G.R. No. 191945 March 11, 2015 c. The Provincial Appraisal Committee valued the lot at ₱500.
c. The Provincial Appraisal Committee valued the lot at ₱500.00 per square meter;
NATIONAL CORPORATION, Petitioner,
vs.
SOCORRO T. POSADA, RENATO BUENO, ALICE BALIN, ADRIAN TABLIZO, TEOFILO TABLIZO, and
LYDIA T. OLIVO, substituted by her heirs, ALFREDO M. OLIVO, ALICIA O. SALAZAR, ANITA O.
ORDONO, ANGELITA O. LIM, AND ADELFA O. ESPINAS, Respondents.
DECISION
LEONEN, J.:
When the taking of private property is no longer for a public purpose, the expropriation com-
plaint should be dismOOOissed by the trial court. The case will proceed only if the trial court's
order of expropriation became final and executory and the expropriation causes prejudice to
the property owner.
Before this court is a Motion1 filed by the National Power Corporation seeking to withdraw its
Petition for Review2 dated June 4, 2010. The Petition sought to reverse the Decision3 of the
Court of Appeals dated August 7, 2009, which affirmed the trial court’s Decision recalling the
Writ of Possession issued in the National Power Corporation’s favor.
The National Power Corporation instituted expropriation proceedings for the acquisition of a
right-of-way easement over parcels of land located in Barangay Marinawa, Bato,Catanduanes
owned by respondents Socorro T. Posada, Renato Bueno, Alice Balin, Adrian Tablizo, Teofilo Ta-
blizo, and Lydia Tablizo.4 The expropriation was for the construction and maintenance of its
Substation Island Grid Project.5 The case was docketed as Civil Case No. 0008.6 The National
Power Corporation offered the price of ₱500.00 per square meter. In their Answer, respond-
ents objected to the offer and alleged that the value of the properties was ₱2,000.00 per
square meter.7
In the Order dated December 16, 2002, Branch 438 of the Regional Trial Court of Virac, Cata-
nduanes confirmed the National Power Corporation’s right to expropriate the properties and
ordered the creation of a commission to determine the amount of just compensation to be paid
to respondents.9
On January 28, 2003, the National Power Corporation filed a Notice to Take Possession before
the court on the basis of Rule 67, Section 210 of the Rules of Court. It alleged that it was enti-
tled to a Writ of Possession in view of its deposit with the Land Bank of the Philippines in the
amount of ₱3,280.00, alleging that it represented the provisional value of the properties.11
On July 10, 2003, the court-appointed commissioners recommended a fair market value of
₱1,500.00 per square meter based on the following considerations:
a. The location of the subject parcels of land, which is along the highway, within a fast-growing
community, ideal both for residential and business purposes, about 3 1/2 kilometers from the
capital town of Virac, a stones-throw from the seashore of Cabugao Bay and not too distant
from "Maribina Falls", a tourist attraction;
b. The prevailing market value of the properties along the national highway ranges from
₱1,500.00 to ₱2, 000.00 per square meter as per interview with the residents of the place;
c. Structures and improvements consisting of the residential houses of [respondents] and
others can be found on the property, hence if the expropriation proceeds, [respondents] would
be constrained to leave their homes to relocate.12
The National Power Corporation opposed the recommendation of the commissioners, arguing
that:
a. the opinion given by the persons who live in the area should not be given weight because
they are not experts in real estate appraisal;
b. the value of the land at the time of taking and not its potential as a building site is the criteria
for determination of just compensation[;]
d. The approved zonal values of real properties in Catanduanes classified as Residential Regular
(RR) is ₱105.00;
e. The Schedule of Fair Market Values prescribed ₱160.00 for all lots along the national road
from Marinawa Bridge to FICELCO;
f. Only an easement of right-of-way shall be acquired over the properties of the other defend-
ants which remain classified as cocoland and as provided in [Republic Act No.] 6395 (NPC Char-
ter), shall not exceed 10% of the market value declared by the owner or administrator or any-
one having legal interest in the property, or as determined by the assessor, whichever is low-
er.13 On November 19, 2003, the National Power Corporation amended its Complaint stating
that it needed to acquire portions of the properties, instead of just an easement of right of way,
for the construction of the Substation Island Grid Project. For this reason, it deposited with
Land Bank of the Philippines the amount of ₱580,769.93, alleging that this represented the val-
ue of the 3,954 square meters sought to be expropriated.14
The National Power Corporation filed an Urgent Ex Parte Motion for the Issuance of a Writ of
Possession.15 It also served respondents with a Notice to Take Possession stating that "it shall
enter and take possession of the property on September 26, 2005."16
In the Order dated July 14, 2005, the trial court granted the Urgent Ex Parte Motion for the Issu-
ance of a Writ of Possession and issued a Writ of Possession.17
Respondents filed a Motion to Lift and/or Suspend the Issuance of the Writ of Possession,
which the trial court denied.18
Undaunted, respondents filed an Urgent Motion to Grant Defendants Time to Remove their
Houses and Improvements as well as Additional Deposit for Use in Land Acquisition and Ex-
penses for Transfer of their Respective Residential Houses.19
The trial court granted respondents’ Motion in its Order dated June 5, 2006. It fixed the value of
the structures and improvements on the land in the amount of ₱827,000.00, based on the val-
ue determined by the commissioners. It ordered the National Power Corporation to deposit an
additional amount of ₱262,639.17.20 The trial court stated that this amount was the difference
between value of structures and improvements determined by the trial court (₱827,000.00)
and the amount initially deposited by the National Power Corporation (₱564,360.83).21
The National Power Corporation failed to deposit the additional amount. The trial court issued
an Order during the November 22, 2006 hearing for the National Power Corporation to make
the necessary deposit. The issue on the amount of just compensation was also submitted for
decision.22
On November 27, 2006, the trial court resolved the issue of just compensation as follows:
WHEREFORE, all factors carefully evaluated and considered, this Court, hereby, fixes the just
compensation at TWO THOUSAND PESOS (₱2,000.00) per square meter for the taking of the
properties of [respondents] by [petitioner].
LIKEWISE, in view of NPC’s failure to comply with the Court’s order dated June 5, 2006 and for
misleading this Court when it filed its Motion for the Issuance of Writ of Possession, this Court,
hereby, RECALLS its order granting said Motion and CANCELS the Writ of Possession. AND, AS A
FINAL NOTE, the amount determined by the Court in said Order represents only the value of
the structures and improvements and does not include the value of the land. Even if said
amount is fully paid by NPC, still it would not be entitled to a Writ of Possession until it has paid
the value of the land. And what should be its value? Is it the zonal valuation of the Bureau of In-
ternal Revenue? Under Section 4 of Rep. [A]ct. No. 8974, payment of one hundred [percent]
(100%) of the value of the property based on the current relevant zonal valuation of the Bureau
of Internal Revenue is required upon the filing of the complaint, and after due notice to the de-
fendant. This Court believes that this basis is used because the just compensation is yet to be
determined during the second stage of the expropriation proceeding. In the instant case, the
complaint has long been filed, and the just compensation has already been determined above.
Therefore, it should now be the basis for the re-issuance of a Writ of Possession – nay, even the
transfer of ownership if fully paid.
SO ORDERED.23 (Emphasis supplied)
The National Power Corporation appealed the trial court’s Decision to the Court of Ap-
peals.24 On August 7, 2009,25 the Court of Appeals rendered a Decision denying the ap-
peal.26 It held that the trial court committed no reversible error "in adopting the recommenda-
tion of the appointed commissioners insofar as the value of the subject property is con-
cerned."27
The Court of Appeals also held that "the writ of possession was correctly recalled by the lower
court."28 Citing Republic v. Judge Gingoyon,29 it held that the National Power Corporation
must first pay respondents the amount determined by the trial court.30 In the absence of proof
that respondents were paid, the National Power Corporation cannot take possession of the
property.31
The National Power Corporation filed a Motion for Reconsideration, but this was denied in the
Resolution32 dated April 14, 2010. Hence, it filed a Petition for Review on Certiorari before this
court.
Respondents filed their Comment33 on September 17, 2010. The National Power Corporation
filed its Reply34 to the Comment, substantially reiterating the arguments in its Petition.
During the pendency of the case before this court, the National Power Corporation filed an Ur-
gent Motion for the Issuance of a Temporary Restraining Order35 dated December 13, 2012,
which was received by this court on January 7, 2013. Respondents, in turn, filed their Com-
ments and Opposition to the Urgent Motion for Issuance of a Temporary Restraining Order.36
On March 11, 2013, this court issued a Resolution37 deferring action on the Motion for the Issu-
ance of a Temporary Restraining Order.
On May 17, 2013, the National Power Corporation filed a Very Urgent Motion to Resolve38 stat-
ing that "the delay in the possession of the subject properties – intended for the Marinawa 10
MVA Sub-Station Project – would adversely affect the implementation of the Codon-Virac
Transmission Lines[.]"39
In a turn of events, the National Power Corporation informed its counsel on July 24, 2014 that it
no longer needed the properties as it was set to acquire an alternative site.40 It also requested
its counsel to withdraw Civil Case No. 0008 before the trial court because "it [was] impractical
to pursue the acquisition of the original site[.]"41
Thus, the National Power Corporation, through counsel, filed the present Motion to Withdraw
Appeal,42 praying for the withdrawal of its appeal before this court and, ultimately, for its
Amended Complaint before the trial court to be dismissed.43
We are asked to decide whether the National Power Corporation may be allowed to withdraw
its Petition for Review and whether the withdrawal has the effect of dismissing its Amended
Complaint before the trial court.
We grant the Motion to Withdraw the Petition for Review.
I plaintiff shall have the right to take or enter upon the possession of the real property involved if
Expropriation proceedings for national infrastructure projects are governed by Rule 67 of the
Rules of Court and Republic Act No. 8974.44
The power of eminent domain is an inherent competence of the state. It is essential to a sover-
eign. Thus, the Constitution does not explicitly define this power but subjects it to a limitation:
that it be exercised only for public use and with payment of just compensation.45 Whether the
use is public or whether the compensation is constitutionally just will be determined finally by
the courts.
However, the manner of its exercise such as which government instrumentality can be dele-
gated with the power to condemn, under what conditions, and how may be limited by law. Re-
public Act No. 8974 does these, but it should not be read as superseding the power of this court
to promulgate rules of procedure. Thus, our existing rules should be read in conjunction with
the law that limits and conditions the power of eminent domain.
Expropriation, the procedure by which the government takes possession of private property, is
outlined primarily in Rule 67 of the Rules of Court. It undergoes two phases. The first phase de-
termines the propriety of the action. The second phase determines the compensation to be
paid to the landowner. Thus:
There are two (2) stages in every action for expropriation. The first is concerned with the deter-
mination of the authority of the plaintiff to exercise the power of eminent domain and the pro-
priety 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 com-
plaint, upon the payment of just compensation to be determined as of the date of the filing of
the complaint." An order of dismissal, if this be ordained, would be a final one, of course, since
it finally disposes of the action and leaves nothing more to be done by the Court on the merits.
So, too, would an order of condemnation be a final one, for thereafter, as the Rules expressly
state, in the proceedings before the Trial Court, "no objection to the exercise of the right of
condemnation (or the propriety thereof) shall be filed or heard.["]
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. The order fixing the just compen-
sation on the basis of the evidence before, and findings of, the commissioners would be final,
too. It would finally dispose of the second stage of the suit, and leave nothing more to be done
by the Court regarding the issue. Obviously, one or another of the parties may believe the order
to be erroneous in its appreciation of the evidence or findings of fact or otherwise. Obviously,
too, such a dissatisfied party may seek a reversal of the order by taking an appeal there-
from.46 (Emphasis supplied, citations omitted)
The first phase of expropriation commences with the filing of the complaint. It ends with the or-
der of the trial court to proceed with the expropriation and determination of just compensa-
tion. During the pendency of the complaint before the trial court, the state may already enter
and possess the property subject to the guidelines in Rule 67 of the Rules of Court.
Rule 67 of the Rules of Court, however, is not the only set of rules that governs the first phase
of expropriation. On November 7, 2000, Congress enacted Republic Act No. 8974 to govern the
expropriation of private property for national government infrastructure projects. The law
qualifies the manner by which the government may enter and take possession of the property
to be expropriated.
Rule 67, Section 2 of the Rules of Court states:
Sec. 2. Entry of plaintiff upon depositing value with authorized government depositary. — Upon
the filing of the complaint or at any time thereafter and after due notice to the defendant, the
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 depos-
it of a certificate of deposit of a government bank of the Republic of the Philippines payable on
demand to the authorized government depositary. (Emphasis supplied)
Section 4 of Republic Act No. 8974,on the other hand, mandates: Section 4. Guidelines for Ex-
propriation Proceedings.- Whenever it is necessary to acquire real property for the right-of-way
or location for any national government infrastructure project through expropriation, the ap-
propriate implementing agency shall initiate the expropriation proceedings before the proper
court under the following guidelines:
(a) Upon the filing of the complaint, and after due notice to the defendant, the implementing
agency shall immediately pay the owner of the property the amount equivalent to the sum of
(1) one hundred percent (100%) of the value of the property based on the current relevant zo-
nal valuation of the Bureau of Internal Revenue (BIR); and (2) the value of the improvements
and/or structures as determined under Section 7 hereof;
....
Upon compliance 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. (Emphasis supplied)
As stated in Gingoyon, Republic Act No. 8974 "provides for a procedure eminently more favor-
able to the property owner than Rule 67"47 since it requires the immediate payment of the zo-
nal value and the value of the improvements on the land to the property owner before the trial
court can allow the government to take possession. In contrast, Rule 67 only requires the gov-
ernment to deposit the assessed value of the property for it to enter and take possession.
In its Petition, the National Power Corporation argues that the amount of just compensation at
₱2,000.00 per square meter is excessive since the zonal valuation of the Bureau of Internal Rev-
enue classifies the property as cocoland48 pegged at 4.15 per square meter, and the commis-
sioners merely "engaged in speculation and guess-work"49 when they arrived at the amount.50
The National Power Corporation argues that the Writ of Possession should not have been re-
called because it already deposited ₱580,769.93, the provisional amount required by Republic
Act No. 8974. It argues that the amount ordered by the trial court to be paid to respondents
was the amount of just compensation, which should have been distinguished from the provi-
sional amount required for the issuance of a Writ of Possession. The deposit of the provisional
amount was sufficient to be granted a Writ of Possession and to take possession of the prop-
erty.51
In their Comment, respondents argue that the Court of Appeals did not err in sustaining the
amount of just compensation determined by the trial court since the value was based on loca-
tion, costs of improvements, prevailing market values of the properties similarly located, and
opinions of the residents in the area.52
Respondents also argue that the Court of Appeals correctly upheld the trial court’s recall of the
Writ of Possession because there was no showing that any payment was made to respondents,
as required by Gingoyon.53
The purpose for the taking of private property was for the construction of the National Power
Corporation’s Substation Island Grid Project. According to the Implementing Rules and Regula-
tions of Republic Act No. 8974, projects related to "power generation, transmission and distri-
bution"54 are national infrastructure projects covered by the law. The National Power Corpora-
tion must first comply with the guidelines stated in Republic Act No. 8974 before it can take
possession of respondents’ property.
The trial court allowed the National Power Corporation to take possession of the properties be-
cause of its deposit with Land Bank of the Philippines of the alleged provisional value. However,
the trial court recalled the Writ of Possession because the National Power Corporation failed to
deposit the additional amount.
We find that the trial court erred, not in recalling the Writ of Possession, but in granting the
Writ of Possession in the first place.
Section 4 of Republic Act No. 8974, unlike Rule 67, Section 2 of the Rules of Civil Procedure, re-
quires immediate payment to the landowner of 100% of the value of the property based on the
current relevant zonal valuation of the Bureau of Internal Revenue. It is the Bureau of Internal
Revenue, not the court, which determines the zonal value.
The law also requires the immediate payment of the value of the improvements and/or struc-
tures on the land before the trial court can issue the Writ of Possession.
Thus, the trial court committed two errors. First, it based the value of the improvements on the
property on the determination made by the commissioners, and not on the determination
made by the National Power Corporation, contrary to the requirements of Section 7 of Republic
Act No. 8974:
Section 7. Valuation of Improvements and/or Structures.- The Department of Public Works and
Highways and other implementing agencies concerned, in coordination with the local govern-
ment units concerned in the acquisition of right-of-way, site or location for any national govern-
ment infrastructure project, are hereby mandated to adopt within sixty (60) days upon approval
of this Act, the necessary implementing rules and regulations for the equitable valuation of the
improvements and/or structures on the land to be expropriated.
The Implementing Rules and Regulations of Republic Act No. 8974 clarifies:
Section 10. Valuation of Improvements and/or Structures -Pursuant to Section 7 of the Act, the
Implementing Agency shall determine the valuation of the improvements and/or structures on
the land to be acquired using the replacement cost method. The replacement cost of the im-
provements/structures is defined as the amount necessary to replace the improvements/struc-
tures, based on the current market prices for materials, equipment, labor, contractor’s profit
and overhead, and all other attendant costs associated with the acquisition and installation in
place of the affected improvements/structures. In the valuation of the affected improve-
ments/structures, the Implementing Agency shall consider, among other things, the kinds and
quantities of materials/equipment used, the location, configuration and other physical features
of the properties, and prevailing construction prices. (Emphasis supplied)
According to the law, it is the implementing agency, not the commissioners, that determines
the proffered value of the improvements and structures. A Writ of Possession may be issued
once there is confirmation by the trial court of the proffered value.
The second error of the trial court occurred when it issued a Writ of Possession on the basis of
the National Power Corporation’s deposit of the alleged provisional value with Land Bank of the
Philippines, not on its actual payment to respondents. Even if the deposit of ₱580,769.93 was
the correct provisional value, it cannot be considered as compliance with Section 4 of Republic
Act No. 8974. In Gingoyon:
[T]he 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.55 (Emphasis supplied)
There are, of course, instances when immediate payment cannot be made even if the imple-
menting agency is willing to do so. The owner of the property is not precluded from contesting
the power of the implementing agency to exercise eminent domain, the necessity of the taking,
the public character of its use, or the proffered value by the implementing agency. In these in-
stances, the implementing agency may deposit the proffered value with the trial court having
jurisdiction over the expropriation proceedings.
Considering that the National Power Corporation failed to comply with the guidelines in Repub-
lic Act No. 8974, a Writ of Possession should not have been issued.
II
The recall of an improperly issued Writ of Possession is not the same as an injunction.
In its Urgent Motion for the Issuance of a Temporary Restraining Order, the National Power Cor-
poration argued that it was unable to commence the Substation Project as it was paralyzed by
the trial court’s Decision dated November 27, 2006 recalling the issuance of the Writ of Posses-
sion in its favor.56
The National Power Corporation manifested that the project was "intended to resolve the six
(6) to eight (8) hours of daily brownouts being suffered by the residents of the province."57 It
cited Section 3 of Republic Act No. 897558 and argued that the project cannot be restrained by
the recall of a previously issued Writ of Possession because this amounted to an injunctive writ
expressly prohibited by Section 4 of Republic Act No. 8975.59
Respondents, on the other hand, filed their Comments and Opposition to the Urgent Motion
for Issuance of a Temporary Restraining Order. They argued that records of the First Cata-
nduanes Electric Cooperative, Inc. (FICELCO)60 showed that brownouts in the entire province
only averaged 2.97 hours per day and not 6 to 8 hours as claimed by the National Power Corpo-
ration. Contrary to the National Power Corporation’s claims, respondents never filed any mo-
tion for the issuance of a restraining order or injunctive writ against the National Power Corpo-
ration. They argued that the trial court recalled the Writ of Possession upon a finding that the
National Power Corporation misled the trial court by making its own interpretation of Section 4
of Republic Act No. 8974,in that a provisional deposit was sufficient compliance when the law
requires immediate payment to the owner of the property.61
The National Power Corporation’s argument that the recall of a Writ of Possession amounts to
an injunctive writ prohibited under Section 3 of Republic Act No. 8975 is without merit.
Section 3 of Republic Act No. 8975 states:
Sec. 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions
and Preliminary Mandatory Injunctions. - No court, except the Supreme Court, shall issue any
temporary restraining order, preliminary injunction or preliminary mandatory injunction against
the government, or any of its subdivisions, officials or any person or entity, whether public or
private, acting under the government’s direction, to restrain, prohibit or compel the following
acts: (a) Acquisition, clearance and development of the right-of-way and/or site or location of
any national government project(Emphasis supplied)
The recall of a Writ of Possession for failure to comply with the guidelines of Section 4 of Re-
public Act No. 8974 is not the same as the issuance of an injunctive writ. The first is an action by
the trial court to correct an erroneous issuance while the second is an ancillary remedy to pre-
serve rights.
For an injunctive writ to be issued, parties must specifically pray for its issuance. Under Rule 58,
Section 4(a)62 of the Rules of Civil Procedure, a preliminary injunction or temporary restraining
order may be granted only when, among other requisites, the applicant is entitled to the relief
demanded. In Nerwin Industries Corporation v. PNOC-Energy Development Corporation:63
A preliminary injunction is an order granted at any stage of an action or proceeding prior to the
judgment or final order, requiring a party or a court, agency or person, to refrain from a particu-
lar act or acts. It is an ancillary or preventive remedy resorted to by a litigant to protect or pre-
serve his rights or interests during the pendency of the case. As such, it is issued only when it is
established that:
(a) The applicant is entitled to the relief demanded, and the whole or part of such relief consists
in restraining the commission or continuance of the act or acts complained of, or in requiring
the performance of an act or acts, either for a limited period or perpetually; or
(b) The commission, continuance or nonperformance of the act or acts complained of during
the litigation would probably work injustice to the applicant; or
(c) A party, court, agency or a person is doing, threatening, or is attempting to do, or is procur-
ing or suffering to be done, some act or acts probably in violation of the rights of the applicant
respecting the subject of the action or proceeding, and tending to render the judgment ineffec-
tual.64
Section 3 of Republic Act No. 8975 contemplates only the issuance of an injunctive writ by low-
er courts. In Republic v. Nolasco:65
What is expressly prohibited by the statute is the issuance of the provisional reliefs of tempo-
rary restraining orders, preliminary injunctions, and preliminary mandatory injunctions. It does
not preclude the lower courts from assuming jurisdiction over complaints or petitions that seek
as ultimate relief the nullification or implementation of a national government infrastructure
project. A statute such as Republic Act No. 8975 cannot diminish the constitutionally mandated
judicial power to determine whether or not there has been a grave abuse of discretion amount-
ing to lack or excess of jurisdiction on the part of any branch or instrumentality of govern-
ment.66 (Emphasis supplied)
Philippine Ports Authority v. Cipres Stevedoring & Arrastre, Inc.67 adds:
[I]t is settled that the sole object of a preliminary injunction, may it be prohibitory or manda-
tory, is to preserve the status quo until the merits of the case can be heard and the final judg-
ment rendered. The status quo is the last actual peaceable uncontested status which preceded
the controversy.68
In expropriation cases involving national infrastructure projects, the trial court issues a Writ of
Possession upon compliance by the implementing agency of the guidelines stated in Section 4
of Republic Act No. 8974. If it is later found that the guidelines were not complied with, the trial
court recalls the Writ of Possession for being improperly issued.
