Regional Trial Court, Branch 1, in Batangas City as the court of origin for further
proceedings to be conducted in accordance with the foregoing instructions; and
ORDERS said trial court to try and decide the issues with dispatch.

SO ORDERED.