When a trial court recalls a Writ of Possession in an expropriation proceeding, the parties do
not revert to status quo, i.e. the status of the parties before the expropriation complaint was
filed. The trial court’s order of condemnation stands regardless of whether a Writ of Possession
was already issued.
The National Power Corporation was not able to take possession of the property because it
failed to comply with Republic Act No. 8974. Respondents did not file an application for the is-
suance of a writ of preliminary injunction or temporary restraining order against it. The trial
court did not issue any injunctive writ. In other words, it was the National Power Corporation’s
own acts that prevented it from implementing its infrastructure project.
III
In accordance, however, with Rule 67,Section 4 of the Rules of Civil Procedure,69 the trial court
proceeded with the second phase of expropriation, that is, the determination of just compensa-
tion.
Just compensation as required by the Constitution is different from the provisional value re-
quired by Republic Act No. 8974. In Capitol Steel Corporation v. PHIVIDEC Industrial Author-
ity:70
Upon compliance with the requirements, a petitioner in an expropriation case . . . is entitled to
a writ of possession as a matter of right and it becomes the ministerial duty of the trial court to
forthwith issue the writ of possession. No hearing is required and the court neither exercises its
discretion or judgment in determining the amount of the provisional value of the properties to
be expropriated as the legislature has fixed the amount under Section 4 of R.A. 8974.
To clarify, the payment of the provisional value as a prerequisite to the issuance of a writ of
possession differs from the payment of just compensation for the expropriated property. While
the provisional value is based on the current relevant zonal valuation, just compensation is
based on the prevailing fair market value of the property. As the appellate court explained:
The first refers to the preliminary or provisional determination of the value of the property. It
serves a double-purpose of pre-payment if the property is fully expropriated, and of an indem-
nity for damages if the proceedings are dismissed. It is not a final determination of just compen-
sation and may not necessarily be equivalent to the prevailing fair market value of the property.
Of course, it may be a factor to be considered in the determination of just compensation.
Just compensation, on the other hand, is the final determination of the fair market value of the
property. It has been described as "the just and complete equivalent of the loss which the own-
er of the thing expropriated has to suffer by reason of the expropriation." Market values, has
[sic] also been described in a variety of ways as the "price fixed by the buyer and seller in the
open market in the usual and ordinary course of legal trade and competition; the price and val-
ue of the article established as shown by sale, public or private, in the ordinary way of business;
the fair value of the property between one who desires to purchase and one who desires to
sell; the current price; the general or ordinary price for which property may be sold in that local-
ity.
There is no need for the determination with reasonable certainty of the final amount of just
compensation before the writ of possession may be issued.71 (Emphasis and underscoring in
the original, citation omitted)
The statutory requirement to pay a provisional amount equivalent to the full Bureau of Internal
Revenue zonal valuation does not substitute for the judicial determination of just compensa-
tion. The payment to the property owner of a preliminary amount is one way to ensure that
property will not be condemned arbitrarily. It allows front loading the costs of the exercise so
that it is the government instrumentality that bears the burden and not the owner whose prop-
erty is taken.
The payment of a provisional value may also serve as indemnity for damages in the event that
the expropriation does not succeed. In City of Manila v. Alegar Corporation:72
[T]he advance deposit required under Section 19 of the Local Government Code73 constitutes
an advance payment only in the event the expropriation prospers. Such deposit also has a dual
purpose: as pre-payment if the expropriation succeeds and as indemnity for damages if it is dis-
missed. This advance payment, a prerequisite for the issuance of a writ of possession, should
not be confused with payment of just compensation for the taking of property even if it could
be a factor in eventually determining just compensation. If the proceedings fail, the money
could be used to indemnify the owner for damages.74 (Emphasis supplied)
The National Power Corporation was only required to pay the provisional value so that it could
take possession of respondents’ properties. Ordinarily, the government, in accordance with
Rule 67 or Republic Act No. 8974, would have already taken possession of the property before
the proper amount of just compensation could be determined by the court.
However, the trial court had already determined the amount of just compensation even before
the National Power Corporation could take possession of the properties. Payment of the provi-
sional value is not anymore enough. In Export Processing Zone Authority v. Judge Dulay:75
The determination of "just compensation" in eminent domain cases is a judicial function. The
executive department or the legislature may make the initial determinations but when a party
claims a violation of the guarantee in the Bill of Rights that private property may not be taken
for public use without just compensation, no statute, decree, or executive order can mandate
that its own determination shall prevail over the court’s findings. Much less can the courts be
precluded from looking into the "just-ness" of the decreed compensation.76 (Emphasis sup-
plied)
Once the amount of just compensation has been determined, it stands to reason that this is the
amount that must be paid to the landowner as compensation for his or her property. In the ex-
ercise of the power of eminent domain, taking of private property necessarily includes its pos-
session. Government, then, must pay the proper amount of just compensation, instead of the
provisional value in order to enter and take the private property.
IV
Before the issue of just compensation can even be considered by this court, any question on
the validity of the exercise of the power of eminent domain must first pertain to its necessity. In
Vda. de Ouano, et al. v. Republic, et al.:77
In esse, expropriation is forced private property taking, the landowner being really without a
ghost of a chance to defeat the case of the expropriating agency. In other words, in expropria-
tion, the private owner is deprived of property against his will. Withal, the mandatory require-
ment of due process ought to be strictly followed, such that the state must show, at the mini-
mum, a genuine need, an exacting public purpose to take private property, the purpose to be
specifically alleged or least reasonably deducible from the complaint.
Public use, as an eminent domain concept, has now acquired an expansive meaning to include
any use thatis of "usefulness, utility, or advantage, or what is productive of general benefit [of
the public]." If the genuine public necessity—the very reason or condition as it were— allowing,
at the first instance, the expropriation of a private land ceases or disappears, then there is no
more cogent point for the government’s retention of the expropriated land. The same legal sit-
uation should hold if the government devotes the property to another public use very much dif-
ferent from the original or deviates from the declared purpose to benefit another private per-
son. It has been said that the direct use by the state of its power to oblige landowners to re-
nounce their productive possession to another citizen, who will use it predominantly for that
citizen’s own private gain, is offensive to our laws.
A condemnor should commit to use the property pursuant to the purpose stated in the petition
for expropriation, failing which it should file another petition for the new purpose. If not, then it
behooves the condemnor to return the said property to its private owner, if the latter so de-
sires. The government cannot plausibly keep the property it expropriated in any manner it
pleases and, in the process, dishonor the judgment of expropriation. This is not in keeping with
the idea of fair play[.]78 (Emphasis supplied)
It is the state that bears the burden of proving that the taking of private property is for a public
purpose. If it fails in discharging this burden, it must return the property to the private owner,
subject to whatever damages were incurred in the course of the taking.
In Heirs of Moreno v. Mactan-Cebu International Airport Authority,79 private property was ex-
propriated for the proposed expansion of Lahug Airport in 1949.80 The property owners were
assured that they would be given a right to repurchase once Lahug Airport is closed or its opera-
tions are transferred to Mactan Airport.81 In 1991, Lahug Airport ceased operations when Mac-
tan Airport became fully operational. The former owners filed a Complaint for Reconveyance to
compel the repurchase of the expropriated properties.82
This court considered the case "difficult" as it called for "a difficult but just solution."83 In allow-
ing the reconveyance, this court stated:
Mactan-Cebu International Airport Authority[v. Court of Appeals] is correct in stating that one
would not find an express statement in the Decision in Civil Case No. R-1881 to the effect that
"the [condemned] lot would return to [the landowner] or that [the landowner] had a right to
repurchase the same if the purpose for which it was expropriated is ended or abandoned or if
the property was to be used other than as the Lahug Airport." This omission notwithstanding,
and while the inclusion of this pronouncement in the judgment of condemnation would have
been ideal, such precision is not absolutely necessary nor is it fatal to the cause of petitioners
herein. No doubt, the return or repurchase of the condemned properties of petitioners could
be readily justified as the manifest legal effect or consequence of the trial court’s underlying
presumption that "Lahug Airport will continue to be in operation" when it granted the com-
plaint for eminent domain and the airport discontinued its activities.
The predicament of petitioners involves a constructive trust, one that is akin to the implied
trust referred to in Art. 1454 of the Civil Code, "If an absolute conveyance of property is made
in order to secure the performance of an obligation of the grantor toward the grantee, a trust
by virtue of law is established. If the fulfillment of the obligation is offered by the grantor when
it becomes due, he may demand the reconveyance of the property to him." In the case at bar,
petitioners conveyed Lots Nos. 916 and 920 to the government with the latter obliging itself to
use the realties for the expansion of Lahug Airport; failing to keep its bargain, the government
can be compelled by petitioners to reconvey the parcels of land to them, otherwise, petitioners
would be denied the use of their properties upon a state of affairs that was not conceived nor
contemplated when the expropriation was authorized.
Although the symmetry between the instant case and the situation contemplated by Art. 1454
is not perfect, the provision is undoubtedly applicable. For, as explained by an expert on the law
of trusts: "The only problem of great importance in the field of constructive trusts is to decide
whether in the numerous and varying fact situations presented to the courts there is a wrongful
holding of property and hence a threatened unjust enrichment of the defendant." Constructive
trusts are fictions of equity which are bound by no unyielding formula when they are used by
courts as devices to remedy any situation in which the holder of the legal title may not in good
conscience retain the beneficial interest.
....
The rights and obligations between the constructive trustee and the beneficiary, in this case, re-
spondent MCIAA and petitioners over Lots Nos. 916 and 920, are echoed in Art. 1190 of the Civ-
il Code, "When the conditions have for their purpose the extinguishment of an obligation to
give, the parties, upon the fulfillment of said conditions, shall return to each other what they
have received. . . . In case of the loss, deterioration or improvement of the thing, the provisions
which, with respect to the debtor, are laid down in the preceding article shall be applied to the
party who is bound to return. . . ."
Hence, respondent MCIAA as representative of the State is obliged to reconvey Lots Nos. 916
and 920 to petitioners who shall hold the same subject to existing liens thereon, i.e., leasehold
right of DPWH. In return, petitioners as if they were plaintiff-beneficiaries of a constructive
trust must restore to respondent MCIAA what they received as just compensation for the ex-
propriation of Lots Nos. 916 and 920 in Civil Case No. R-1881, i.e., ₱7,065.00 for Lot No. 916 and
₱9,291.00 for Lot No. 920 with consequential damages by way of legal interest from 16 Novem-
ber 1947. Petitioners must likewise pay respondent MCIAA the necessary expenses it may have
incurred in sustaining the properties and the monetary value of its services in managing them
to the extent that petitioners will be benefited thereby. The government however may keep
whatever income or fruits it may have obtained from the parcels of land, in the same way that
petitioners need not account for the interests that the amounts they received as just compen-
sation may have earned in the meantime. As a matter of justice and convenience, the law con-
siders the fruits and interests as the equivalent of each other.
Under Art. 1189 of the Civil Code, "If the thing is improved by its nature, or by time, the im-
provement shall inure to the benefit of the creditor . . .," the creditor being the person who
stands to receive something as a result of the process of restitution. Consequently, petitioners
as creditors do not have to settle as part of the process of restitution the appreciation in value
of Lots Nos. 916 and 920 which is the natural consequence of nature and time.
Petitioners need not also pay for improvements introduced by third parties, i.e., DPWH, as the
disposition of these properties is governed by existing contracts and relevant provisions of law.
As for the improvements that respondent MCIAA may have made on Lots Nos. 916 and 920, if
any, petitioners must pay respondent their prevailing free market price in case petitioners opt
to buy them and respondent decides to sell. In other words, if petitioners do not want to appro-
priate such improvements or respondent does not choose to sell them, the improvements
would have to be removed without any obligation on the part of petitioners to pay any com-
pensation to respondent MCIAA for what ever it may have tangibly introduced therein.84 (Em-
phasis supplied)
Heirs of Moreno illustrates the difficulty of determining the respective rights of the parties once
it has been determined that the expropriated properties will no longer be devoted for a public
purpose. Matters involving the dismissal of an expropriation case or the return of expropriated
property must be determined on a case-to-case basis.
V
The National Power Corporation now requests this court for leave to withdraw this Petition on
the ground that it was in the process of acquiring a vacant lot owned by FICELCO. Considering
that eminent domain is the taking of private property for public use, no expropriation proceed-
ing can continue if the property to be expropriated will not be for public use.
Respondents filed a Motion for Leave to File Comment to Petitioner’s Motion to Withdraw Ap-
peal.85 They argue that the grant of a Motion to Withdraw would be unjust. From their point of
view, the National Power Corporation cannot resort to a withdrawal of an appeal in order to in-
validate a judgment duly rendered by the trial court and affirmed by the Court of Appeals. They
state that they have no objection to the withdrawal of the appeal, but they object to the dis-
missal of the Amended Complaint before the trial court. They propose that the effect of with-
drawing the Petition for Review is to make the Court of Appeals’ Decision final and execu-
tory.86
In National Housing Authority v. Heirs of Guivelondo:87
In the early case of City of Manila v. Ruymann, the Court was confronted with the question:
May the petitioner, in an action for expropriation, after he has been placed in possession of the
property and before the termination of the action, dismiss the petition? It resolved the issue in
the affirmative and held:
The right of the plaintiff to dismiss an action with the consent of the court is universally recog-
nized with certain well-defined exceptions. If the plaintiff discovers that the action which he
commenced was brought for the purpose of enforcing a right or a benefit, the advisability or
necessity of which he later discovers no longer exists, or that the result of the action would be
different from what he had intended, then he should be permitted to withdraw his action, sub-
ject to the approval of the court. The plaintiff should not be required to continue the action,
subject to some well-defined exceptions, when it is not to his advantage to do so. Litigation
should be discouraged and not encouraged. Courts should not require parties to litigate when
they no longer desire to do so. Courts, in granting permission to dismiss an action, of course,
should always take into consideration the effect which said dismissal would have upon the
rights of the defendant.
Subsequently, in Metropolitan Water District v. De Los Angeles, the Court had occasion to apply
the above-quoted ruling when the petitioner, during the pendency of the expropriation case,
resolved that the land sought to be condemned was no longer necessary in the maintenance
and operation of its system of waterworks. It was held:
It is not denied that the purpose of the plaintiff was to acquire the land in question for a 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 nec-
essarily 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 pend-
ency of the appeal of [sic] 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 expro-
priation 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.88 (Emphasis sup-
plied)
Considering that the National Power Corporation is no longer using respondents’ properties for
the purpose of building the Substation Project, it may be allowed to discontinue with the expro-
priation proceedings, subject to the approval of the court.
However, the grant of the Motion to Withdraw carries with it the necessary consequence of
making the trial court’s order of condemnation final and executory. In National Housing Author-
ity: Notably, [City of Manila and Water District] refer to the dismissal of an action for eminent
domain at the instance of the plaintiff during the pendency of the case. The rule is different
where the case had been decided and the judgment had already become final and executory.
....
In the case at bar, petitioner did not appeal the Order of the trial court dated December 10,
1999, which declared that it has a lawful right to expropriate the properties of respondent Heirs
of Isidro Guivelondo. Hence, the Order became final and may no longer be subject to review or
reversal in any court. A final and executory decision or order can no longer be disturbed or re-
opened no matter how erroneous it may be. Although judicial determinations are not infallible,
judicial error should be corrected through appeals, not through repeated suits on the same
claim.
....
Respondent landowners had already been prejudiced by the expropriation case. Petitioner can-
not be permitted to institute condemnation proceedings against respondents only to abandon
it later when it finds the amount of just compensation unacceptable. Indeed, our reprobation in
the case of Cosculluela v. Court of Appeals is apropos:
It is arbitrary and capricious for a government agency to initiate expropriation proceedings,
seize a person’s property, allow the judgment of the court to become final and executory and
then refuse to pay on the ground that there are no appropriations for the property earlier tak-
en and profitably used. We condemn in the strongest possible terms the cavalier attitude of
government officials who adopt such a despotic and irresponsible stance.89 (Emphasis sup-
plied)
The rule, therefore, is that expropriation proceedings must be dismissed when it is determined
that it is not for a public purpose, except when:
First, the trial court’s order already became final and executory;
Second, the government already took possession of the property; and
Lastly, the expropriation case already caused prejudice to the landowner.
The expropriation case is not automatically dismissed when the property ceases to be for public
use. The state must first file the appropriate Motion to Withdraw before the trial court having
jurisdiction over the proceedings. The grant or denial of any Motion to Withdraw in an expropri-
ation proceeding is always subject to judicial discretion.
Respondents have not yet been deprived of their property since the National Power Corpora-
tion was never able to take possession. We cannot determine whether damages have been suf-
fered as a result of the expropriation.
This case needs to be remanded to the trial court to determine whether respondents have al-
ready been prejudiced by the expropriation. The withdrawal of the Petition before this court
will have no practical effect other than to make the trial court's order of condemnation final
and executory. In order to prevent this absurdity, the National Power Corporation should file
the proper Motion to Withdraw before the trial court. It is now the burden of the National
Power Corporation to plead and prove to the trial court its reasons for discontinuing with the
expropriation. Respondents may also plead and prove damages incurred from the commence-
ment of the expropriation, if any.
WHEREFORE, the Motion to Withdraw Appeal dated August 28, 2014 is GRANTED insofar as it
withdraws the Petition for Review dated June 4, 2010. The Motion for Leave to File Comment
(to Petitioner's Motion to Withdraw Appeal) dated September 30, 2014 is NOTED. This case is
REMANDED to the Regional Trial Court of Virac, Catanduanes, Branch 43 for appropriate action.
SO ORDERED.
G.R. No. 171101 April 24, 2012
HACIENDA LUISITA, INCORPORATED, Petitioner,
LUISITA INDUSTRIAL PARK CORPORATION and RIZAL COMMERCIAL BANKING CORPORA-
TION, Petitioners-in-Intervention,
vs.
PRESIDENTIAL AGRARIAN REFORM COUNCIL; SECRETARY NASSER PANGANDAMAN OF THE
DEPARTMENT OF AGRARIAN REFORM; ALYANSA NG MGA MANGGAGAWANG BUKID NG HA-
CIENDA LUISITA, RENE GALANG, NOEL MALLARI, and JULIO SUNIGA1 and his SUPERVISORY
GROUP OF THE HACIENDA LUISITA, INC. and WINDSOR ANDAYA, Respondents.
RESOLUTION
VELASCO, JR., J.:
Before the Court are the Motion to Clarify and Reconsider Resolution of November 22, 2011
dated December 16, 2011 filed by petitioner Hacienda Luisita, Inc. (HLI) and the Motion for Re-
consideration/Clarification dated December 9, 2011 filed by private respondents Noel Mallari,
Julio Suniga, Supervisory Group of Hacienda Luisita, Inc. and Windsor Andaya (collectively re-
ferred to as "Mallari, et al.").
In Our July 5, 2011 Decision2 in the above-captioned case, this Court denied the petition for re-
view filed by HLI and affirmed the assailed Presidential Agrarian Reform Council (PARC) Resolu-
tion No. 2005-32-01 dated December 22, 2005 and PARC Resolution No. 2006-34-01 dated May
3, 2006 with the modification that the original 6,296 qualified farmworker-beneficiaries of Ha-
cienda Luisita (FWBs) shall have the option to remain as stockholders of HLI.
Upon separate motions of the parties for reconsideration, the Court, by Resolution3 of Novem-
ber 22, 2011, recalled and set aside the option thus granted to the original FWBs to remain as
stockholders of HLI, while maintaining that all the benefits and homelots received by all the
FWBs shall be respected with no obligation to refund or return them.
HLI invokes the following grounds in support of its instant Motion to Clarify and Reconsider Res-
olution of November 22, 2011 dated December 16, 2011:
A
WITH DUE RESPECT, THE HONORABLE COURT ERRED IN RULING THAT IN DETERMINING THE
JUST COMPENSATION, THE DATE OF "TAKING" IS NOVEMBER 21, 1989, WHEN PARC APPROVED
HLI’s SDP [STOCK DISPTRIBUTION PLAN] "IN VIEW OF THE FACT THAT THIS IS THE TIME THAT
THE FWBs WERE CONSIDERED TO OWN AND POSSESS THE AGRICULTURAL LANDS IN HACIENDA
LUISITA" BECAUSE:
(1) THE SDP IS PRECISELY A MODALITY WHICH THE AGRARIAN LAW GIVES THE LANDOWNER AS
ALTERNATIVE TO COMPULSORY COVERAGE IN WHICH CASE, THEREFORE, THE FWBs CANNOT
BE CONSIDERED AS OWNERS AND POSSESSORS OF THE AGRICULTURAL LANDS AT THE TIME
THE SDP WAS APPROVED BY PARC;
(2) THE APPROVAL OF THE SDP CANNOT BE AKIN TO A NOTICE OF COVERAGE IN COMPULSORY
COVERAGE OR ACQUISITION BECAUSE SDP AND COMPULSORY COVERAGE ARE TWO DIFFERENT
MODALITIES WITH INDEPENDENT AND SEPARATE RULES AND MECHANISMS;
(3) THE NOTICE OF COVERAGE OF JANUARY 02, 2006 MAY, AT THE VERY LEAST, BE CONSIDERED
AS THE TIME WHEN THE FWBs CAN BE CONSIDERED TO OWN AND POSSESS THE AGRICULTUR-
AL LANDS OF HACIENDA LUISITA BECAUSE THAT IS THE ONLY TIME WHEN HACIENDA LUISITA
WAS PLACED UNDER COMPULSORY ACQUISITION IN VIEW OF FAILURE OF HLI TO PERFORM
CERTAIN OBLIGATIONS OF THE SDP, OR SDOA [STOCK DISTRIBUTION OPTION AGREEMENT];
(4) INDEED, THE IMMUTABLE RULE AND THE UNBENDING JURISPRUDENCE IS THAT "TAKING"
TAKES PLACE WHEN THE OWNER IS ACTUALLY DEPRIVED OR DISPOSSESSED OF HIS PROPERTY;
(5) TO INSIST THAT THE "TAKING" IS WHEN THE SDP WAS APPROVED BY PARC ON NOVEMBER
21, 1989 AND THAT THE SAME BE CONSIDERED AS THE RECKONING PERIOD TO DETERMINE
THE JUST COMPENSATION IS DEPRIVATION OF LANDOWNER’S PROPERTY WITHOUT DUE PROC-
ESS OF LAW;
(6) HLI SHOULD BE ENTITLED TO PAYMENT OF INTEREST ON THE JUST COMPENSATION.
B Basically, the issues raised by HLI and Mallari, et al. boil down to the following: (1) determina-
WITH DUE RESPECT, THE HONORABLE COURT ERRED WHEN IT REVERSED ITS DECISION GIVING
THE FWBs THE OPTION TO REMAIN AS HLI STOCKHOLDERS OR NOT, BECAUSE:
(1) IT IS AN EXERCISE OF A RIGHT OF THE FWB WHICH THE HONORABLE COURT HAS DECLARED
IN ITS DECISION AND EVEN IN ITS RESOLUTION AND THAT HAS TO BE RESPECTED AND IMPLE-
MENTED;
(2) NEITHER THE CONSTITUTION NOR THE CARL [COMPREHENSIVE AGRARIAN REFORM LAW]
REQUIRES THAT THE FWBs SHOULD HAVE CONTROL OVER THE AGRICULTURAL LANDS;
(3) THE OPTION HAS NOT BEEN SHOWN TO BE DETRIMENTAL BUT INSTEAD BENEFICIAL TO THE
FWBs AS FOUND BY THE HONORABLE COURT.
C compulsory coverage situations because stock distribution option and compulsory acquisition
WITH DUE RESPECT, THE HONORABLE COURT ERRED IN RULING THAT THE PROCEEDS FROM
THE SALES OF THE 500-HECTARE CONVERTED LOT AND THE 80.51-HECTARE SCTEX CANNOT BE
RETAINED BY HLI BUT RETURNED TO THE FWBs AS BY SUCH MANNER; HLI IS USING THE CORPO-
RATION CODE TO AVOID ITS LIABILITY TO THE FWBs FOR THE PRICE IT RECEIVED FROM THE
SALES, BECAUSE:
(1) THE PROCEEDS OF THE SALES BELONG TO THE CORPORATION AND NOT TO EITHER HLI/TA-
DECO OR THE FWBs, BOTH OF WHICH ARE STOCKHOLDERS ENTITLED TO THE EARNINGS OF THE
CORPORATION AND TO THE NET ASSETS UPON LIQUIDATION;
(2) TO ALLOW THE RETURN OF THE PROCEEDS OF THE SALES TO FWBs IS TO IMPOSE ALL LIABIL-
ITIES OF THE CORPORATION ON HLI/TADECO WHICH IS UNFAIR AND VIOLATIVE OF THE CORPO-
RATION CODE.
Mallari, et al. similarly put forth the following issues in its Motion for Reconsideration/Clarifica-
tion dated December 9, 2011:
I tion (to the Motion to Clarify and Reconsider Resolution of November 22, 2011) dated January
REPUBLIC ACT NO. 6657 [RA 6657] OR THE COMPREHENSIVE AGRARIAN REFORM LAW [CARL]
DOES NOT PROVIDE THAT THE FWBs WHO OPT FOR STOCK DISTRIBUTION OPTION SHOULD RE-
TAIN MAJORITY SHAREHOLDING OF THE COMPANY TO WHICH THE AGRICULTURAL LAND WAS
GIVEN.
II
IF THE NOVEMBER 22, 2011 DECISION OF THIS HONORABLE COURT ORDERING LAND DISTRIBU-
TION WOULD BE FOLLOWED, THIS WOULD CAUSE MORE HARM THAN GOOD TO THE LIVES OF
THOSE PEOPLE LIVING IN THE HACIENDA, AND MORE PARTICULARLY TO THE WELFARE OF THE
FWBs.
III
ON THE CONCLUSION BY THIS HONORABLE COURT THAT THE OPERATIVE FACT DOCTRINE IS AP-
PLICABLE TO THE CASE AT BAR, THEN FWBs WHO MERELY RELIED ON THE PARC APPROVAL
SHOULD NOT BE PREJUDICED BY ITS SUBSEQUENT NULLIFICATION.
IV
THOSE WHO CHOOSE LAND SHOULD RETURN WHATEVER THEY GOT FROM THE SDOA [STOCK
DISTRIBUTION OPTION AGREEMENT] AND TURN OVER THE SAME TO HLI FOR USE IN THE OPER-
ATIONS OF THE COMPANY, WHICH IN TURN WILL REDOUND TO THE BENEFIT OF THOSE WHO
WILL OPT TO STAY WITH THE SDO.
V
FOR THOSE WHO CHOOSE LAND, THE TIME OF TAKING FOR PURPOSES OF JUST COMPENSA-
TION SHOULD BE AT THE TIME HLI WAS DISPOSSESSED OF CONTROL OVER THE PROPERTY, AND
THAT PAYMENT BY [THE GOVERNMENT] OF THE LAND SHOULD BE TURNED OVER TO HLI FOR
THE BENEFIT AND USE OF THE COMPANY’S OPERATIONS THAT WILL, IN TURN, REDOUND TO
THE BENEFIT OF FWBs WHO WILL OPT TO STAY WITH THE COMPANY.
tion of the date of "taking"; (2) propriety of the revocation of the option on the part of the origi-
nal FWBs to remain as stockholders of HLI; (3) propriety of distributing to the qualified FWBs
the proceeds from the sale of the converted land and of the 80.51-hectare Subic-Clark-Tarlac
Expressway (SCTEX ) land; and (4) just compensation for the homelots given to the FWBs.
Payment of just compensation
HLI contends that since the SDP is a modality which the agrarian reform law gives the land-
owner as alternative to compulsory coverage, then the FWBs cannot be considered as owners
and possessors of the agricultural lands of Hacienda Luisita at the time the SDP was approved
by PARC.4 It further claims that the approval of the SDP is not akin to a Notice of Coverage in
are two (2) different modalities with independent and separate rules and mechanisms. Con-
comitantly, HLI maintains that the Notice of Coverage issued on January 2, 2006 may, at the
very least, be considered as the date of "taking" as this was the only time that the agricultural
lands of Hacienda Luisita were placed under compulsory acquisition in view of its failure to per-
form certain obligations under the SDP.5
Mallari, et al. are of a similar view. They contend that Tarlac Development Corporation (Tade-
co), having as it were majority control over HLI, was never deprived of the use and benefit of
the agricultural lands of Hacienda Luisita. Upon this premise, Mallari, et al. claim the "date of
taking" could not be at the time of the approval of the SDP.6
A view has also been advanced that the date of the "taking" should be left to the determination
of the Department of Agrarian Reform (DAR) in conjunction with its authority to preliminarily
determine the just compensation for the land made subject of CARP.
Alyansa ng mga Manggagawang Bukid sa Hacienda Luisita (AMBALA), in its Comment/Opposi-
30, 2012, on the other hand, alleges that HLI should not be paid just compensation alto-
gether.7 It argues that when the Court of Appeals (CA) dismissed the case8 the government of
then President Ferdinand E. Marcos initially instituted and won against Tadeco, the CA allegedly
imposed as a condition for its dismissal of the action that should the stock distribution program
fail, the lands should be distributed to the FWBs, with Tadeco receiving by way of compensa-
tion only the amount of PhP 3,988,000.9
AMBALA further contends that if HLI or Tadeco is, at all, entitled to just compensation, the "tak-
ing" should be reckoned as of November 21, 1989, the date when the SDP was approved, and
the amount of compensation should be PhP 40,000 per hectare as this was the same value de-
clared in 1989 by Tadeco to ensure that the FWBs will not control the majority stockholdings in
HLI.10
At the outset, it should be noted that Section 2, Rule 52 of the Rules of Court states, "No sec-
ond motion for reconsideration of a judgment or final resolution by the same party shall be en-
tertained." A second motion for reconsideration, as a rule, is prohibited for being a mere reiter-
ation of the issues assigned and the arguments raised by the parties.11
In the instant case, the issue on just compensation and the grounds HLI and Mallari, et al. rely
upon in support of their respective stance on the matter had been previously raised by them in
their first motion for reconsideration and fully passed upon by the Court in its November 22,
2011 Resolution. The similarities in the issues then and now presented and the grounds invoked
are at once easily discernible from a perusal of the November 22, 2011 Resolution, the perti-
nent portions of which read:
In Our July 5, 2011 Decision, We stated that "HLI shall be paid just compensation for the re-
maining agricultural land that will be transferred to DAR for land distribution to the FWBs." We
also ruled that the date of the "taking" is November 21, 1989, when PARC approved HLI’s SDP
per PARC Resolution No. 89-12-2.
In its Motion for Clarification and Partial Reconsideration, HLI disagrees with the foregoing rul-
ing and contends that the "taking" should be reckoned from finality of the Decision of this
Court, or at the very least, the reckoning period may be tacked to January 2, 2006, the date
when the Notice of Coverage was issued by the DAR pursuant to PARC Resolution No. 2006-34-
01 recalling/revoking the approval of the SDP.
For their part, Mallari, et al. argue that the valuation of the land cannot be based on November
21, 1989, the date of approval of the SDP. Instead, they aver that the date of "taking" for valua-
tion purposes is a factual issue best left to the determination of the trial courts.
At the other end of the spectrum, AMBALA alleges that HLI should no longer be paid just com-
pensation for the agricultural land that will be distributed to the FWBs, since the Manila Region-
al Trial Court (RTC) already rendered a decision ordering the Cojuangcos to transfer the control
of Hacienda Luisita to the Ministry of Agrarian Reform, which will distribute the land to small
farmers after compensating the landowners P3.988 million. In the event, however, that this
Court will rule that HLI is indeed entitled to compensation, AMBALA contends that it should be
pegged at forty thousand pesos (PhP 40,000) per hectare, since this was the same value that Ta-
deco declared in 1989 to make sure that the farmers will not own the majority of its stocks.
Despite the above propositions, We maintain that the date of "taking" is November 21, 1989,
the date when PARC approved HLI’s SDP per PARC Resolution No. 89-12-2, in view of the fact
that this is the time that the FWBs were considered to own and possess the agricultural lands in
Hacienda Luisita. To be precise, these lands became subject of the agrarian reform coverage
through the stock distribution scheme only upon the approval of the SDP, that is, November 21,
1989. Thus, such approval is akin to a notice of coverage ordinarily issued under compulsory ac-
quisition. Further, any doubt should be resolved in favor of the FWBs. As this Court held in Per-
ez-Rosario v. CA:
It is an established social and economic fact that the escalation of poverty is the driving force
behind the political disturbances that have in the past compromised the peace and security of
the people as well as the continuity of the national order. To subdue these acute disturbances,
the legislature over the course of the history of the nation passed a series of laws calculated to
accelerate agrarian reform, ultimately to raise the material standards of living and eliminate dis-
content. Agrarian reform is a perceived solution to social instability. The edicts of social justice
found in the Constitution and the public policies that underwrite them, the extraordinary na-
tional experience, and the prevailing national consciousness, all command the great depart-
ments of government to tilt the balance in favor of the poor and underprivileged whenever rea-
sonable doubt arises in the interpretation of the law. But annexed to the great and sacred
charge of protecting the weak is the diametric function to put every effort to arrive at an equi-
table solution for all parties concerned: the jural postulates of social justice cannot shield illegal
acts, nor do they sanction false sympathy towards a certain class, nor yet should they deny jus-
tice to the landowner whenever truth and justice happen to be on her side. In the occupation
of the legal questions in all agrarian disputes whose outcomes can significantly affect societal
harmony, the considerations of social advantage must be weighed, an inquiry into the prevail-
ing social interests is necessary in the adjustment of conflicting demands and expectations of
the people, and the social interdependence of these interests, recognized. (Emphasis and cita-
tions omitted.)
Considering that the issue on just compensation has already been passed upon and denied by
the Court in its November 22, 2011 Resolution, a subsequent motion touching on the same is-
sue undeniably partakes of a second motion for reconsideration, hence, a prohibited pleading,
and as such, the motion or plea must be denied. Sec. 3 of Rule 15 of the Internal Rules of the
Supreme Court is clear:
SEC. 3. Second motion for reconsideration. – The Court shall not entertain a second motion for
reconsideration, and any exception to this rule can only be granted in the higher interest of jus-
tice by the Court en banc upon a vote of at least two-thirds of its actual membership. There is
reconsideration "in the higher interest of justice" when the assailed decision is not only legally
erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and
irremediable injury or damage to the parties. A second motion for reconsideration can only be
entertained before the ruling sought to be reconsidered becomes final by operation of law or
by the Court’s declaration.
In the Division, a vote of three Members shall be required to elevate a second motion for recon-
sideration to the Court En Banc.
Nonetheless, even if we entertain said motion and examine the arguments raised by HLI and
Mallari, et al. one last time, the result will be the same.
Sec. 4, Article XIII of the 1987 Constitution expressly provides that the taking of land for use in
the agrarian reform program of the government is conditioned on the payment of just compen-
sation. As stated:
Section 4. The State shall, by law, undertake an agrarian reform program founded on the right
of farmers and regular farm workers, who are landless, to own directly or collectively the lands
they till or, in the case of other farm workers, to receive a just share of the fruits thereof. To
this end, the State shall encourage and undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits as the Congress may prescribe, taking
into account ecological, developmental, or equity considerations, and subject to the payment of
just compensation. (Emphasis supplied.)
Just compensation has been defined as "the full and fair equivalent of the property taken from
its owner by the expropriator."12 The measure is not the taker’s gain, but the owner’s
loss.13 In determining just compensation, the price or value of the property at the time it was
taken from the owner and appropriated by the government shall be the basis. If the govern-
ment takes possession of the land before the institution of expropriation proceedings, the value
should be fixed as of the time of the taking of said possession, not of the filing of the com-
plaint.14
In Land Bank of the Philippines v. Livioco, the Court held that "the ‘time of taking’ is the time
when the landowner was deprived of the use and benefit of his property, such as when title is
transferred to the Republic."15 It should be noted, however, that "taking" does not only take
place upon the issuance of title either in the name of the Republic or the beneficiaries of the
Comprehensive Agrarian Reform Program (CARP). "Taking" also occurs when agricultural lands
are voluntarily offered by a landowner and approved by PARC for CARP coverage through the
stock distribution scheme, as in the instant case. Thus, HLI’s submitting its SDP for approval is
an acknowledgment on its part that the agricultural lands of Hacienda Luisita are covered by
CARP. However, it was the PARC approval which should be considered as the effective date of
"taking" as it was only during this time that the government officially confirmed the CARP cover-
age of these lands.
Indeed, stock distribution option and compulsory land acquisition are two (2) different modal-
ities under the agrarian reform program. Nonetheless, both share the same end goal, that is, to
have "a more equitable distribution and ownership of land, with due regard to the rights of
landowners to just compensation."16
The fact that Sec. 31 of Republic Act No. 6657 (RA 6657) gives corporate landowners the option
to give qualified beneficiaries the right to avail of a stock distribution or, in the phraseology of
the law, "the right to purchase such proportion of the capital stock of the corporation that the
agricultural land, actually devoted to agricultural activities, bears in relation to the company’s
total assets," does not detract from the avowed policy of the agrarian reform law of equitably
distributing ownership of land. The difference lies in the fact that instead of actually distributing
the agricultural lands to the farmer-beneficiaries, these lands are held by the corporation as
part of the capital contribution of the farmer-beneficiaries, not of the landowners, under the
stock distribution scheme. The end goal of equitably distributing ownership of land is, there-
fore, undeniable. And since it is only upon the approval of the SDP that the agricultural lands ac-
tually came under CARP coverage, such approval operates and takes the place of a notice of
coverage ordinarily issued under compulsory acquisition.
Moreover, precisely because due regard is given to the rights of landowners to just compensa-
tion, the law on stock distribution option acknowledges that landowners can require payment
for the shares of stock corresponding to the value of the agricultural lands in relation to the out-
standing capital stock of the corporation.
Although Tadeco did not require compensation for the shares of stock corresponding to the val-
ue of the agricultural lands in relation to the outstanding capital stock of HLI, its inability to re-
ceive compensation cannot be attributed to the government. The second paragraph of Sec. 31
of RA 6657 explicitly states that "[u]pon certification by DAR, corporations owning agricultural
lands may give their qualified beneficiaries the right to purchase such proportion of the capital
stock of the corporation that the agricultural land, actually devoted to agricultural activities,
bears in relation to the company’s total assets, under such terms and conditions as may be
agreed upon by them. x x x"17 On the basis of this statutory provision, Tadeco could have ex-
acted payment for such shares of stock corresponding to the value of the agricultural lands of
Hacienda Luisita in relation to the outstanding capital stock of HLI, but it did not do so.
What is notable, however, is that the divestment by Tadeco of the agricultural lands of Hacien-
da Luisita and the giving of the shares of stock for free is nothing but an enticement or incentive
for the FWBs to agree with the stock distribution option scheme and not further push for land
distribution. And the stubborn fact is that the "man days" scheme of HLI impelled the FWBs to
work in the hacienda in exchange for such shares of stock.
Notwithstanding the foregoing considerations, the suggestion that there is "taking" only when
the landowner is deprived of the use and benefit of his property is not incompatible with Our
conclusion that "taking" took place on November 21, 1989. As mentioned in Our July 5, 2011
Decision, even from the start, the stock distribution scheme appeared to be Tadeco’s preferred
option in complying with the CARP when it organized HLI as its spin-off corporation in order to
facilitate stock acquisition by the FWBs. For this purpose, Tadeco assigned and conveyed to HLI
the agricultural lands of Hacienda Luisita, set at 4,915.75 hectares, among others. These agricul-
tural lands constituted as the capital contribution of the FWBs in HLI. In effect, Tadeco deprived
itself of the ownership over these lands when it transferred the same to HLI.
While it is true that Tadeco has majority control over HLI, the Court cannot subscribe to the
view Mallari, et al. espouse that, on the basis of such majority stockholding, Tadeco was never
deprived of the use and benefit of the agricultural lands of Hacienda Luisita it divested itself in
favor of HLI.
It bears stressing that "[o]wnership is defined as a relation in law by virtue of which a thing per-
taining to one person is completely subjected to his will in everything not prohibited by law or
the concurrence with the rights of another."18 The attributes of ownership are: jus utendi or
the right to possess and enjoy, jus fruendi or the right to the fruits, jus abutendi or the right to
abuse or consume, jus disponendi or the right to dispose or alienate, and jus vindicandi or the
right to recover or vindicate.19
When the agricultural lands of Hacienda Luisita were transferred by Tadeco to HLI in order to
comply with CARP through the stock distribution option scheme, sealed with the imprimatur of
PARC under PARC Resolution No. 89-12-2 dated November 21, 1989, Tadeco was consequently
dispossessed of the afore-mentioned attributes of ownership. Notably, Tadeco and HLI are two
different entities with separate and distinct legal personalities. Ownership by one cannot be
considered as ownership by the other.
Corollarily, it is the official act by the government, that is, the PARC’s approval of the SDP,
which should be considered as the reckoning point for the "taking" of the agricultural lands of
Hacienda Luisita. Although the transfer of ownership over the agricultural lands was made prior
to the SDP’s approval, it is this Court’s consistent view that these lands officially became subject
of the agrarian reform coverage through the stock distribution scheme only upon the approval
of the SDP. And as We have mentioned in Our November 22, 2011 Resolution, such approval is
akin to a notice of coverage ordinarily issued under compulsory acquisition.
Further, if We adhere to HLI’s view that the Notice of Coverage issued on January 2, 2006
should, at the very least, be considered as the date of "taking" as this was the only time that the
agricultural portion of the hacienda was placed under compulsory acquisition in view of HLI’s
failure to perform certain obligations under the SDP, this Court would, in effect, be penalizing
the qualified FWBs twice for acceding to the adoption of the stock distribution scheme: first, by
depriving the qualified FWBs of the agricultural lands that they should have gotten early on
were it not for the adoption of the stock distribution scheme of which they only became minor-
ity stockholders; and second, by making them pay higher amortizations for the agricultural
lands that should have been given to them decades ago at a much lower cost were it not for the
landowner’s initiative of adopting the stock distribution scheme "for free."
Reiterating what We already mentioned in Our November 22, 2011 Resolution, "[e]ven if it is
the government which will pay the just compensation to HLI, this will also affect the FWBs as
they will be paying higher amortizations to the government if the ‘taking’ will be considered to
have taken place only on January 2, 2006." As aptly observed by Justice Leonardo-De Castro in
her Concurring Opinion, "this will put the land beyond the capacity of the [FWBs] to pay," which
this Court should not countenance.
Considering the above findings, it cannot be gainsaid that effective "taking" took place in the
case at bar upon the approval of the SDP, that is, on November 21, 1989.
HLI postulates that just compensation is a question of fact that should be left to the determina-
tion by the DAR, Land Bank of the Philippines (LBP) or even the special agrarian court
(SAC).20 As a matter of fact, the Court, in its November 22, 2011 Resolution, dispositively or-
dered the DAR and the LBP to determine the compensation due to HLI. And as indicated in the
body of said Resolution:
The foregoing notwithstanding, it bears stressing that the DAR’s land valuation is only prelimi-
nary and is not, by any means, final and conclusive upon the landowner. The landowner can file
an original action with the RTC acting as a special agrarian court to determine just compensa-
tion. The court has the right to review with finality the determination in the exercise of what is
admittedly a judicial function.
As regards the issue on when "taking" occurred with respect to the agricultural lands in ques-
tion, We, however, maintain that this Court can rule, as it has in fact already ruled on its reckon-
ing date, that is, November 21, 1989, the date of issuance of PARC Resolution No. 89-12-2,
based on the above-mentioned disquisitions. The investment on SACs of original and exclusive
jurisdiction over all petitions for the determination of just compensation to landowners21 will
not preclude the Court from ruling upon a matter that may already be resolved based on the re-
cords before Us. By analogy, Our ruling in Heirs of Dr. Jose Deleste v. LBP is applicable:
Indeed, it is the Office of the DAR Secretary which is vested with the primary and exclusive juris-
diction over all matters involving the implementation of the agrarian reform program. How-
ever, this will not prevent the Court from assuming jurisdiction over the petition considering
that the issues raised in it may already be resolved on the basis of the records before Us. Be-
sides, to allow the matter to remain with the Office of the DAR Secretary would only cause un-
necessary delay and undue hardship on the parties. Applicable, by analogy, is Our ruling in the
recent Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Department of Labor
and Employment Secretary, where We held:
But as the CA did, we similarly recognize that undue hardship, to the point of injustice, would
result if a remand would be ordered under a situation where we are in the position to resolve
the case based on the records before us. As we said in Roman Catholic Archbishop of Manila v.
Court of Appeals:
[w]e have laid down the rule that the remand of the case to the lower court for further recep-
tion of evidence is not necessary where the Court is in a position to resolve the dispute based
on the records before it. On many occasions, the Court, in the public interest and for the expe-
ditious administration of justice, has resolved actions on the merits instead of remanding them
to the trial court for further proceedings, such as where the ends of justice, would not be sub-
served by the remand of the case.22 (Emphasis supplied; citations omitted.)
Even though the compensation due to HLI will still be preliminarily determined by DAR and LBP,
subject to review by the RTC acting as a SAC, the fact that the reckoning point of "taking" is al-
ready fixed at a certain date should already hasten the proceedings and not further cause un-
due hardship on the parties, especially the qualified FWBs.
By a vote of 8-6, the Court affirmed its ruling that the date of "taking" in determining just com-
pensation is November 21, 1989 when PARC approved HLI’s stock option plan.
As regards the issue of interest on just compensation, We also leave this matter to the DAR and
the LBP, subject to review by the RTC acting as a SAC.
Option will not ensure
control over agricultural lands
In Our November 22, 2011 Resolution, this Court held:
After having discussed and considered the different contentions raised by the parties in their re-
spective motions, We are now left to contend with one crucial issue in the case at bar, that is,
control over the agricultural lands by the qualified FWBs.
Upon a review of the facts and circumstances, We realize that the FWBs will never have control
over these agricultural lands for as long as they remain as stockholders of HLI. In Our July 5,
2011 Decision, this Court made the following observations:
There is, thus, nothing unconstitutional in the formula prescribed by RA 6657. The policy on
agrarian reform is that control over the agricultural land must always be in the hands of the
farmers. Then it falls on the shoulders of DAR and PARC to see to it the farmers should always
own majority of the common shares entitled to elect the members of the board of directors to
ensure that the farmers will have a clear majority in the board. Before the SDP is approved,
strict scrutiny of the proposed SDP must always be undertaken by the DAR and PARC, such that
the value of the agricultural land contributed to the corporation must always be more than 50%
of the total assets of the corporation to ensure that the majority of the members of the board
of directors are composed of the farmers. The PARC composed of the President of the Philip-
pines and cabinet secretaries must see to it that control over the board of directors rests with
the farmers by rejecting the inclusion of non-agricultural assets which will yield the majority in
the board of directors to non-farmers. Any deviation, however, by PARC or DAR from the cor-
rect application of the formula prescribed by the second paragraph of Sec. 31 of RA 6675 does
not make said provision constitutionally infirm. Rather, it is the application of said provision
that can be challenged. Ergo, Sec. 31 of RA 6657 does not trench on the constitutional policy of
ensuring control by the farmers.
In line with Our finding that control over agricultural lands must always be in the hands of the
farmers, We reconsider our ruling that the qualified FWBs should be given an option to remain
as stockholders of HLI, inasmuch as these qualified FWBs will never gain control given the
present proportion of shareholdings in HLI.
A revisit of HLI’s Proposal for Stock Distribution under CARP and the Stock Distribution Option
Agreement (SDOA) upon which the proposal was based reveals that the total assets of HLI is
PhP 590,554,220, while the value of the 4,915.7466 hectares is PhP 196,630,000. Consequently,
the share of the farmer-beneficiaries in the HLI capital stock is 33.296% (196,630,000 divided by
590,554.220); 118,391,976.85 HLI shares represent 33.296%. Thus, even if all the holders of the
118,391,976.85 HLI shares unanimously vote to remain as HLI stockholders, which is unlikely,
control will never be placed in the hands of the farmer-beneficiaries. Control, of course, means
the majority of 50% plus at least one share of the common shares and other voting shares. Ap-
plying the formula to the HLI stockholdings, the number of shares that will constitute the major-
ity is 295,112,101 shares (590,554,220 divided by 2 plus one [1] HLI share). The 118,391,976.85
shares subject to the SDP approved by PARC substantially fall short of the 295,112,101 shares
needed by the FWBs to acquire control over HLI. Hence, control can NEVER be attained by the
FWBs. There is even no assurance that 100% of the 118,391,976.85 shares issued to the FWBs
will all be voted in favor of staying in HLI, taking into account the previous referendum among
the farmers where said shares were not voted unanimously in favor of retaining the SDP. In
light of the foregoing consideration, the option to remain in HLI granted to the individual FWBs
will have to be recalled and revoked.
Moreover, bearing in mind that with the revocation of the approval of the SDP, HLI will no lon-
ger be operating under SDP and will only be treated as an ordinary private corporation; the
FWBs who remain as stockholders of HLI will be treated as ordinary stockholders and will no
longer be under the protective mantle of RA 6657. (Emphasis in the original.)
HLI, however, takes exception to the above-mentioned ruling and contends that "[t]here is
nothing in the Constitution nor in the agrarian laws which require that control over the agricul-
tural lands must always be in the hands of the farmers."23 Moreover, both HLI and Mallari, et
al. claim that the option given to the qualified FWBs to remain as stockholders of HLI is neither
iniquitous nor prejudicial to the FWBs.24
The Court agrees that the option given to the qualified FWBs whether to remain as stockhold-
ers of HLI or opt for land distribution is neither iniquitous nor prejudicial to the FWBs. Nonethe-
less, the Court is not unmindful of the policy on agrarian reform that control over the agricultur-
al land must always be in the hands of the farmers. Contrary to the stance of HLI, both the Con-
stitution and RA 6657 intended the farmers, individually or collectively, to have control over the
agricultural lands of HLI; otherwise, all these rhetoric about agrarian reform will be rendered
for naught. Sec. 4, Art. XIII of the 1987 Constitution provides:
Section 4. The State shall, by law, undertake an agrarian reform program founded on the right
of farmers and regular farmworkers who are landless, to own directly or collectively the lands
they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this
end, the State shall encourage and undertake the just distribution of all agricultural lands, sub-
ject to such priorities and reasonable retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations, and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of small land-
owners. The State shall further provide incentives for voluntary land-sharing. (Emphasis sup-
plied.)
Pursuant to and as a mechanism to carry out the above-mentioned constitutional directive, RA
6657 was enacted. In consonance with the constitutional policy on agrarian reform, Sec. 2 of RA
6657 also states:
SECTION 2. Declaration of Principles and Policies. - It is the policy of the State to pursue a Com-
prehensive Agrarian Reform Program (CARP). The welfare of the landless farmers and farm
workers will receive the highest consideration to promote social justice and to move the nation
towards sound rural development and industrialization, and the establishment of owner cultiva-
torship of economic-sized farms as the basis of Philippine agriculture.
To this end, a more equitable distribution and ownership of land, with due regard to the rights
of landowners to just compensation and to the ecological needs of the nation, shall be under-
taken to provide farmers and farm workers with the opportunity to enhance their dignity and
improve the quality of their lives through greater productivity of agricultural lands.
The agrarian reform program is founded on the right of farmers and regular farm workers, who
are landless, to own directly or collectively the lands they till or, in the case of other farm work-
ers, to receive a share of the fruits thereof. To this end, the State shall encourage the just distri-
bution of all agricultural lands, subject to the priorities and retention limits set forth in this Act,
having taken into account ecological, developmental, and equity considerations, and subject to
the payment of just compensation. The State shall respect the right of small landowners and
shall provide incentives for voluntary land-sharing.
The State shall recognize the right of farmers, farm workers and landowners, as well as cooper-
atives and other independent farmers’ organization, to participate in the planning, organiza-
tion, and management of the program, and shall provide support to agriculture through appro-
priate technology and research, and adequate financial, production, marketing and other sup-
port services.
The State shall apply the principles of agrarian reform or stewardship, whenever applicable, in
accordance with law, in the disposition or utilization of other natural resources, including lands
of the public domain, under lease or concession, suitable to agriculture, subject to prior rights,
homestead rights of small settlers and the rights of indigenous communities to their ancestral
lands.
The State may resettle landless farmers and farm workers in its own agricultural estates, which
shall be distributed to them in the manner provided by law.
By means of appropriate incentives, the State shall encourage the formation and maintenance
of economic-sized family farms to be constituted by individual beneficiaries and small land-
owners.
The State shall protect the rights of subsistence fishermen, especially of local communities, to
the preferential use of communal marine and fishing resources, both inland and offshore. It
shall provide support to such fishermen through appropriate technology and research, ad-
equate financial, production and marketing assistance and other services, The State shall also
protect, develop and conserve such resources. The protection shall extend to offshore fishing
grounds of subsistence fishermen against foreign intrusion. Fishworkers shall receive a just
share from their labor in the utilization of marine and fishing resources.
The State shall be guided by the principles that land has a social function and land ownership
has a social responsibility. Owners of agricultural land have the obligation to cultivate directly or
through labor administration the lands they own and thereby make the land productive.
The State shall provide incentives to landowners to invest the proceeds of the agrarian reform
program to promote industrialization, employment and privatization of public sector enter-
prises. Financial instruments used as payment for lands shall contain features that shall en-
hance negotiability and acceptability in the marketplace.
The State may lease undeveloped lands of the public domain to qualified entities for the devel-
opment of capital-intensive farms, traditional and pioneering crops especially those for exports
subject to the prior rights of the beneficiaries under this Act. (Emphasis supplied.)
Based on the above-quoted provisions, the notion of farmers and regular farmworkers having
the right to own directly or collectively the lands they till is abundantly clear. We have exten-
sively discussed this ideal in Our July 5, 2011 Decision:
The wording of the provision is unequivocal –– the farmers and regular farmworkers have a
right TO OWN DIRECTLY OR COLLECTIVELY THE LANDS THEY TILL. The basic law allows two (2)
modes of land distribution—direct and indirect ownership. Direct transfer to individual farmers
is the most commonly used method by DAR and widely accepted. Indirect transfer through col-
lective ownership of the agricultural land is the alternative to direct ownership of agricultural
land by individual farmers. The aforequoted Sec. 4 EXPRESSLY authorizes collective ownership
by farmers. No language can be found in the 1987 Constitution that disqualifies or prohibits cor-
porations or cooperatives of farmers from being the legal entity through which collective own-
ership can be exercised. The word ‘collective’ is defined as ‘indicating a number of persons or
things considered as constituting one group or aggregate,’ while ‘collectively’ is defined as ‘in a
collective sense or manner; in a mass or body.’ By using the word ‘collectively,’ the Constitution
allows for indirect ownership of land and not just outright agricultural land transfer. This is in
recognition of the fact that land reform may become successful even if it is done through the
medium of juridical entities composed of farmers.
Collective ownership is permitted in two (2) provisions of RA 6657. Its Sec. 29 allows workers’
cooperatives or associations to collectively own the land, while the second paragraph of Sec. 31
allows corporations or associations to own agricultural land with the farmers becoming stock-
holders or members. Said provisions read:
SEC. 29. Farms owned or operated by corporations or other business associations.—In the case
of farms owned or operated by corporations or other business associations, the following rules
shall be observed by the PARC.
In general, lands shall be distributed directly to the individual worker-beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall be owned col-
lectively by the worker beneficiaries who shall form a workers’ cooperative or association which
will deal with the corporation or business association. x x x
SEC. 31. Corporate Landowners.— x x x
xxxx
Upon certification by the DAR, corporations owning agricultural lands may give their qualified
beneficiaries the right to purchase such proportion of the capital stock of the corporation that
the agricultural land, actually devoted to agricultural activities, bears in relation to the com-
pany’s total assets, under such terms and conditions as may be agreed upon by them. In no
case shall the compensation received by the workers at the time the shares of stocks are distrib-
uted be reduced. The same principle shall be applied to associations, with respect to their
equity or participation. x x x
Clearly, workers’ cooperatives or associations under Sec. 29 of RA 6657 and corporations or as-
sociations under the succeeding Sec. 31, as differentiated from individual farmers, are author-
ized vehicles for the collective ownership of agricultural land. Cooperatives can be registered
with the Cooperative Development Authority and acquire legal personality of their own, while
corporations are juridical persons under the Corporation Code. Thus, Sec. 31 is constitutional as
it simply implements Sec. 4 of Art. XIII of the Constitution that land can be owned COLLEC-
TIVELY by farmers. Even the framers of the l987 Constitution are in unison with respect to the
two (2) modes of ownership of agricultural lands tilled by farmers––DIRECT and COLLECTIVE,
thus:
MR. NOLLEDO. And when we talk of the phrase ‘to own directly,’ we mean the principle of di-
rect ownership by the tiller?
MR. MONSOD. Yes.
MR. NOLLEDO. And when we talk of ‘collectively,’ we mean communal ownership, stewardship
or State ownership?
MS. NIEVA. In this section, we conceive of cooperatives; that is farmers’ cooperatives owning
the land, not the State.
MR. NOLLEDO. And when we talk of ‘collectively,’ referring to farmers’ cooperatives, do the
farmers own specific areas of land where they only unite in their efforts?
MS. NIEVA. That is one way.
MR. NOLLEDO. Because I understand that there are two basic systems involved: the ‘moshave’
type of agriculture and the ‘kibbutz.’ So are both contemplated in the report?
MR. TADEO. Ang dalawa kasing pamamaraan ng pagpapatupad ng tunay na reporma sa lupa ay
ang pagmamay-ari ng lupa na hahatiin sa individual na pagmamay-ari – directly – at ang tinata-
wag na sama-samang gagawin ng mga magbubukid. Tulad sa Negros, ang gusto ng mga magbu-
bukid ay gawin nila itong ‘cooperative or collective farm.’ Ang ibig sabihin ay sama-sama nilang
sasakahin.
xxxx
MR. TINGSON. x x x When we speak here of ‘to own directly or collectively the lands they till,’ is
this land for the tillers rather than land for the landless? Before, we used to hear ‘land for the
landless,’ but now the slogan is ‘land for the tillers.’ Is that right?
MR. TADEO. Ang prinsipyong umiiral dito ay iyong land for the tillers. Ang ibig sabihin ng ‘di-
rectly’ ay tulad sa implementasyon sa rice and corn lands kung saan inaari na ng mga magsasa-
ka ang lupang binubungkal nila. Ang ibig sabihin naman ng ‘collectively’ ay sama-samang pagga-
wa sa isang lupain o isang bukid, katulad ng sitwasyon sa Negros.
As Commissioner Tadeo explained, the farmers will work on the agricultural land ‘sama-sama’
or collectively. Thus, the main requisite for collective ownership of land is collective or group
work by farmers of the agricultural land. Irrespective of whether the landowner is a coopera-
tive, association or corporation composed of farmers, as long as concerted group work by the
farmers on the land is present, then it falls within the ambit of collective ownership scheme.
(Emphasis in the original; underscoring supplied.)
As aforequoted, there is collective ownership as long as there is a concerted group work by the
farmers on the land, regardless of whether the landowner is a cooperative, association or cor-
poration composed of farmers. However, this definition of collective ownership should be read
in light of the clear policy of the law on agrarian reform, which is to emancipate the tiller from
the bondage of the soil and empower the common people. Worth noting too is its noble goal of
rectifying "the acute imbalance in the distribution of this precious resource among our peo-
ple."25 Accordingly, HLI’s insistent view that control need not be in the hands of the farmers
translates to allowing it to run roughshod against the very reason for the enactment of agrarian
reform laws and leave the farmers in their shackles with sheer lip service to look forward to.
Notably, it has been this Court’s consistent stand that control over the agricultural land must al-
ways be in the hands of the farmers. As We wrote in Our July 5, 2011 Decision:
There is, thus, nothing unconstitutional in the formula prescribed by RA 6657. The policy on
agrarian reform is that control over the agricultural land must always be in the hands of the
farmers. Then it falls on the shoulders of DAR and PARC to see to it the farmers should always
own majority of the common shares entitled to elect the members of the board of directors to
ensure that the farmers will have a clear majority in the board. Before the SDP is approved,
strict scrutiny of the proposed SDP must always be undertaken by the DAR and PARC, such that
the value of the agricultural land contributed to the corporation must always be more than 50%
of the total assets of the corporation to ensure that the majority of the members of the board
of directors are composed of the farmers. The PARC composed of the President of the Philip-
pines and cabinet secretaries must see to it that control over the board of directors rests with
the farmers by rejecting the inclusion of non-agricultural assets which will yield the majority in
the board of directors to non-farmers. Any deviation, however, by PARC or DAR from the cor-
rect application of the formula prescribed by the second paragraph of Sec. 31 of RA 6675 does
not make said provision constitutionally infirm. Rather, it is the application of said provision
that can be challenged. Ergo, Sec. 31 of RA 6657 does not trench on the constitutional policy of
ensuring control by the farmers. (Emphasis supplied.)
There is an aphorism that "what has been done can no longer be undone." That may be true,
but not in this case. The SDP was approved by PARC even if the qualified FWBs did not and will
not have majority stockholdings in HLI, contrary to the obvious policy by the government on
agrarian reform. Such an adverse situation for the FWBs will not and should not be permitted to
stand. For this reason, We maintain Our ruling that the qualified FWBs will no longer have the
option to remain as stockholders of HLI.
FWBs Entitled
to Proceeds of Sale
HLI reiterates its claim over the proceeds of the sales of the 500 hectares and 80.51 hectares of
the land as corporate owner and argues that the return of said proceeds to the FWBs is unfair
and violative of the Corporation Code.
This claim is bereft of merit.
It cannot be denied that the adverted 500-hectare converted land and the SCTEX lot once
formed part of what would have been agrarian-distributable lands, in fine subject to compul-
sory CARP coverage. And, as stated in our July 5, 2011 Decision, were it not for the approval of
the SDP by PARC, these large parcels of land would have been distributed and ownership trans-
ferred to the FWBs, subject to payment of just compensation, given that, as of 1989, the sub-
ject 4,915 hectares of Hacienda Luisita were already covered by CARP. Accordingly, the pro-
ceeds realized from the sale and/or disposition thereof should accrue for the benefit of the
FWBs, less deductions of the 3% of the proceeds of said transfers that were paid to the FWBs,
the taxes and expenses relating to the transfer of titles to the transferees, and the expenditures
incurred by HLI and Centennary Holdings, Inc. for legitimate corporate purposes, as prescribed
in our November 22, 2011 Resolution.
Homelots
In the present recourse, HLI also harps on the fact that since the homelots given to the FWBs do
not form part of the 4,915.75 hectares covered by the SDP, then the value of these homelots
should, with the revocation of the SDP, be paid to Tadeco as the landowner.26
We disagree. As We have explained in Our July 5, 2011 Decision, the distribution of homelots is
required under RA 6657 only for corporations or business associations owning or operating
farms which opted for land distribution. This is provided under Sec. 30 of RA 6657. Particularly:
SEC. 30. Homelots and Farmlots for Members of Cooperatives. ¾ The individual members of the
cooperatives or corporations mentioned in the preceding section shall be provided with home-
lots and small farmlots for their family use, to be taken from the land owned by the cooperative
or corporation. (Italics supplied.)
The "preceding section" referred to in the above-quoted provision is Sec. 29 of RA 6657, which
states:
SEC. 29. Farms Owned or Operated by Corporations or Other Business Associations.¾In the case
of farms owned or operated by corporations or other business associations, the following rules
shall be observed by the PARC.
In general, lands shall be distributed directly to the individual worker-beneficiaries.
In case it is not economically feasible and sound to divide the land, then it shall be owned col-
lectively by the worker-beneficiaries who shall form a workers’ cooperative or association
which will deal with the corporation or business association. Until a new agreement is entered
into by and between the workers’ cooperative or association and the corporation or business
association, any agreement existing at the time this Act takes effect between the former and
the previous landowner shall be respected by both the workers’ cooperative or association and
the corporation or business association.
Since none of the above-quoted provisions made reference to corporations which opted for
stock distribution under Sec. 31 of RA 6657, then it is apparent that said corporations are not
obliged to provide for homelots. Nonetheless, HLI undertook to "subdivide and allocate for free
and without charge among the qualified family-beneficiaries x x x residential or homelots of not
more than 240 sq. m. each, with each family beneficiary being assured of receiving and owning
a homelot in the barrio or barangay where it actually resides." In fact, HLI was able to distribute
homelots to some if not all of the FWBs. Thus, in our November 22, 2011 Resolution, We de-
clared that the homelots already received by the FWBs shall be respected with no obligation to
refund or to return them.
The Court, by a unanimous vote, resolved to maintain its ruling that the FWBs shall retain own-
ership of the homelots given to them with no obligation to pay for the value of said lots. How-
ever, since the SDP was already revoked with finality, the Court directs the government through
the DAR to pay HLI the just compensation for said homelots in consonance with Sec. 4, Article
XIII of the 1987 Constitution that the taking of land for use in the agrarian reform program is
"subject to the payment of just compensation." Just compensation should be paid to HLI in-
stead of Tadeco in view of the Deed of Assignment and Conveyance dated March 22, 1989 exe-
cuted between Tadeco and HLI, where Tadeco transferred and conveyed to HLI the titles over
the lots in question. DAR is ordered to compute the just compensation of the homelots in ac-
cordance with existing laws, rules and regulations.
To recapitulate, the Court voted on the following issues in this manner:
1. In determining the date of "taking," the Court voted 8-6 to maintain the ruling fixing Novem-
ber 21, 1989 as the date of "taking," the value of the affected lands to be determined by the
LBP and the DAR;
2. On the propriety of the revocation of the option of the FWBs to remain as HLI stockholders,
the Court, by unanimous vote, agreed to reiterate its ruling in its November 22, 2011 Resolution
that the option granted to the FWBs stays revoked;
3. On the propriety of returning to the FWBs the proceeds of the sale of the 500-hectare con-
verted land and of the 80.51-hectare SCTEX land, the Court unanimously voted to maintain its
ruling to order the payment of the proceeds of the sale of the said land to the FWBs less the 3%
share, taxes and expenses specified in the fallo of the November 22, 2011 Resolution;
4. On the payment of just compensation for the homelots to HLI, the Court, by unanimous vote,
resolved to amend its July 5, 2011 Decision and November 22, 2011 Resolution by ordering the
government, through the DAR, to pay to HLI the just compensation for the homelots thus dis-
tributed to the FWBS.
WHEREFORE, the Motion to Clarify and Reconsider Resolution of November 22, 2011 dated De-
cember 16, 2011 filed by petitioner Hacienda Luisita, Inc. and the Motion for Reconsidera-
tion/Clarification dated December 9, 2011 filed by private respondents Noel Mallari, Julio Suni-
ga, Supervisory Group of Hacienda Luisita, Inc. and Windsor Andaya are hereby DENIED with
this qualification: the July 5, 2011 Decision, as modified by the November 22, 2011 Resolution,
is FURTHER MODIFIED in that the government, through DAR, is ordered to pay Hacienda Luisita,
Inc. the just compensation for the 240-square meter homelots distributed to the FWBs.1âwphi1
The July 5, 2011 Decision, as modified by the November 22, 2011 Resolution and further modi-
fied by this Resolution is declared FINAL and EXECUTORY. The entry of judgment of said deci-
sion shall be made upon the time of the promulgation of this Resolution.
No further pleadings shall be entertained in this case.
SO ORDERED.
G.R. No. 183290* July 9, 2014
DEPARTMENT OF AGRARIAN REFORM, represented by SECRETARY NASSER C. PANGANDA-
MAN, Petitioner,
vs.
SPOUSES DIOSDADO STA. ROMANA and RESURRECCION O. RAMOS, represented by AURORA
STA. ROMANA, PURIFICACION C. DAEZ, represented by EFREN D. VILLALUZ and ROSAURO D.
VILLALUZ, and SPOUSES LEANDRO C. SEVILLA and MILAGROS C. DAEZ, Respondents.
RESOLUTION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated March 27, 2008 and
the Resolution3 dated June 12, 2008 rendered by the Court of Appeals (CA) in CA-G.R. SP Nos.
93132 and 93240 which affirmed the Decision4 dated October 18, 2005 of the Regional Trial
Court of Guimba, Nueva Ecija, Branch 33 (RTC) in AGR. Case No. 1163-G,5 fixing the just com-
pensation for respondents’ 21.2192-hectare (ha.) land at ₱2,576,829.94 or ₱121,438.60/ha.,
and ordering the Land Bank of the Philippines (LBP) to pay the said amount in the manner pro-
vided by law.
The Facts
Respondents, spouses Diosdado Sta. Romana and Resurreccion O. Ramos, represented by
Aurora Sta. Romana, Purificacion C. Daez, represented by Efren D. Villaluz and Rosauro D. Villa-
luz, and spouses Leandro C. Sevilla and Milagros C. Daez, are the owners of a 27.5307-ha. agri-
cultural land situated in San Jose City, Nueva Ecija, covered by Transfer Certificate of Title No.
NT-66211.6 Petitioner, the Department of Agrarian Reform (DAR), compulsorily acquired a
21.2192-ha. portion (subject land) of respondents’ property pursuant to the government’s Op-
eration Land Transfer Program7 under Presidential Decree No. (PD) 27,8 otherwise known as
the "Tenants Emancipation Decree," as amended. On November 29, 1995, the DAR caused the
generation of emancipation patents (EPs) in favor of the farmer-beneficiaries,9 and, in 1996,
the LBP fixed the value of the subject land at ₱361,181.8710 (LBP valuation) using the formu-
la11 under Executive Order No. (EO) 22812 and DAR Administrative Order No. (AO) 13, series of
1994,13 i.e., LV = (2.5 x AGP x ₱35.00) x (1.06)n14 .Under this formula, the government support
price (GSP) for one (1) cavan of palay was pegged at ₱35.00, which is the GSP price set on the
date of PD 27’s effectivity on October 21, 1972.15
Dissatisfied with the LBP valuation, respondents filed a Petition for Approval and Appraisal of
Just Compensation before the RTC, docketed as AGR. Case No. 1163-G, averring that: (a) the
LBP valuation was grossly inadequate considering the subject land’s proximity to subdivision
lots and commercial establishments; and (b) the fair market value of the subject land should be
fixed in the amount of at least ₱300,000.00/ha. as some beneficiaries were even selling their
lands to subdivision developers at the price of ₱1,000,000.00/ha.16
On the other hand, the LBP insisted on the correctness of the valuation, having been computed
in accordance with the formula under EO 228 which governs the determination of just compen-
sation due a landowner whose property was seized under PD 27. For its part, the DAR main-
tained that the proper procedure relevant to the determination of the valuation was followed,
hence, the amount of ₱361,181.87 or ₱4,719.77/ha. was in keeping with the mandate of PD
27.17
The RTC appointed two18 (2) commissioners for the purpose. On August 27, 2004, the commis-
sioners submitted their report, recommending the amount of ₱300,000.00/ha. as reasonable
compensation for the subject land.19
The RTC Ruling
On October 18, 2005, the RTC rendered a Decision20 rejecting the LBP valuation and fixing the
just compensation of the subject land at ₱2,576,829.94 or ₱121,438.60/ha. It explained that
while respondents’ land was acquired pursuant to PD 27, the same is covered by Republic Act
No. (RA) 6657,21 otherwise known as the "Comprehensive Agrarian Reform Law of 1988," as
amended, which provides that in determining just compensation, the factors under Section 17
of RA 6657, as amended, should be considered.22 It likewise pointed out that t he Court, in the
case of LBP v. Spouses Banal,23 had declared that the abovementioned factors have already
been translated into a basic formula in DAR AO 6, series of 1992,24 as amended by DAR AO 11,
series of 1994,25 i.e., LV = (CNI + 0.6) + (CS x 0.3) + (MV x 0.1).26 Considering the availability of
only the CS27 and MV28 factors, the RTC applied the formula LV = (CS x 0.9) + (MV x 0.1) in fix-
ing the just compensation for the subject land.29
The DAR and the LBP filed separate motions for reconsideration which were, however, denied
by the RTC. Hence, they filed separate appeals before the CA, respectively docketed as CA-G.R.
SP Nos. 93132 and 93240, that were, thereafter, consolidated by the CA on August 31, 2006.30
The CA Ruling
In a Decision31 dated March 27, 2008, the CA affirmed the RTC Decision, explaining that the ex-
propriation of a landholding covered by PD 27, such as that of the subject land, is not consid-
ered to have taken place on the effectivity of the said decree, or on October 21, 1972, but at
the time payment of just compensation is made, as judicially determined. Thus, it would be in-
equitable to base the amount of just compensation on the guidelines provided by PD 27 and EO
228 when the seizure of the subject land took place after the enactment of RA 665732 on June
15, 1988. The acquisition of the subject land having been initiated only in 1995, the LBP valua-
tion using the formula under EO 228 was confiscatory , as just compensation should constitute
the full and fair equivalent of the property when it is taken. Considering that the agrarian re-
form process remained incomplete as the payment of the just compensation for the subject
land has yet to be made, and in view of the passage of RA 6657 in the interim, the CA upheld
the RTC valuation as having been computed in accordance with Section 17 of RA 6657, as
amended.33
The motions for reconsideration filed by the DAR and the LBP were denied in a Resolu-
tion34 dated June 12, 2008, hence, the instant petition by the DAR which was subsequently
consolidated35 with the LBP’s petition in G.R. Nos. 183298-99.
The Issue Before the Court
The essential issue for the Court’s resolution is whether or not the subject land was properly
valued in accordance with the factors set forth in Section 17 of RA 6657, as amended. The Pro-
ceedings Before the Court
In a Resolution36 dated October 12, 2009, the parties were directed to file their respective
memoranda. In lieu of a memorandum, however, the LBP filed a manifestation and mo-
tion37 (motion to withdraw and to remand) in G.R. Nos. 183298-99 (a) averring that the matter
of computation of just compensation had been rendered moot and academic by the enactment
of RA 9700,38 which ordains that when the valuation of previously acquired lands is challenged
by the landowner, the same shall be completed and finally resolved pursuant to Section 17 of
RA 6657, as amended;39 and (b) praying that it be allowed to withdraw its petition and that the
case be remanded to the RTC for re-computation of the just compensation of the subject
land40 based on the factors set forth under Section 17 of RA 6657, as amended, in relation to
Section 541 of RA 9700.
The respondents in the said cases, who are the same respondents in the instant case, did not
oppose the motion to withdraw and to remand, which the Court granted in a Resolu-
tion42 dated January 18, 2010. Neither did they file any motion for reconsideration therefrom.
On the other hand, the DAR filed a memorandum,43 praying for the adoption of the LBP valua-
tion for the subject land, or in the alternative, for a similar remand of the case to the RTC for
further proceedings to determine the value of the land in accordance with existing provisions of
law and applicable administrative issuances.
The Court’s Ruling
Settled is the rule that when the agrarian reform process is still incomplete, as in this case
where the just compensation for the subject land acquired under PD 27 has yet to be paid, just
compensation should be determined and the process concluded under RA 6657,44 with PD 27
and EO 228 having mere suppletory effects. This means that PD 27 and EO 228 only apply when
there are gaps in RA 6657; where RA 6657 is sufficient, PD 27 and EO 228 are superseded.45
For purposes of determining just compensation, the fair market value of an expropriated prop-
erty is determined by its character and its price at the time of taking.46 In addition, the factors
enumerated under Section 17 of RA 6657,47 i.e., (a) the acquisition cost of the land, (b) the cur-
rent value of like properties, (c) the nature and actual use of the property, and the income
therefrom, (d) the owner's sworn valuation, (e) the tax declarations, (f) the assessment made
by government assessors, (g) the social and economic benefits contributed by the farmers and
the farmworkers, and by the government to the property, and (h) the non-payment of taxes or
loans secured from any government financing institution on the said land, if any , must be
equally considered.1âwphi1
The Court has gone over the records and observed that the only factors considered by the RTC
in determining the just compensation for the subject land were (a) the acquisition price of a
5.5825-ha. landholding situated in the same locality paid to the owner on November 17,
1997,48 and (b) the market value of the subject land declared by the respondents, without a
showing that the other factors under Section 17 of RA 6657 , as amended, were even taken into
account or, otherwise, found to be inapplicable , contrary to what the law requires. Conse-
quently, the CA erred in upholding the RTC’s valuation as having been made in accordance with
Section 17 of RA 6657, as amended.
This, considering too that the records of AGR. Case No. 1163-G on LBP’s petition for review,
docketed as G.R. Nos. 183298-99, had already been remanded to the RTC, the Court finds that
there is a need to make a similar remand of DAR’ s present petition in this case also stemming
from AGR. Case No. 1163-G to the same RTC for the determination of just compensation in ac-
cordance with Section 17 of RA 6657, as amended. Aside from the requirement and need to ap-
ply the factors under Section 17 of RA 6657, as amended, this course of action is also meant to
avoid the possibility of any conflict or inconsistency with any eventual ruling in AGR. Case No.
1163-G. To this end, the RTC is hereby directed to observe the following guidelines in the re-
mand of the case:
1. Just compensation must be valued at the time of taking, or the time when the landowner
was deprived of the use and benefit of his property, such as when title is transferred in the
name of the Republic of the Philippines.49 Hence, the evidence to be presented by the parties
before the trial court for the valuation of the subject land must be based on the values preva-
lent on such time of taking for like agricultural lands.50
2. The evidence must conform with Section 17 of RA 6657, as amended, prior to its amendment
by RA 9700. It bears pointing out that while Congress passed RA 9700 on July 1, 2009, amending
certain provisions of RA 6657, as amended, among them, Section 17, and declaring "(t)hat all
previously acquired lands wherein valuation is subject to challenge by landowners shall be com-
pleted and finally resolved pursuant to Section 17 of [RA 6657], as amended,"51 the law should
not be retroactively applied to pending claims/cases. In fact, DAR AO 2, series of 2009,52 imple-
menting RA 9700, expressly excepted from the application of the amended Section 17 all claim
folders received by LBP prior to July 1, 20 09, which shall be valued in accordance with Section
17 of RA 6657, as amended, prior to its further amendment by RA 9700.53
With this in mind, the Court, cognizant of the fact that the instant petition for review on certior-
ari was filed on July 21, 2008,54 or long before the passage of RA 9700, finds that Section 17 of
RA 6657, as amended, prior to its further amendment by RA 9700, should control the chal-
lenged valuation. In the event that the respondents had already withdrawn the amount depos-
ited by the LB P, the withdrawn amount should be deducted from the final land valuation to be
paid by LBP.55
3. The Regional Trial Court may impose interest on the just compensation award as may be war-
ranted by the circumstances of the case.56 In previous cases, the Court has allowed the grant of
legal interest in expropriation cases where there is delay in the payment since the just compen-
sation due to the landowners was deemed to be an effective forbearance on the part of the
State.57 Legal interest shall be pegged at the rate of 12% interest per annum (p.a.). from the
time of taking until June 30, 2013 only. Thereafter, or beginning July 1, 2013, until fully paid, the
just compensation due the landowners shall earn interest at the new legal rate of 6% interest
p.a. in line with the amendment introduced by BSP-MB Circular No. 799,58 series of 2013.59
4. The Regional Trial Court is reminded, however, that while it should take into account the dif-
ferent formula created by the DAR in arriving at its just compensation valuation, it is not strictly
bound thereto if the situations before it do not warrant their application. As held in LBP v. Heirs
of Maximo Puyat:60
[T]he determination of just compensation is a judicial function; hence, courts cannot be unduly
restricted in their determination thereof. To do so would deprive the courts of their judicial pre-
rogatives and reduce them to the bureaucratic function of inputting data and arriving at the val-
uation. While the courts should be mindful of the different formulae created by the DAR in ar-
riving at just compensation, they are not strictly bound to adhere thereto if the situations be-
fore them do not warrant it. Apo Fruits Corporation v. Court of Appeals thoroughly discusses
this issue, to wit:
"x x x [T]he basic formula and its alternatives–administratively determined (as it is not found in
Republic Act No. 6657, but merely set forth in DAR AO No. 5, Series of 1998)–although referred
to and even applied by the courts in certain instances, does not and cannot strictly bind the
courts. To insist that the formula must be applied with utmost rigidity whereby the valuation is
drawn following a strict mathematical computation goes beyond the intent and spirit of the
law. The suggested interpretation is strained and would render the law inutile. Statutory con-
struction should not kill but give life to the law. As we have established in earlier jurisprudence,
the valuation of property in eminent domain is essentially a judicial function which is vested in
the regional trial court acting as a SAC, and not in administrative agencies. The SAC, therefore,
must still be able to reasonably exercise its judicial discretion in the evaluation of the factors for
just compensation, which cannot be arbitrarily restricted by a formula dictated by the DAR, an
administrative agency. Surely, DAR AO No. 5 did not intend to straightjacket the hands of the
court in the computation of the land valuation. While it provides a formula, it could not have
been its intention to shackle the courts into applying the formula in every instance. The court
shall apply the formula after an evaluation of the three factors, or it may proceed to make its
own computation based on the extended list in Section 17 of Republic Act No. 6657, which in-
cludes other factors[.] x x x."61
WHEREFORE, the petition is DENIED insofar as it seeks to sustain the valuation of the 21.2192-
hectare portion of respondents' property made by the Land Bank of the Philippines. The Deci-
sion dated March 27, 2008 and the Resolution dated June 12, 2008 rendered by the Court of
Appeals in CAG.R. SP Nos. 93132 and 93240 upholding the said valuation which did not consider
the factors enumerated under Section 17 of Republic Act No. 6657, as amended, are hereby RE-
VERSED and SET ASIDE. The Department of Agrarian Reform's petition stemming from AGR.
Case No. 1163-G is REMANDED to the Regional Trial Court of Guimba, Nueva Ecija, Branch 33
for reception of evidence on the issue of just compensation in accordance with the guidelines
set in this Decision. The trial court is directed to conduct the proceedings in said case with rea-
sonable dispatch and to submit to the Court a report on its findings and recommended conclu-
sions within sixty (60) days from notice of this Decision.
SO ORDERED.
G.R. No. 205544
MUNICIPALITY OF CORDOVA, PROVINCE OF CEBU; THE SANGGUNIANG BAYAN OF CORDOVA;
and THE MAYOR OF THE MUNICIPALITY of CORDOVA, Petitioners,
vs.
PATHFINDER DEVELOPMENT CORPORATION and TOPANGA DEVELOPMENT CORPORA-
TION, Respondents.
DECISION
PERALTA, J.:
This is a Petition for Review on Certiorari which petitioners Municipality of Cordova, Province of
Cebu, the Sangguniang Bayan of Cordova, and the Mayor of the Municipality of Cordova filed
seeking to reverse the Court of Appeals (CA) Decision1 dated March 28, 2012 in CA-G.R. SP No.
06193 and to order the trial court to proceed to the second stage of the proceedings for the de-
termination of the proper valuation of the expropriated properties.
The procedural and factual antecedents of the case, as borne by the records, are as follows:
Respondent Pathfinder Development Corporation (Pathfinder) is the owner of real properties in
Alegria, Cordova, Cebu: (1) Lot No. 692 covered by Tax Declaration (TD) No. 190002-02765 with
an area of 1,819 square meters (sq.m.), and (2) part of Lot No. 697 covered by Transfer Certifi-
cate of Title (TCT) No. T-95706 and TD No. 190002-02902 with an area of 50,000 sq.m., while re-
spondent Topanga Development Corporation
(Topanga) owns Lot No. 691 covered by TCT No. 109337 and TD No. 190002-02761 with an area
of 29,057 sq.m., and part of Lot No. 697 covered by TD No. 190002-02901 with an area of
15,846 sq.m.
On February 8, 2011, petitioner Sangguniang Bayan of the Municipality of Cordova enacted Or-
dinance No. 003-2011 expropriating 836 sq.m. of Lot No. 692, 9,728 sq.m. of Lot No. 697, 3,898
sq.m. of Lot No. 691, and 1,467 sq.m. of Lot No. 693 owned by one Eric Ng Mendoza, for the
construction of a road access from the national highway to the municipal roll-on/roll-
off (RORO) port. It likewise authorized petitioner Mayor of Cordova (the Mayor) to initiate and
execute the necessary expropriation proceedings.
On February 17, 2011, the Mayor of Cordova filed an expropriation complaint against the own-
ers of the properties. Later, the Mayor filed a motion to place the municipality in possession of
the properties sought to be expropriated.
On March 4, 2011, Pathfinder and Topanga filed an action for Declaration of Nullity of the Ex-
propriation Ordinance before the Regional Trial Court (RTC) of Mandaue City, Branch 56, claim-
ing that no offer to buy addressed to them was shown or attached to the expropriation com-
plaint, thereby rendering the Ordinance constitutionally infirm for being in violation of their
right to due process and equal protection. On July 13, 2011, they likewise filed an Urgent Mo-
tion to Suspend Proceedings based on prejudicial question in the case for the declaration of nul-
lity of the Ordinance.
On August 12, 2011, the Lapu-Lapu RTC, Branch 27 issued an Order2 denying the corporations'
motion for suspension of the proceedings and granting the issuance of a Writ of Possession in
favor of the municipality. Pathfinder and Topanga moved for reconsideration, but the same was
denied. Hence, they elevated the case to the CA via a Petition for Certiorari and Prohibition
under Rule 65 of the Rules of Court.
On March 28, 2012, the CA reversed the RTC, thus:
WHEREFORE, the petition is hereby GRANTED. The Orders issued by the Regional trial Court,
th
7 Judicial Region, Branch 53 and Branch 27, Lapu-Lapu City in Civil Case No. R-LLP-11-05959-
CV, dated May 26, 2011, August 12, 2011 and August 22, 2011, are REVERSED, [ANNULLED]
and SET ASIDE.
The case is remanded to the Regional Trial Court, Branch 27, Lapu-Lapu City for the reception of
evidence de nova on the determination of the authority of the respondent municipality to exer-
cise the power of eminent domain and the propriety of its exercise in the context of the facts in-
volved in the suit. No pronouncement as to costs.
SO ORDERED.3
Petitioners Municipality, Sangguniang Bayan, and Mayor of Cordova then filed a Motion for Re-
consideration, but the same proved to be futile.
Hence, this petition.
The main issue before the Court is whether or not the CA committed a reversible error in giving
due course to the petition under Rule 65.
The petition deserves merit.
The municipality argues that the CA seriously erred when it allowed the companies' Petition
for Certiorari despite the available remedy of appeal under Rule 67 of the Rules of Court.
While there exists a settled rule precluding certiorari as a remedy against the final order when
appeal is available, a petition for certiorari may be allowed when: (a) the broader interest of jus-
tice demands that certiorari be given due course to avoid any grossly unjust result that would
otherwise befall the petitioners; and (b) the order of the R TC evidently constitutes grave abuse
of discretion amounting to excess of jurisdiction. In the past, the Court has considered certior-
ari as the proper remedy despite the availability of appeal, or other remedy in the ordinary
course of law. In Francisco Motors Corporation v. Court of Appeals,4 the Court has declared that
"the requirement that there must be no appeal, or any plain, speedy and adequate remedy in
the ordinary course of law admits of exceptions, such as: (a) when it is necessary to prevent ir-
reparable damages and injury to a party; (b) where the trial judge capriciously and whimsically
exercised his judgment; (c) where there may be danger of a failure of justice; (d) where an ap-
peal would be slow, inadequate, and insufficient; (e) where the issue raised is one purely of
law; (t) where public interest is involved; and (g) in case of urgency."5
If appeal is not an adequate remedy, or an equally beneficial, or speedy remedy, the availability
of appeal as a remedy cannot constitute sufficient ground to prevent or preclude a party from
making use of certiorari. It is mere inadequacy, not the absence of all other legal remedies, and
the danger of failure of justice without the writ, that must determine the propriety of certior-
ari. A remedy is said to be plain, speedy and adequate if it will promptly relieve the petitioner
from the injurious effects of the judgment, order, or resolution of the lower court or agency. It
is understood, then, that a litigant need not resort to the less speedy remedy of appeal in order
to have an order annulled and set aside for being patently void. And even assuming that certior-
ari is not the proper remedy against an assailed order, the petitioner should still not be denied
the recourse because it is better to look beyond procedural requirements and to overcome the
ordinary disinclination to exercise supervisory powers in order that a void order of a lower
court may be made conformable to law and justice.6
Verily, the instances in which certiorari will issue cannot be strictly defined, because to do so is
to destroy the comprehensiveness and usefulness of the extraordinary writ. The wide breadth
and range of the discretion of the Court are such that authority is not wanting to show that cer-
tiorari is more discretionary than either prohibition or mandamus, and that in the exercise of
superintending control over inferior courts, a superior court is to be guided by all the circum-
stances of each particular case as the ends of justice may require. Therefore, when, as in this
case, there is an urgent need to prevent a substantial wrong or to do substantial justice, the
writ will be granted.7
The foregoing notwithstanding, the CA erred when it held that the RTC acted with grave abuse
of discretion.1avvphi1
Eminent domain is the right or power of a sovereign state to appropriate private property to
particular uses to promote public welfare.1âwphi1 It is an indispensable attribute of sover-
eignty; a power grounded in the primary duty of government to serve the common need and
advance the general welfare.8 The power of eminent domain is inseparable in sovereignty
being essential to the existence of the State and inherent in government. Its exercise is pro-
scribed by only two Constitutional requirements: first, that there must be just compensation,
and second, that no person shall be deprived of life, libe1iy or property without due process of
law.9
The power of eminent domain is essentially legislative in nature but may be validly delegated to
local government units. The basis for its exercise by the Municipality of Cordova, being a local
government unit, is granted under Section 19 of Republic Act 7160, to wit:
Sec. 19. Eminent Domain. -A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or
welfare for the benefit of the poor and the landless, upon payment of just compensation, pur-
suant to the provisions of the Constitution and pertinent laws: Provided, however, That the
power of eminent domain may not be exercised unless a valid and definite offer has been previ-
ously made to the owner, and such offer was not accepted: Provided, further, That the local
government unit may immediately take possession of the property upon the filing of the expro-
priation proceedings and upon making a deposit with the proper court of at least fifteen per-
cent (15%) of the fair market value of the property based on the current tax declaration of the
property to be expropriated: Provided, finally, That the amount to be paid for the expropriated
property shall be determined by the proper court, based on the fair market value at the time of
the taking of the property.
Judicial review of the exercise of the power of eminent domain is limited to the following areas
of concern: (a) the adequacy of the compensation, (b) the necessity of the taking, and (c) the
public use character of the purpose of the taking. 10
Under Rule 67 of the Rules of Court, expropriation proceedings are comprised of two stages: (1)
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 surrounding facts, and (2) the determination
of the just compensation for the property sought to be taken. The first stage ends, if not in a
dismissal of the action, with an order of condemnation declaring that the plaintiff has a lawful
right to take the property sought to be condemned, for public use or purpose. 11
Pathfinder and Topanga contend that the trial court issued an Order of Condemnation of the
properties without previously conducting a proper hearing for the reception of evidence of the
parties. However, no hearing is actually required for the issuance of a writ of possession, which
demands only two requirements: (a) the sufficiency in form and substance of the complaint,
and (b) the required provisional deposit. The sufficiency in form and substance of the complaint
for expropriation can be determined by the mere examination of the allegations of the com-
plaint. 12 Here, there is indeed a necessity for the taking of the subject properties as these
would provide access towards the RORO port being constructed in the municipality. The con-
struction of the new road will highly benefit the public as it will enable shippers and passengers
to gain access to the port from the main public road or highway.
The requisites for authorizing immediate entry are the filing of a complaint for expropriation
sufficient in form and substance, and the deposit of the amount equivalent to fifteen percent
(15%) of the fair market value of the property to be expropriated based on its current tax decla-
ration. Upon compliance with these requirements, the petitioner in an expropriation case is en-
titled to a writ of possession as a matter of right13 and the issuance of the writ becomes minis-
terial. 14 Indubitably, since the complaint was found to have been sufficient in form and sub-
stance and the required deposit had been duly complied with, the issuance of the writ had
aptly become ministerial on the part of the RTC. It cannot be said, therefore, that the RTC com-
mitted grave abuse of discretion when it found the taking of the properties of Topanga and
Pathfinder proper.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is GRANTED. The Decision of the Court
of Appeals dated March 28, 2012 in CA-G.R. SP No. 06193 is hereby REVERSED and SET
ASIDE. The Orders of the Regional Trial Court of Lapu-Lapu, Branches 53 and 27, in Civil Case
No. R-LLP-11-05959-CV, dated May 26, 2011, August 12, 2011, and August 22, 2011, are here-
by REINSTATED. The case is REMANDED to the trial court for further proceedings.
SO ORDERED.
G.R. No. 166429 December 19, 2005
REPUBLIC OF THE PHILIPPINES, Represented by Executive Secretary Eduardo R. Ermita, the
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS (DOTC), and the MANILA IN-
TERNATIONAL 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., Respond-
ents.
DECISION
TINGA, J.:
The Ninoy Aquino International Airport Passenger Terminal III (NAIA 3) was conceived, designed
and constructed to serve as the country’s show window to the world. Regrettably, it has
spawned controversies. Regrettably too, despite the apparent completion of the terminal com-
plex 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 per-
vades both the Court’s 2004 Resolution in the first case and the latest expropriation law.
The present controversy has its roots with the promulgation of the Court’s decision in Agan v.
PIATCO,2 promulgated in 2003 (2003 Decision). This decision nullified the "Concession Agree-
ment for the Build-Operate-and-Transfer Arrangement of the Ninoy Aquino International Air-
port 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 dur-
ing the concession period of 25 years. The contracts were nullified, among others, that Paircar-
go 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 le-
gal status of the NAIA 3 facilities following the nullification of the contracts, as well as whatever
rights of PIATCO for reimbursement for its expenses in the construction of the facilities. Still, in
his Separate Opinion, Justice Panganiban, joined by Justice Callejo, declared as follows:
Should government pay at all for reasonable expenses incurred in the construction of the Ter-
minal? 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 par-
cel of the critical infrastructure and transportation-related programs of government.5
PIATCO and several respondents-intervenors filed their respective motions for the reconsidera-
tion of the 2003 Decision. These motions were denied by the Court in its Resolution dated 21
January 2004 (2004 Resolution).6 However, the Court this time squarely addressed the issue of
the rights of PIATCO to refund, compensation or reimbursement for its expenses in the con-
struction 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 con-
struction. 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 PIAT-
CO and its investors.7
After the promulgation of the rulings in Agan, the NAIA 3 facilities have remained in the posses-
sion 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 re-
garding 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 Internation-
al Centre for the Settlement of Investment Disputes,9 although the Government has raised ju-
risdictional 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 Bil-
lion)13 in Cash with the Land Bank of the Philippines, representing the NAIA 3 terminal’s as-
sessed 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 is-
sued 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 Mani-
la 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 de-
posit 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 facili-
ties] 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. Accord-
ing to PIATCO, the Government was able to take possession over the NAIA 3 facilities immedi-
ately after the Writ of Possession was issued.18
However, on 4 January 2005, the RTC issued another Order designed to supplement its 21 De-
cember 2004 Order and 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 pay-
ment to the property owner upon the filing of the complaint to be entitled to a writ of posses-
sion, whereas in Rule 67, the Government is required only to make an initial deposit with an au-
thorized government depositary. Moreover, Rule 67 prescribes that the initial deposit be equiv-
alent 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 prop-
erty as stated in the tax declaration or the current relevant zonal valuation of the Bureau of In-
ternal Revenue (BIR), whichever is higher, and the value of the improvements and/or structures
using the replacement cost method.
Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974 and Section 10 of the Imple-
menting Rules, the RTC made key qualifications to its earlier issuances. First, it directed the
Land Bank of the Philippines, Baclaran Branch (LBP-Baclaran), to immediately release the
amount of US$62,343,175.77 to PIATCO, an amount which the RTC characterized as that which
the Government "specifically made available for the purpose of this expropriation;" and such
amount to be deducted from the amount of just compensation due PIATCO as eventually deter-
mined by the RTC. Second, the Government was directed to submit to the RTC a Certificate of
Availability of Funds signed by authorized officials to cover the payment of just compensa-
tion. Third, the Government was directed "to maintain, preserve and safeguard" the NAIA 3 fa-
cilities or "perform such as acts or activities in preparation for their direct operation" of the air-
port terminal, pending expropriation proceedings and full payment of just compensation. How-
ever, the Government was prohibited "from performing acts of ownership like awarding con-
cessions 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 Jan-
uary 2005, the RTC issued another Order, the second now assailed before this Court, which ap-
pointed three (3) Commissioners to ascertain the amount of just compensation for the NAIA 3
Complex. That same day, the Government filed a Motion for Inhibition of Hon. Gingoyon.
The RTC heard the Urgent Motion for Reconsideration and Motion for Inhibition on 10 January
2005. On the same day, it denied these motions in an Omnibus Order dated 10 January 2005.
This is the third Order now assailed before this Court. Nonetheless, while the Omnibus Order af-
firmed the earlier dispositions in the 4 January 2005 Order, it excepted from affirmance "the
superfluous part of the Order prohibiting the plaintiffs from awarding concessions or leasing
any part of [NAIA 3] to other parties."20
Thus, the present Petition for Certiorari and Prohibition under Rule 65 was filed on 13 January
2005. The petition prayed for the nullification of the RTC orders dated 4 January 2005, 7 Janu-
ary 2005, and 10 January 2005, and for the inhibition of Hon. Gingoyon from taking further ac-
tion 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;
(iii) that the RTC could not have prohibited the Government from enjoining the performance of
acts of ownership;
(iv) that the appointment of the three commissioners was erroneous; and
(v) that Hon. Gingoyon should be compelled to inhibit himself from the expropriation case.22
Before we delve into the merits of the issues raised by the Government, it is essential to consid-
er 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 construc-
tion. For the government to take over the said facility, it has to compensate respondent PIAT-
CO 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 accord-
ance 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 do-
main.
It cannot be denied though that the Court in the 2004 Resolution prescribed mandatory guide-
lines 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 Resolu-
tion,24 thus its application
to the case at bar is not a matter of controversy. Of course, questions such as what is the stand-
ard of "just compensation" and which particular laws and equitable principles are applicable, re-
main 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 compensa-
tion 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 under-
standable in this case. The 2004 Resolution, in requiring the payment of just compensation pri-
or 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 expro-
priation proceedings. Is eminent domain appropriate in the first place, with due regard not only
to the law on expropriation but also to the Court’s 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 Ex-
propriation) 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 aver-
ment 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 Devel-
opment 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. Emi-
nent 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 Court’s 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 resolu-
tion of this petition. Otherwise, the integrity and efficacy of the rulings of this Court will be se-
verely 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 proceed-
ings 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 Govern-
ment. 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 pro-
ceedings 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 expropri-
ates property "for national government infrastructure projects."28 Thus, if expropriation is en-
gaged 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 pro-
ceedings through the filing of a complaint. Unlike in the case of local governments which neces-
sitate 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 defend-
ant, 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 au-
thorizes 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 proj-
ect through expropriation, the appropriate proceedings before the proper court under the fol-
lowing 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 zo-
nal 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 im-
portance, 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 de-
posit with an authorized government depositary the assessed value of the property for expro-
priation for it to be entitled to a writ of possession. On the other hand, Rep. Act No. 8974 re-
quires 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 ef-
fort to point out that Rep. Act No. 8974 does not apply in this case, notwithstanding the undeni-
able reality that NAIA 3 is a national government project. Yet, these efforts fail, especially con-
sidering 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 pos-
session of the real property involved if [the plaintiff] deposits with the authorized government
depositary an amount equivalent to the assessed value of the property for purposes of taxation
to be held by such bank subject to the orders of the court."30 It is thus apparent that under the
provision, all the Government need do to obtain a writ of possession is to deposit the amount
equivalent to the assessed value with an authorized government depositary.
Would the deposit under Section 2 of Rule 67 satisfy the requirement laid down in the 2004
Resolution that "[f]or the government to take over the said facility, it has to compensate re-
spondent 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 fol-
low that Rule 67 should then apply. After all, adherence to the letter of Section 2, Rule 67
would in turn violate the Court’s 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 proj-
ects. 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). That’s why we need to really secure the availability of funds.
xxx
THE CHAIRMAN (SEN. CAYETANO). No, no. It’s the same. It says here: iyong first paragraph, di-
ba? 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. It’s pay-
ment."
REP. BATERINA. It’s 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 determin-
ing the amount of just compensation in expropriation cases relating to national government in-
frastructure 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 as-
pects 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 expropri-
ation 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 ap-
plication 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 Loca-
tion For National Government Infrastructure Projects And For Other Purposes." Obviously, the
law is intended to cover expropriation proceedings intended for national government infra-
structure 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 proj-
ects undertaken by government-owned and controlled corporations, all projects covered by Re-
public Act No. 6957, as amended by Republic Act No. 7718, otherwise known as the Build-Oper-
ate-and-Transfer Law, and other related and necessary activities, such as site acquisition, supply
and/or installation of equipment and materials, implementation, construction, completion, op-
eration, maintenance, improvement, repair and rehabilitation, regardless of the source of fund-
ing.
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 con-
struction, 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 fi-
nanced 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 PIATCO’s 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 eject-
ment proceedings.
Since the rights of PIATCO over the NAIA 3 facilities are established, the nature of these facili-
ties should now be determined. Under Section 415(1) of the Civil Code, these facilities are in-
eluctably 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 can-
not 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 Government’s insistence that the NAIA 3 facilities
cannot be deemed as the "right-of-way", "site" or "location" of a national government infra-
structure 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 Government’s insistence that neither could NAIA 3 be a "site" or
"location". The petition quotes the definitions provided in Black’s Law Dictionary of "location’"
as the specific place or position of a person or thing and ‘site’ as pertaining to a place or loca-
tion or a piece of property set aside for specific use.’"39 Yet even Black’s Law Dictionary pro-
vides 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 Government’s proposition that the only properties that may be
expropriated under Rep. Act No. 8974 are parcels of land. Rep. Act No. 8974 contemplates with-
in 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 law’s
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 improve-
ments or structures on the land may very well be the subject of expropriation proceedings. Sec-
tion 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 ad-
hered. Any sub-classifications of real property and divergent treatment based thereupon for
purposes of expropriation must be based on substantial distinctions, otherwise the equal pro-
tection clause of the Constitution is violated. There may be perhaps a molecular distinction be-
tween soil and the inorganic improvements adhered thereto, yet there are no purposive distinc-
tions 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 depriva-
tion of property. The owner of improvements seized through expropriation suffers the same de-
gree 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 law’s 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 compensa-
tion 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 unques-
tionably 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 val-
ue 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 pre-
scription 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 gov-
erns 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 Govern-
ment 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 air-
port 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 val-
ue of the improvements and/or structures themselves. Thus, the determination of just compen-
sation 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 ulti-
mate 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. Sec-
tion 4(c) of Rep. Act No. 8974 states that "in case the completion of a government infrastruc-
ture 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 in-
tuition 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 undertak-
en 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 determina-
tion of the proffered value, the Government is not strictly required to adhere to any predeter-
mined 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 compen-
sation under Section 5 of Rep. Act No. 8974, as required for judicial review of the proffered val-
ue.
The Court notes that in the 10 January 2005 Omnibus Order, the RTC noted that the conces-
sions 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 equiva-
lent 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 compensa-
tion 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 inappropri-
ate.
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 expropria-
tion 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 en-
tire amount of US$62.3 Million was intended by the Government to answer for whatever guar-
anties 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 infer-
entially 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 [RTC’s] 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 de-
posited 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 re-
quires direct payment to the property owner, and not a mere deposit with the authorized gov-
ernment 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 acquir-
ing possession of the property with, respectively, an authorized
Government depositary54 or the proper court.55 In both cases, the private owner does not re-
ceive 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 proceed-
ings with a position of fundamental equity. While expropriation proceedings have always de-
manded just compensation in exchange for private property, the previous deposit requirement
impeded immediate compensation to the private owner, especially in cases wherein the deter-
mination
of the final amount of compensation would prove highly disputed. Under the new modality pre-
scribed 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 pro-
tracted 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 pay-
ment placates to some degree whatever ill-will that arises from expropriation, as well as satis-
fies the demand of basic fairness.
The Court has the duty to implement Rep. Act No. 8974 and to direct compliance with the re-
quirement of immediate payment in this case. Accordingly, the Writ of Possession dated 21 De-
cember 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 im-
posed by the RTC in its 4 January 2005 Order consisting of the prohibition on the Government
from performing acts of ownership such as awarding concessions or leasing any part of NAIA 3
to other parties. To be certain, the RTC, in its 10 January 2005 Omnibus Order, expressly stated
that it was not affirming "the superfluous part of the Order [of 4 January 2005] prohibiting the
plaintiffs from awarding concessions or leasing any part of NAIA [3] to other parties."56 Still,
such statement was predicated on the notion that since the Government was not yet the owner
of NAIA 3 until final payment of just compensation, it was obviously incapacitated to perform
such acts of ownership.
In deciding this question, the 2004 Resolution in Agan cannot be ignored, particularly the decla-
ration 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 PIAT-
CO 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 op-
eration of the facilities.
There are critical reasons for the Court to view the 2004 Resolution less stringently, and thus al-
low 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 dete-
rioration, 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 posses-
sion. Section 4 states that "the court shall immediately issue to the implementing agency an or-
der 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, recondi-
tioning 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 in-
ternational airport.
The Government’s 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 de-
cidendi 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 prop-
erty. 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 Government’s
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 pend-
ing payment of just compensation. We reiterated the various doctrines of such import in our re-
cent 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 con-
demnor until the judgment fixing just compensation is entered and paid, but the condemnor’s
title relates back to the date on which the petition under the Eminent Domain Act, or the com-
missioner’s report under the Local Improvement Act, is filed.
x x x Although the right to appropriate and use land taken for a canal is complete at the time
of entry, title to the property taken remains in the owner until payment is actually
made. (Emphasis supplied.)
In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to prop-
erty 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 appro-
priation 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 exam-
ined it will be apparent that the method of expropriation adopted in this jurisdiction is such
as to afford absolute reassurance that no piece of land can be finally and irrevocably taken
from an unwilling owner until compensation is paid....’"(Emphasis supplied.)
Clearly, without full payment of just compensation, there can be no transfer of title from the
landowner to the expropriator. Otherwise stated, the Republic’s acquisition of ownership is
conditioned upon the full payment of just compensation within a reasonable time.
Significantly, in Municipality of Biñan 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 in-
volved in the suit. It ends with an order, if not of dismissal of the action, "of condemnation de-
claring 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 com-
pleted. 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 ju-
dicial 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 fi-
nality 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 compen-
sation may be had. Section 4 provides:
In the event that the owner of the property contests the implementing agency’s proffered val-
ue, 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 law’s avowed policy "to ensure that owners of real prop-
erty acquired for national government infrastructure projects are promptly paid just compensa-
tion."66 In this case, there already has been irreversible delay in the prompt payment of PIAT-
CO of just compensation, and it is no longer possible for the RTC to determine the just compen-
sation 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 requir-
ing the trial court to make such determination within sixty (60) days from finality of this deci-
sion, 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
Government’s 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 ap-
pointing the three commissioners in its 7 January 2005 Order without prior consultation with ei-
ther the Government or PIATCO, or without affording the Government the opportunity to ob-
ject to the appointment of these commissioners. We can dispose of this argument without com-
plication.
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 Imple-
menting 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 deter-
mination 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 re-
placement 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 ex-
propriation 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 soli-
tary 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 commis-
sioners.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 ob-
jections 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 Government’s 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 is-
sued 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 al-
lowed on the basis of mere speculations and surmises. It certainly cannot be predicated on the
adverse nature of the judge’s rulings towards the movant for inhibition, especially if these rul-
ings 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 extrajudi-
cial 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 proceed-
ings, although erroneous, as long as they are based on the evidence presented and conduct ob-
served by the judge, do not prove personal bias or prejudice on the part of the judge. As a gen-
eral 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 pur-
pose, in addition to the palpable error which may be inferred from the decision or order it-
self. Although the decision may seem so erroneous as to raise doubts concerning a judge's in-
tegrity, 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 Government’s contentions against Hon. Gingoyon are severely undercut by the fact that
the 21 December 2004 Order, which the 4 January 2005 Order sought to rectify, was indeed se-
verely 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. Gingoyon’s bias, was promul-
gated 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 mo-
tu 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 in-
herent power of courts "to amend and control its process and orders so as to make them con-
formable to law and justice,"77 a power which Hon. Gingoyon noted in his 10 January 2005 Om-
nibus 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 ad-
here to its decision will cause injustice to a party litigant.79
Certainly, the 4 January 2005 Order was designed to make the RTC’s previous order conform-
able to law and justice, particularly to apply the correct law of the case. Of course, as earlier es-
tablished, 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 re-
formed the most basic premise of the case that Rep. Act No. 8974 governs the expropriation
proceedings.
Nonetheless, the Government belittles Hon. Gingoyon’s invocation of Section 5(g), Rule 135 as
"patently without merit". Certainly merit can be seen by the fact that the 4 January 2005 Or-
der reoriented the expropriation proceedings towards the correct governing law. Still, the Gov-
ernment 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 ben-
efit 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 immedi-
ately 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 expropria-
tion cases comes at the expense of the rights of the property owner to be heard or to be de-
prived 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. How-
ever, 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 administra-
tive 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 vehe-
mence of the litigant’s claim of bias, but the Court’s 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 in-
cite 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 al-
legations, 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 Government’s claim of bias does not translate to clear and con-
vincing 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 compen-
sation 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 pay-
ment 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 Gov-
ernment 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 facili-
ties and equipment, installation of new facilities and equipment, provision of services and facili-
ties pertaining to the facilitation of air traffic and transport, and other services that are integral
to a modern-day international airport."83
(5) The RTC is mandated to complete its determination of the just compensation within sixty
(60) days from finality of this Decision. In doing so, the RTC is obliged to comply with "law and
equity" as ordained in Again and the standard set under Implementing Rules of Rep. Act No.
8974 which is the "replacement cost method" as the standard of valuation of structures and im-
provements.
(6) There was no grave abuse of discretion attending the RTC Order appointing the commis-
sioners for the purpose of determining just compensation. The provisions on commissioners
under Rule 67 shall apply insofar as they are not inconsistent with Rep. Act No. 8974, its Imple-
menting Rules, or the rulings of the Court in Agan.
(7) The Government shall pay the just compensation fixed in the decision of the trial court to
PIATCO immediately upon the finality of the said decision.
(8) There is no basis for the Court to direct the inhibition of Hon. Gingoyon.
All told, the Court finds no grave abuse of discretion on the part of the RTC to warrant the nulli-
fication of the questioned orders. Nonetheless, portions of these orders should be modified to
conform with law and the pronouncements made by the Court herein.
WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4 January 2005
and 10 January 2005 of the lower court. Said orders are AFFIRMED with the following MODIFI-
CATIONS:
1) The implementation of the Writ of Possession dated 21 December 2005 is HELD IN ABEY-
ANCE, pending payment by petitioners to PIATCO of the amount of Three Billion Two Million
One Hundred Twenty Five Thousand Pesos (₱3,002,125,000.00), representing the proffered val-
ue of the NAIA 3 facilities;
2) Petitioners, upon the effectivity of the Writ of Possession, are authorized start the implemen-
tation of the Ninoy Aquino International Airport Pasenger Terminal III project by performing the
acts that are essential to the operation of the said International Airport Passenger Terminal
project;
3) RTC Branch 117 is hereby directed, within sixty (60) days from finality of this Decision, to de-
termine the just compensation to be paid to PIATCO by the Government.
The Order dated 7 January 2005 is AFFIRMED in all respects subject to the qualification that the
parties are given ten (10) days from finality of this Decision to file, if they so choose, objections
to the appointment of the commissioners decreed therein.
The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 156093 February 2, 2007
NATIONAL POWER CORP., Petitioner,
vs.
SPOUSES NORBERTO AND JOSEFINA DELA CRUZ, METROBANK, Dasmariñas, Cavite Branch,
REYNALDO FERRER, and S.K. DYNAMICS MANUFACTURER CORP., Respondents.
DECISION
VELASCO, JR., J.:
The Case
In this petition for review under Rule 45 of the Rules of Court, petitioner National Power Corpo-
1 mercial area, situated in the northern section of the Municipality of Dasmariñas which was
ration (NAPOCOR) seeks to annul and set aside the November 18, 2002 Decision of the Court
2 transversed [sic] by Gen. Emilio Aguinaldo Highway [where] several residential subdivisions and
of Appeals (CA) in CA-G.R. CV No. 67446, which affirmed the December 28, 1999 Order of the
Imus, Cavite Regional Trial Court (RTC), Branch XX in Civil Case No. 1816-98, which fixed the fair
market value of the expropriated lots at PhP 10,000.00 per square meter.
The Facts
Petitioner NAPOCOR is a government-owned and controlled corporation created under Repub-
lic Act No. 6395, as amended, with the mandate of developing hydroelectric power, producing
transmission lines, and developing hydroelectric power throughout the Philippines. NAPOCOR
decided to acquire an easement of right-of-way over portions of land within the areas of
Dasmariñas and Imus, Cavite for the construction and maintenance of the proposed
3
Dasmariñas-Zapote 230 kV Transmission Line Project.
4 Community centers such as, [sic] churches, public markets, shopping malls, banks and gasoline
On November 27, 1998, petitioner filed a Complaint for eminent domain and expropriation of
an easement of right-of-way against respondents as registered owners of the parcels of land
sought to be expropriated, which were covered by Transfer Certificates of Title (TCT) Nos. T-
313327, T-671864, and T-454278. The affected areas were 51.55, 18.25, and 14.625 square me-
ters, respectively, or a total of 84.425 square meters.
After respondents filed their respective answers to petitioner’s Complaint, petitioner deposited
PhP 5,788.50 to cover the provisional value of the land in accordance with Section 2, Rule 67 of
5
the Rules of Court. Then, on February 25, 1999, petitioner filed an Urgent Ex-Parte Motion for
the Issuance of a Writ of Possession, which the trial court granted in its March 9, 1999 Order.
The trial court issued a Writ of Possession over the lots owned by respondents spouses de la
Cruz and respondent Ferrer on March 10, 1999 and April 12, 1999, respectively.
However, the trial court dropped the Dela Cruz spouses and their mortgagee, Metrobank, as
6 property is good for residential and commercial purposes.
parties-defendants in its May 11, 1999 Order, in view of the Motion to Intervene filed by re-
spondent/intervenor Virgilio M. Saulog, who claimed ownership of the land sought to be expro-
priated from respondents spouses Dela Cruz.
On June 24, 1999, the trial court terminated the pre-trial in so far as respondent Ferrer was con-
cerned, considering that the sole issue was the amount of just compensation, and issued an Or-
der directing the constitution of a Board of Commissioners with respect to the property of re-
spondent S.K. Dynamics. The trial court designated Mr. Lamberto C. Parra, Cavite Provincial As-
sessor, as chairman, while petitioner nominated the Municipal Assessor of Dasmariñas, Mr. Re-
galado T. Andaya, as member. Respondent S.K. Dynamics did not nominate any commissioner.
As to the just compensation for the property of Saulog, successor-in-interest of the Dela Cruz
spouses, the trial court ordered the latter and petitioner to submit their compromise agree-
ment.
The commissioners conducted an ocular inspection of S.K. Dynamics’ property, and on October
8, 1999, they submitted a report to the trial court, with the following pertinent findings:
In arriving our [sic] estimate of values our studies and analysis include the following:
I. PROPERTY LOCATION
As shown to us on-site during our ocular inspection, the appraised property is land only, identi-
fied as the area affected by the construction of the National Power Corporation (NPC)
Dasmariñas-Zapote 230KV Transmission Lines Project, located within Barangay Salitran,
Dasmariñas, Cavite registered in the name of S.K. Dynamic[s] Manufacture[r], Corp., under
Transfer Certificate of Title No. T-454278.
II. NEIGHBORHOOD DESCRIPTION
The neighborhood particularly in the immediate vicinity is within a mixed residential and com-
commercial establishment[s] are located.
Considered as some of the important improvements [on] the vicinity are (within 1.5 radius)
Orchard Golf and Country Club
Golden City Subdivision
Southfield Subdivisions
Arcontica Sports Complex
Max’s Restaurant
Waltermart Shopping Mall
UMC Medical Center
Several savings and Commercial Banks as well as several Gasoline stations.
stations are easily accessible from the subject real properties.
Convenience facilities such as electricity, telephone service as well as pipe potable water supply
system are all available along Gen. Emilio Aguinaldo Highway.
Public transportation consisting of passenger jeepneys and buses as well taxicabs are [sic] regu-
larly available along Gen. E. Emilio Aguinaldo Highway [sic].
xxxx
IV. HIGHEST AND MOST PROFITABLE USE
xxxx
The subject property is situated within the residential/commercial zone and considering the
area affected and taking into consideration, their location, shape, lot topography, accessibility
and the predominant uses of properties in the neighborhood, as well as the trend of land devel-
opments in the vicinity, we are on the opinion that the highest and most profitable use of the
V. VALUATION OF LAND MARKET DATA
xxxx
Based on the analysis of data gathered and making the proper adjustments with respect to the
location, area, shape, accessibility, and the highest and best use of the subject properties, it is
the opinion of the herein commissioners that the fair market value of the subject real proper-
7
ties is P10,000.00 per square meter, as of this date, October 05, 1999.
Thus, both commissioners recommended that the property of S.K. Dynamics to be expropriated
by petitioner be valued at PhP 10,000.00 per square meter.
The records show that the commissioners did not afford the parties the opportunity to intro-
duce evidence in their favor, nor did they conduct hearings before them. In fact, the commis-
sioners did not issue notices to the parties to attend hearings nor provide the concerned parties
the opportunity to argue their respective causes.
Upon the submission of the commissioners’ report, petitioner was not notified of the comple-
tion or filing of it nor given any opportunity to file its objections to it.
On December 1, 1999, respondent Ferrer filed a motion adopting in toto the commissioners’ re-
8
port with respect to the valuation of his property. On December 28, 1999, the trial court con-
sequently issued the Order approving the commissioners’ report, and granted respondent Fer-
rer’s motion to adopt the subject report. Subsequently, the just compensation for the disparate
properties to be expropriated by petitioner for its project was uniformly pegged at PhP
10,000.00 per square meter.
Incidentally, on February 11, 2000, respondent S.K. Dynamics filed a motion informing the trial
court that in addition to the portion of its property covered by TCT No. T-454278 sought to be
expropriated by petitioner, the latter also took possession of an 8.55-square meter portion of
S.K. Dynamics’ property covered by TCT No. 503484 for the same purpose––to acquire an ease-
ment of right-of-way for the construction and maintenance of the proposed Dasmariñas-Zapote
230 kV Transmission Line Project. Respondent S.K. Dynamics prayed that said portion be in-
cluded in the computation of the just compensation to be paid by petitioner.
On the same date, the Imus, Cavite RTC granted S.K. Dynamics’ motion to have the 8.55-square
meter portion of its property included in the computation of just compensation.1awphi1.net
The Ruling of the Regional Trial Court
As previously stated, in its December 28, 1999 Order, the trial court fixed the just compensation
to be paid by petitioner at PhP 10,000.00 per square meter. The relevant portion of the said Or-
der reads as follows:
On October 8, 1999, a Commissioner’s Valuation Report was submitted in Court by the Provin-
cial Assessor of Cavite and by the Municipal Assessor of Dasmariñas, Cavite. Quoting from said
Report, thus:
"Based on the analysis of data gathered and making the proper adjustments with respect to lo-
cation, area, shape, accessibility, and the highest and best use of the subject properties, it is the
opinion of herein commissioners that the fair market value of the subject real properties is
₧10,000.00 per square meter, as of this date, October 05, 1999."
Finding the opinion of the Commissioners to be in order, this Court approves the same. Accord-
ingly, the Motion filed by [respondent] Reynaldo Ferrer adopting said valuation report is
granted.
9
SO ORDERED.
On January 20, 2000, petitioner filed a Motion for Reconsideration of the abovementioned Or-
der, but said motion was denied in the trial court’s March 23, 2000 Order, which states that:
The basis of [petitioner] in seeking to set aside the Order dated December 28, 1999 is its claim
that the Commissioners’ Report fixing the just compensation at P10,000.00 per square meter is
exorbitant, unjust and unreasonable. To support its contention, [petitioner] invoked Provincial
Appraisal Committee Report No. 08-95 dated October 25, 1995 which set the just compensa-
tion of lots along Gen. Aguinaldo Highway at P3,000.00 per sq.m. only.
By way of opposition, [respondent] Dynamics countered that the valuation of a lot under expro-
priation is reckoned at the time of its taking by the government. And since in the case at bar,
the writ of possession was issued on March 10, 1999, the price or value for 1999 must be the
one to be considered.
We find for the defendant.
The PAR Resolution alluded to by [petitioner] was passed in 1995 or four (4) years [before] the
lot in question was taken over by the government. This explains why the price or cost of the
land has considerably increased. Besides, the valuation of P10,000.00 per sq.m. was the one
recommended by the commissioner designated by [petitioner] itself and concurred in by the
Provincial Assessor of Cavite.
Be that as it may, the Motion for Reconsideration is denied.
10
SO ORDERED.
The Ruling of the Court of Appeals
Unsatisfied with the amount of just compensation, petitioner filed an appeal before the CA. In
resolving the appeal, the CA made the following findings:
We find nothing on record which would warrant the reversal of the Order dated December 28,
1999 of the court a quo.
[Petitioner] submits that the order of the court a quo adopting the Commissioners [sic] Valua-
tion Report, fixing the just compensation for the subject lots in the amount of P10,000.00 per
square meter is exhorbitant [sic], highly speculative and without any basis. In support thereto,
[petitioner] presented before the court a quo the Provincial Appraisal Committee of Cavite Res-
olution No. 08-95 x x x which fixed the fair market value of lots located along Gen. Aguinaldo
Highway, Dasmariñas, Cavite, which incidentally includes the lots subject of this proceedings
[sic], in the amount of P3,000.00 per square meter.
We do not agree.
"The nature and character of the land at the time of its taking is the principal criterion to deter-
mine just compensation to the land owner." (National Power Corporation vs. Henson, 300 SCRA
751-756).
11
The CA then cited Section 4, Rule 67 of the 1997 Rules of Civil Procedure to explain why Reso-
lution No. 08-95 could not "be used as [a] basis for determining the just compensation of the
subject lots, which by reason of the changed commercial conditions in the vicinity, could have
increased its value greater than its value three (3) years ago." The said resolution, which fixed
the fair market value of the lots, including that of the disputed lots along Gen. Aguinaldo High-
way, was approved on October 25, 1995, while petitioner filed the Complaint for the expropria-
tion of the disputed lots on November 27, 1998, or more than three (3) years had elapsed after
said resolution was approved. Reflecting on the commissioners’ report, the CA noted that since
the property underwent important changes and improvements, "the highest and most profit-
able use of the property is good for residential and commercial purposes."
As regards the commissioners’ failure to conduct a hearing "to give the parties the opportunity
to present their respective evidence," as alleged by petitioner, the CA opined that "[t]he filing
by [petitioner] of a motion for reconsideration accorded it ample opportunity to dispute the
findings of the commissioners, so that [petitioner] was as fully heard as there might have been
hearing actually taken place x x x."
The CA ultimately rendered its judgment, as follows:
WHEREFORE, premises considered, the present appeal is hereby DISMISSED for lack of merit.
The Order dated December 28, 1999 and March 23, 2000 of the court a quo are hereby AF-
FIRMED by this Court.
12
SO ORDERED.
Significantly, petitioner did not file a Motion for Reconsideration of the CA November 18, 2002
Decision, but it directly filed a petition for review before us.
The Issues
In this petition for review, the issues are the following:
PETITIONER WAS DENIED DUE PROCESS WHEN IT WAS NOT ALLOWED TO PRESENT EVIDENCE
ON THE REASONABLE VALUE OF THE EXPROPRIATED PROPERTY BEFORE THE BOARD OF COM-
MISSIONERS.
THE VALUATION OF JUST COMPENSATION HEREIN WAS NOT BASED FROM THE EVIDENCE ON
13
RECORD AND OTHER AUTHENTIC DOCUMENTS.
The Court’s Ruling
We find this petition meritorious.
It is beyond question that petitions for review may only raise questions of law which must be
14
distinctly set forth; thus, this Court is mandated to only consider purely legal questions in this
petition, unless called for by extraordinary circumstances.
In this case, petitioner raises the issue of denial of due process because it was allegedly de-
prived of the opportunity to present its evidence on the just compensation of properties it
wanted to expropriate, and the sufficiency of the legal basis or bases for the trial court’s Order
on the matter of just compensation. Unquestionably, a petition for review under Rule 45 of the
Rules of Court is the proper vehicle to raise the issues in question before this Court.
In view of the significance of the issues raised in this petition, because this case involves the ex-
penditure of public funds for a clear public purpose, this Court will overlook the fact that peti-
tioner did not file a Motion for Reconsideration of the CA November 18, 2002 Decision, and
brush aside this technicality in favor of resolving this case on the merits.
First Issue: Petitioner was deprived of due process when it was not given the opportunity to
present evidence before the commissioners
It is undisputed that the commissioners failed to afford the parties the opportunity to introduce
evidence in their favor, conduct hearings before them, issue notices to the parties to attend
hearings, and provide the opportunity for the parties to argue their respective causes. It is also
undisputed that petitioner was not notified of the completion or filing of the commissioners’ re-
port, and that petitioner was also not given any opportunity to file its objections to the said re-
port.
A re-examination of the pertinent provisions on expropriation, under Rule 67 of the Rules of
Court, reveals the following:
SEC. 6. Proceedings by commissioners.—Before entering upon the performance of their duties,
the commissioners shall take and subscribe an oath that they will faithfully perform their duties
as commissioners, which oath shall be filed in court with the other proceedings in the case. Evi-
dence may be introduced by either party before the commissioners who are authorized to ad-
minister oaths on hearings before them, and the commissioners shall, unless the parties con-
sent to the contrary, after due notice to the parties to attend, view and examine the property
sought to be expropriated and its surroundings, and may measure the same, after which either
party may, by himself or counsel, argue the case. The commissioners shall assess the conse-
quential damages to the property not taken and deduct from such consequential damages the
consequential benefits to be derived by the owner from the public use or purpose of the prop-
erty taken, the operation of its franchise by the corporation or the carrying on of the business
of the corporation or person taking the property. But in no case shall the consequential benefits
assessed exceed the consequential damages assessed, or the owner be deprived of the actual
value of his property so taken.
SEC. 7. Report by commissioners and judgment thereupon.—The court may order the commis-
sioners to report when any particular portion of the real estate shall have been passed upon by
them, and may render judgment upon such partial report, and direct the commissioners to pro-
ceed with their work as to subsequent portions of the property sought to be expropriated, and
may from time to time so deal with such property. The commissioners shall make a full and ac-
curate report to the court of all their proceedings, and such proceedings shall not be effectual
until the court shall have accepted their report and rendered judgment in accordance with their
recommendations. Except as otherwise expressly ordered by the court, such report shall be
filed within sixty (60) days from the date the commissioners were notified of their appointment,
which time may be extended in the discretion of the court. Upon the filing of such report, the
clerk of the court shall serve copies thereof on all interested parties, with notice that they are
allowed ten (10) days within which to file objections to the findings of the report, if they so de-
sire.
SEC. 8. Action upon commissioners’ report.—Upon the expiration of the period of ten (10) days
referred to in the preceding section, or even before the expiration of such period but after all
the interested parties have filed their objections to the report or their statement of agreement
therewith, the court may, after hearing, accept the report and render judgment in accordance
therewith; or, for cause shown, it may recommit the same to the commissioners for further re-
port 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 part; and it may make such order or render such judgment as
shall secure to the plaintiff the property essential to the exercise of his right of expropriation,
and to the defendant just compensation for the property so taken.
Based on these provisions, it is clear that in addition to the ocular inspection performed by the
two (2) appointed commissioners in this case, they are also required to conduct a hearing or
hearings to determine just compensation; and to provide the parties the following: (1) notice of
the said hearings and the opportunity to attend them; (2) the opportunity to introduce evi-
dence in their favor during the said hearings; and (3) the opportunity for the parties to argue
their respective causes during the said hearings.
The appointment of commissioners to ascertain just compensation for the property sought to
be taken is a mandatory requirement in expropriation cases. In the instant expropriation case,
where the principal issue is the determination of just compensation, a hearing before the com-
missioners is indispensable to allow the parties to present evidence on the issue of just com-
pensation. While it is true that the findings of commissioners may be disregarded and the trial
court may substitute its own estimate of the value, the latter may only do so for valid reasons,
that is, where the commissioners have applied illegal principles to the evidence submitted to
them, where they have disregarded a clear preponderance of evidence, or where the amount
allowed is either grossly inadequate or excessive. Thus, "trial with the aid of the commissioners
15
is a substantial right that may not be done away with capriciously or for no reason at all."
In this case, the fact that no trial or hearing was conducted to afford the parties the opportunity
to present their own evidence should have impelled the trial court to disregard the commis-
sioners’ findings. The absence of such trial or hearing constitutes reversible error on the part of
the trial court because the parties’ (in particular, petitioner’s) right to due process was violated.
The Court of Appeals erred in ruling that the petitioner was not deprived of due process when it
was able to file a motion for reconsideration
In ruling that petitioner was not deprived of due process because it was able to file a Motion for
Reconsideration, the CA had this to say:
[Petitioner], further, asserts that "the appointed commissioners failed to conduct a hearing to
give the parties the opportunity to present their respective evidence. According to [petitioner],
the Commissioners Valuation Report was submitted on October 8, 1999 in violation of the ap-
pellant’s right to due process as it was deprived of the opportunity to present evidence on the
determination of the just compensation."
We are not persuaded.
The filing by [petitioner] of a motion for reconsideration accorded it ample opportunity to dis-
pute the findings of the commissioners, so that [petitioner] was as fully heard as there might
have been hearing actually taken place. "Denial of due process cannot be successfully invoked
by a party who has had the opportunity to be heard on his motion for reconsideration." (Vda.
16
De Chua vs. Court of Appeals, 287 SCRA 33, 50).
In this respect, we are constrained to disagree with the CA ruling, and therefore, set it aside.
While it is true that there is jurisprudence supporting the rule that the filing of a Motion for Re-
consideration negates allegations of denial of due process, it is equally true that there are very
specific rules for expropriation cases that require the strict observance of procedural and sub-
17
stantive due process, because expropriation cases involve the admittedly painful deprivation
of private property for public purposes and the disbursement of public funds as just compensa-
tion for the private property taken. Therefore, it is insufficient to hold that a Motion for Recon-
sideration in an expropriation case cures the defect in due process.
As a corollary, the CA’s ruling that "denial of due process cannot be successfully invoked by a
party who has had the opportunity to be heard on his motion for reconsideration," citing Vda.
de Chua v. Court of Appeals, is not applicable to the instant case considering that the cited case
involved a lack of notice of the orders of the trial court in granting letters of administration. It
was essentially a private dispute and therefore, no public funds were involved. It is distinct from
this expropriation case where grave consequences attached to the orders of the trial court
when it determined the just compensation.
The Court takes this opportunity to elucidate the ruling that the opportunity to present evi-
dence incidental to a Motion for Reconsideration will suffice if there was no chance to do so
during the trial. We find such situation to be the exception and not the general rule. The oppor-
tunity to present evidence during the trial remains a vital requirement in the observance of due
process. The trial is materially and substantially different from a hearing on a Motion for Recon-
sideration. At the trial stage, the party is usually allowed several hearing dates depending on
the number of witnesses who will be presented. At the hearing of said motion, the trial court
may not be more accommodating with the grant of hearing dates even if the movant has many
available witnesses. Before the decision is rendered, a trial court has an open mind on the mer-
its of the parties’ positions. After the decision has been issued, the trial court’s view of these
positions might be inclined to the side of the winning party and might treat the Motion for Re-
consideration and the evidence adduced during the hearing of said motion perfunctorily and in
a cavalier fashion. The incident might not receive the evaluation and judgment of an impartial
or neutral judge. In sum, the constitutional guarantee of due process still requires that a party
should be given the fullest and widest opportunity to adduce evidence during trial, and the
availment of a motion for reconsideration will not satisfy a party’s right to procedural due proc-
ess, unless his/her inability to adduce evidence during trial was due to his/her own fault or neg-
ligence.
Second Issue: The legal basis for the determination of just compensation was insufficient
In this case, it is not disputed that the commissioners recommended that the just compensation
be pegged at PhP 10,000.00 per square meter. The commissioners arrived at the figure in ques-
tion after their ocular inspection of the property, wherein they considered the surrounding
structures, the property’s location and, allegedly, the prices of the other, contiguous real prop-
erties in the area. Furthermore, based on the commissioners’ report, the recommended just
compensation was determined as of the time of the preparation of said report on October 5,
1999.
In B.H. Berkenkotter & Co. v. Court of Appeals, we held, thus:
Just compensation is defined as the full and fair equivalent of the property sought to be expro-
priated. The measure is not the taker’s gain but the owner’s loss. The compensation, to be just,
must be fair not only to the owner but also to the taker. Even as undervaluation would deprive
the owner of his property without due process, so too would its overvaluation unduly favor him
to the prejudice of the public.
To determine just compensation, the trial court should first ascertain the market value of the
property, to which should be added the consequential damages after deducting therefrom the
consequential benefits which may arise from the expropriation. If the consequential benefits
exceed the consequential damages, these items should be disregarded altogether as the basic
value of the property should be paid in every case.
The market value of the property is the price that may be agreed upon by parties willing but not
compelled to enter into the contract of sale. Not unlikely, a buyer desperate to acquire a piece
of property would agree to pay more, and a seller in urgent need of funds would agree to ac-
cept less, than what it is actually worth. x x x
Among the factors to be considered in arriving at the fair market value of the property are the
cost of acquisition, the current value of like properties, its actual or potential uses, and in the
particular case of lands, their size, shape, location, and the tax declarations thereon.
It is settled that just compensation is to be ascertained as of the time of the taking, which usu-
ally coincides with the commencement of the expropriation proceedings. Where the institution
of the action precedes entry into the property, the just compensation is to be ascertained as of
18
the time of the filing of the complaint.
We note that in this case, the filing of the complaint for expropriation preceded the petitioner’s
entry into the property.
Therefore, it is clear that in this case, the sole basis for the determination of just compensation
was the commissioners’ ocular inspection of the properties in question, as gleaned from the
commissioners’ October 5, 1999 report. The trial court’s reliance on the said report is a serious
error considering that the recommended compensation was highly speculative and had no
strong factual moorings. For one, the report did not indicate the fair market value of the lots oc-
cupied by the Orchard Golf and Country Club, Golden City Subdivision, Arcontica Sports Com-
plex, and other business establishments cited. Also, the report did not show how convenience
facilities, public transportation, and the residential and commercial zoning could have added
value to the lots being expropriated.
Moreover, the trial court did not amply explain the nature and application of the "highest and
best use" method to determine the just compensation in expropriation cases. No attempt was
made to justify the recommended "just price" in the subject report through other sufficient and
reliable means such as the holding of a trial or hearing at which the parties could have had ad-
equate opportunity to adduce their own evidence, the testimony of realtors in the area con-
cerned, the fair market value and tax declaration, actual sales of lots in the vicinity of the lot
being expropriated on or about the date of the filing of the complaint for expropriation, the
pertinent zonal valuation derived from the Bureau of Internal Revenue, among others.
More so, the commissioners did not take into account that the Asian financial crisis in the sec-
ond semester of 1997 affected the fair market value of the subject lots. Judicial notice can be
taken of the fact that after the crisis hit the real estate market, there was a downward trend in
the prices of real estate in the country.
Furthermore, the commissioners’ report itself is flawed considering that its recommended just
compensation was pegged as of October 5, 1999, or the date when the said report was issued,
and not the just compensation as of the date of the filing of the complaint for expropriation, or
as of November 27, 1998. The period between the time of the filing of the complaint (when just
compensation should have been determined), and the time when the commissioners’ report
recommending the just compensation was issued (or almost one [1] year after the filing of the
complaint), may have distorted the correct amount of just compensation.
Clearly, the legal basis for the determination of just compensation in this case is insufficient as
earlier enunciated. This being so, the trial court’s ruling in this respect should be set aside.
WHEREFORE, the petition is GRANTED. The December 28, 1999 and March 23, 2000 Orders of
the Imus, Cavite RTC and the November 18, 2002 Decision of the CA are hereby SET ASIDE. This
case is remanded to the said trial court for the proper determination of just compensation in
conformity with this Decision. No costs.
SO ORDERED.
G.R. No. 155407 November 11, 2008
PHILIPPINE NATIONAL OIL COMPANY, petitioner
vs.
LEONILO A. MAGLASANG and OSCAR S. MAGLASANG, respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assail-
1
ing the January 23, 2002 Decision of the Court of Appeals (CA) in CA-G.R. CV No. 67341, as reit-
2 adopted by appraisers is included in the computations.
erated in its Resolution of September 20, 2002, affirming with modification the Joint Judg-
3 xxx
ment dated December 16, 1999 of the Regional Trial Court (RTC) of Ormoc City, Branch 35,
in Civil Case No. 3267-O and Civil Case No. 3273-O.
On October 25, 1994, the Philippine National Oil Company (PNOC) filed a complaint for eminent
domain against respondent Oscar S. Maglasang, the registered owner of a 63,333-square meter
parcel of land identified as Lot No. 11900 and covered by TCT No. T-4097. The case was dock-
eted at the RTC, Ormoc City, Leyte as Civil Case No. 3267-O.
On November 10, 1994, the PNOC filed another expropriation complaint, this time against re-
spondent Leolino A. Maglasang, owner of the 98,206-square meter parcel of land identified as
Lot No. 11907, covered by OCT No. P-18869. The case was docketed with the same RTC as Civil
Case No. 3273-O.
The subject parcels of land are located at Lim-ao, Municipality of Kananga, Leyte and to be used
by the PNOC in the construction and operation of the 125MW Upper Mahiao Geothermal
Power Plant Project.
The RTC issued writs of possession over Lot No. 11907 and Lot No. 11900 on December 5, 1994
and December 13, 1994, respectively, after PNOC posted the required provisional deposit.
On March 21, 1997, upon finality of the orders of condemnation in both expropriation cases,
the trial court appointed three commissioners to ascertain and make a recommendation on the
just compensation for the condemned lots in accordance with Section 5, Rule 67 of the Rules of
Court. Those appointed were: Branch Clerk of Court Atty. Bibiano Reforzado, City Assessor Bric-
cio D. Supremo and businessman Augusto T. Pongos.
Upon conduct of hearing and ocular inspections and reception of the parties' position papers
and documentary evidence, Atty. Reforzado submitted a Commissioners' Report dated Febru-
ary 18, 1999, attaching therewith the different valuations recommended by the three commis-
4 consistent rule has always been that the owner of the property should be compensated only for
sioners. City Assessor Supremo recommended the price of P 1,000.00 per square meter, Clerk
5
of Court Reforzado pegged the value of the lots at P 900.00 per square meter. In his report,
Mr. Pongos arrived at the lowest valuation of P 400.00 per square meter for the developed area
6 whose property is taken, but to the public, which is to pay for it.' Hence, the price level for 1994
and P 85.00 for the undeveloped area.
Confronted with the commissioners' varying land valuations, the trial court made its own deter-
mination of the just compensation taking into account the range of prices recommended in the
Commissioners' Report and documentary evidence presented by the parties. Setting the reck-
oning period for the computation of the just compensation at the time of the filing of the com-
plaints, the trial court pegged the value of the two lots at P 300.00 per square meter. However,
in the same decision, the trial court further increased said initial valuation to P 700.00 per
square meter to compensate for what it termed as inflation factor and adjustment factor. Rely-
7
ing on the case of Cosculluela v. Court of Appeals, the trial court ruled:
After examining the data, the Court would like to take the mean position but similar to the ones
taken by the Commissioners. For this, therefore, the Commissioners' Report is hereby accepted.
From the reckoning date of 1994, the Court wants to apply a three-year period therefrom to as-
certain the prevailing price. The court has in mind the dictum in Cosculluela vs. Court of Appeals
(164 SCRA 393) which runs as follows: ‘just compensation means not only the correct determi-
nation of the amount to be paid to the owner of the land but also the payment of the land with-
in a reasonable time from its taking. Without prompt payment, compensation cannot be consid-
ered just for the property owner is made to suffer the consequence of being immediately de-
prived of his land.'
The Court thus believes an inflation factor is to be applied in the computation considering the
time that elapsed since late 1994 up to the present. Also an adjustment factor commonly
Wherefore, after considering all the foregoing, judgment is hereby rendered fixing the amount
of P 700.00 per square meter as just compensation for Lot 11900 under TCT T-4097 in Civil Case
No. 3267-0 or the amount of P 44,333,100 and for Lot 11907 under OCT No. P-18869 in Civil
Case No. 3273-0 or the amount of P 68,744,200 to be paid by the plaintiff to the respective de-
fendants plus cost of the proceedings.
SO ORDERED.
From the foregoing decision, both parties filed their respective appeals with the CA.
8
On January 23, 2002, the CA rendered the herein challenged decision which modified the deci-
sion of the trial court insofar as it reduced the just compensation for the subject lots
from P 700.00 to P 300.00. In arriving at such a decision, the CA ratiocinated, thus:
We are of the opinion that the trial court reversibly erred in taking into account such ‘inflation
factor' and ‘adjustment factor' for the determination of just compensation in this case. It has
misapplied the ruling in Cosculluela by substituting such ‘inflation factor' and or ‘adjustment
factor' for the legally mandated interest in the price to be paid as just compensation in expro-
priation cases.
xxx Nowhere in the said decision may it be inferred that damages for such delay in the payment
of just compensation, other than the legal interest provided by law, may be granted in addition
or considered in computing the amount of just compensation such as the ‘inflation factor' ap-
plied by the trial court. On the contrary, our Supreme Court has even ruled that the de facto de-
valuation of the peso is not a factor in land valuation for purposes of expropriation. Therefore,
there is absolutely no legal basis for the trial court's application of an ‘inflation factor' and ‘ad-
justment factor' in the determination of just compensation in these expropriation cases. The
what he actually loses; it is not intended that his compensation shall extend beyond his loss or
injury. And what he loses is only the actual value of the property at the time it is taken. This is
the only way that compensation to be paid can be truly just, i.e., just ‘not only to the individual
when the property was taken by plaintiff-appellant should be the proper valuation for defend-
ant-appellants' properties and not their subsequent increased value after the passage of time.
xxx
WHEREFORE, premises considered, the present appeals are hereby PARTLY GRANTED. The Joint
Judgment appealed from in Civil Case Nos. 3267-O and 3273-O is hereby AFFIRMED with MODI-
FICATIONS in that the just compensation for the expropriated properties is hereby ordered to
be paid to defendant-appellants in the amount of P 300.00 per square meter, or the total
amounts of P18,999,900.00 to defendant-appellant Oscar S. Maglasang for Lot No. 11900
and P 29,461,800.00 to defendant-appellant Leolino A. Maglasang for Lot No. 11907, with inter-
est at the legal rate of 6% per annum from October 25, 1994 and November 10, 1994, respec-
tively, until full payment is made.
No pronouncement as to costs.
SO ORDERED
Still unsatisfied, petitioner filed a motion for reconsideration of the foregoing decision but its
motion was denied by the CA in the resolution of September 20, 2002.
Unable to accept the CA's decision for allegedly being contrary to law and established jurispru-
dence, PNOC is now before the Court with the following grounds in support of its petition:
A. CONTRARY TO THE RULING OF THE HONORABLE COURT OF APPEALS, THE INITIAL VALUA-
TION OF THE TRIAL COURT OF P 300.00 PER SQUARE METER IS NOT WELL SUPPORTED BY THE
EVIDENCE ON RECORD AS REPRESENTING THE FAIR MARKET VALUE OF THE EXPROPRIATED
PARCELS OF LAND.
B. LIKEWISE CONTRARY TO THE RULING OF THE HONORABLE COURT OF APPEALS, THE SUBJECT
PROPERTIES WERE AGRICULTURAL, NOT INDUSTRIAL, PARCELS OF LAND AT THE TIME THEY
WERE TAKEN FOR PUBLIC USE.
As we see it, other than the question as to the precise time the fixing of just compensation
should be reckoned, the rest of petitioner's arguments dwell solely on questions of fact.
In expropriation proceedings, the value of the land and its character at the time it was taken by
9
the government are the criteria for determining just compensation. This is so because, there
are instances when the expropriating agency takes over the property prior to the expropriation
10
suit, in which situation just compensation shall be determined as of the time of taking. The
11
reason for the rule, as pointed out in Republic v. Lara, is that –
(W)here property is taken ahead of the filing of the condemnation proceedings, the value
thereof may be enchanced by the public purpose for which it is taken; the entry by the plaintiff
upon the property may have depreciated its value thereby; or, there may have been a natural
increase in the value of the property from the time the complaint is filed, due to general eco-
nomic conditions. The owner of private property should be compensated only for what he ac-
tually loses; it is not intended that his compensation shall extend beyond his loss or injury. And
what he loses is only the actual value of his property at the time it is taken. This is the only way
that compensation to be paid can be truly just; i.e., 'just not only to the individual whose prop-
erty is taken,' 'but to the public, which is to pay for it.
Here, petitioner insists that contrary to the findings of the two courts below, the determination
of just compensation should be reckoned prior to the time of the filing of the complaint for ex-
propriation. According to petitioner in Civil Case No. 3267-O, petitioner took possession of the
land on January 1, 1992 when PNOC leased the same from its administrator as evidenced by a
12
Lease Agreement for the period of January 1, 1992 to December 31, 1992. Thus, taking, for
purposes of computing just compensation, should have been reckoned from January 1, 1992.
We are not persuaded.
In the context of the State's inherent power of eminent domain, there is "taking" where the
owner is actually deprived or dispossessed of his property; where there is a practical destruc-
tion or a material impairment of the value of his property; or when he is deprived of the ordi-
13
nary use thereof.
14
In Republic v. Castellvi, this Court held that there is a "taking" 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 de-
prive him of all beneficial enjoyment thereof. Thus, in that case, we rejected the State's conten-
tion that a lease on a year to year basis can give rise to a permanent right to occupy, since by
express legal provision a lease made for a determinate time, as was the lease of Castellvi's land,
ceases upon the day fixed, without need of a demand. Neither can it be said that the right of
eminent domain may be exercised by simply leasing the premises to be expropriated. Where,
as here, the owner was compensated and not deprived of the ordinary and beneficial use of his
property by its being diverted to public use, there is no taking within the constitutional sense.
In fixing the just compensation reckoned from 1994, the trial court took the Commissioners' Re-
port into consideration:
II. Time of the Taking.
In both cases the time of the taking may be reckoned in 1994. For Lot 11900, on October 24,
1994, the date of the filing of the complaint although the plaintiff took possession of the prop-
erty in 1991 due to a lease contract executed between plaintiff and defendant yet the intention
to expropriate was manifested only upon the filing of the complaint (NPC vs. CA and Macapan-
ton Magondata, 254 SCRA 577).
For Lot 11907, the time of the taking shall be reckoned on November 10, 1994 where the insti-
tution of the case precedes entry of the property, the just compensation is to be ascertained as
15
of the filing of the complaint.
Accordingly, we quote with approval the trial court's ruling on this point:
Contrary to plaintiff's position, the lease in 1992 should not be construed as taking in the consti-
tutional sense. What constitutes ‘taking' is when the property is ‘directly appropriated' and not
to ‘consequential injuries resulting from the exercise of lawful power' (Tañada and Carreon, Po-
litical Law of the Philippines, Vol. Two, 1962 First Edition, Manila Central Book Supply, Inc. 1
p.90, p. 92)
Following the doctrine in Castellvi, the trial court committed no error when it reckoned the
time of taking of the subject properties from the date of filing of petitioner's complaints for
eminent domain.
Petitioner would next argue that the subject lots were erroneously classified as industrial land
when in fact they were agricultural land at the time they were taken for expropriation.
At the outset, we reiterate that the Court recognizes the power of a local government to reclas-
16
sify and convert lands through local ordinance.
On this score, we quote the findings of the commissioners as contained in their report on the
ocular inspection conducted on October 29, 1997, and summarized by the CA, to wit:
xxx (1) Lot 11907 was only recently flattened, there are no more trees, no more plants except
cogon grass and other wild plants; Lot 11900 has also been flattened in the middle of which are
two reinjection pumps, and also found therein are some fruit bearing coconut trees; (2) adja-
cent lots are partly forested areas; (3) the trees in both lots had been felled, including fruit
bearing coconut trees, but the number of those felled are unknown, there being no records
available; what remains are cogon grass and other wild plants and the traces of rivulets created
by torrential rains. The terrain is rolling and mountainous although these areas have long been
developed and used by the PNOC before the filing of the cases, which though not traversed di-
rectly by the provincial or national roads, are already accessible by all-weather roads and are
adjacent to different PNOC buildings.
The Commissioners' Report discussed in detail the circumstances which led to the reclassifica-
tion of subject lots from agricultural to industrial land upon declaration of the city of Ormoc and
the town of Kananga that the areas around the geothermal plants are industrial zones. The
schedule of values prepared by the municipal assessor which classified the subject lots as indus-
trial property was also appended to the said report submitted to the trial court.
Taking its cue from the Commissioners' Report, the trial court took into consideration among
others the lots' classification as industrial land in fixing the just compensation. Throughout the
entire proceedings in the trial court, no objection was proffered by petitioner on this matter.
As it were, the Court cannot but agree with the CA when it ruled that petitioner's belated objec-
tion on appeal of the classification of the subject lots could no longer be entertained. For the
17
same reason the Court refuses to consider petitioner's Manifestation stating that a property
adjacent to the subject lots was purchased at P 80.00 per square meter and urging the Court to
peg the value of the subject properties at the same amount. Suffice it to state that issues raised
for the first time on appeal and not raised timely in the proceedings in the lower court are
barred by estoppel. Matters, theories or arguments not brought out in the original proceedings
cannot be considered on review or appeal where they are raised for the first time. To consider
the alleged facts and arguments raised belatedly would amount to trampling on the basic prin-
18
ciples of fair play, justice and due process.
Finally, on the basis of all its arguments, petitioner asks this Court to set aside the lower courts'
factual finding as to the just compensation for the subject expropriated lots.
It must be stressed that only questions of law may be raised in petitions to review decisions of
the CA filed before this Court. The factual findings of the CA affirming those of the trial court
are final and conclusive. They cannot be reviewed by this Court, save only in the following cir-
cumstances, which we find absent in the instant case: (1) when the factual conclusion is a find-
ing grounded entirely on speculations, surmises and conjectures; (2) when the inference is man-
ifestly mistaken, absurd or impossible; (3) when there is a grave abuse of discretion; (4) when
the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflict-
ing; (6) when the CA went beyond the issues of the case in making its findings, which are fur-
ther contrary to the admissions of both the appellant and the appellee; (7) when the CA's find-
ings are contrary to those of the trial court; (8) when the conclusions do not cite the specific evi-
dence on which they are based; (9) when the facts set forth in the petition as well as in the peti-
tioner's main and reply briefs are not disputed by the respondents; and (10) when the CA's find-
ings of fact, supposedly premised on the absence of evidence, are contradicted by the evidence
19
on record.
Clearly, petitioner has failed to establish that the present case falls under any of the exceptions
enumerated above. A perusal of the facts and evidence presented does not convince this Court
to deviate from the findings of fact of the two courts below. The lower courts properly appreci-
ated the evidence submitted by both parties as regards the nature of the expropriated lots.
These courts have determined that the lots were industrial at the time of the taking by peti-
tioner for expropriation.
To recapitulate, in denying the instant petition, the Court relies on a well-established doctrine.
Thus, in the present case, the findings of fact of the CA, affirming those of the trial court, can-
not be disturbed, modified or reversed by this Court in a petition for review under Rule 45 of
the Rules of Court.
WHEREFORE, the petition is DENIED and the assailed decision and resolution of the CA are AF-
FIRMED.
SO ORDERED.
G.R. No. 170147 January 30, 2009
REPUBLIC OF THE PHILIPPINES, represented by the PHILIPPINE ECONOMIC ZONE AUTHORITY
(PEZA), Petitioner,
vs.
SPOUSES AGUSTIN and IMELDA CANCIO, Respondents.
DECISION
CORONA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court seeks to set aside the
1
October 17, 2005 decision of the Court of Appeals (CA) in CA-G.R. SP No. 75092.
Petitioner Philippine Economic Zone Authority is a government-owned and controlled corpora-
2
tion created and existing under and by virtue of RA 7916, as amended. It is vested with govern-
3
mental functions, including the power of eminent domain, thus enabling it to acquire private
land within or adjacent to the ecozone for consolidation with land for zone development pur-
4
poses.
5
On January 15, 1979, then President Ferdinand E. Marcos issued Proclamation No. 1811 which
reserved certain parcels of land of the public domain in Lapu Lapu City in favor of petitioner
(then Export Processing Zone Authority or EPZA) for the establishment of the Mactan Export
Processing Zone. However, some of the parcels covered by the proclamation, including that of
respondent spouses Agustin and Imelda Cancio, were private land.
Petitioner eventually laid out the development of the economic zone and subsequently leased
out respondents’ 47,540 sq. m. lot to an investor in the economic zone, Maitland Smith Inc.
(Maitland).
On May 19, 2001, petitioner offered to purchase respondents’ lot at ₱1,100 per sq. m. or
₱52,294,000 for the whole property. The letter containing the offer further instructed respond-
ents "to consider and accept, otherwise we will initiate expropriation proceedings in the proper
court."
Instead of accepting the offer, respondents filed an unlawful detainer case against Maitland in
the Municipal Trial Court of Lapu Lapu City.
Thereafter, petitioner commenced expropriation proceedings for respondents’ property with
6
the Regional Trial Court (RTC) of Lapu Lapu City, Branch 54 on August 27, 2001. Accordingly, it
sought a writ of possession for the property for which it was willing to deposit 10% of the of-
fered amount or a total of ₱5,229,400 with the Land Bank of the Philippines in accordance with
7
Administrative Order (A.O.) No. 50.
8
Respondents, however, filed a motion to require petitioner to comply with RA 8974, specifically
Section 4(a) thereof, which requires that, upon the filing of the complaint for expropriation, the
implementing agency shall immediately pay the owner of the property an amount equivalent
to 100% of the current zonal valuation thereof for purposes of the issuance of a writ of posses-
sion.
In its January 14, 2002 order (first order), the trial court granted respondents’ motion.
Petitioner moved for its reconsideration. It argued that RA 8974 was inapplicable as the pay-
ment required under the law applied only to instances where the property was still in the own-
er’s possession and had yet to be transferred to the government. It could not be validly invoked
when the property was already in the government’s possession, as in this case. It also averred
that it should be made to pay only the price of the land at the time of its taking. Corollarily, if it
was ordered to pay the amount required under RA 8974, it would be unjustly penalized for its
own improvements to the property.
This time, the RTC agreed with petitioner’s position. On February 26, 2002 (second order), the
court a quo granted petitioner’s motion for reconsideration.
Respondents filed a motion for reconsideration, contending that petitioner should make the re-
quired payment under the law because RA 8974, which took effect before the commencement
of the expropriation case, applied to all actions of such nature regardless of whether the gov-
ernment agency was already in possession or not. The court a quo issued its September 5, 2002
order (third order) which reversed its second order and reinstated the first one.
Thereafter, petitioner filed a petition for certiorari in the CA, assailing the first and third orders
of the RTC. The appellate court sustained the RTC’s ruling.
Hence, this petition.
The issue before us is whether or not RA 8974 is applicable to this case for purposes of the issu-
9
ance of the writ of possession. It is petitioner’s stance that it is not. It cited A.O. No. 50 as its le-
gal authority when it offered to purchase respondents’ property in an amount equivalent to ten
10
percent (10%) higher than the zonal value thereof. Consequently, petitioner prayed in its
11
complaint for expropriation that it be issued a writ of possession upon a showing that the
amount equivalent to ten percent (10%) of the offered amount has been duly deposited. Re-
spondents, on the other hand, agree that RA 8974 is the controlling law in this case as the com-
plaint for expropriation was instituted when said law was already in effect.
We deny the petition. RA 8974 governs this case, not A.O. No. 50 as petitioner insists.
A perusal of RA 8974 readily reveals that it applies to instances when the national government
12
expropriates property for national government infrastructure projects. Undeniably, the eco-
nomic zone is a national government project – a matter undisputed by both parties. Also, the
complaint for expropriation was filed only on August 27, 2001 or almost one year after the law
was approved on November 7, 2000. Thus, there is no doubt about its applicability to this case.
We note that this expropriation case is still in its initial stages. The trial court had yet to approve
a writ of possession in petitioner’s favor when the issue of payment of just compensation
cropped up. Both parties seemed to have confused the requirement of paying 100% of the cur-
rent zonal valuation of the property (as a prerequisite to the issuance of a writ of possession)
with the payment of just compensation itself.
13
In its complaint filed in the RTC, petitioner prayed that:
a. A writ of possession be issued in favor of plaintiff respecting its possession, control and dispo-
sition of the land sought to be expropriated including the power or authority to demolish, if
any, improvements thereon, upon showing that the amount equivalent to 10% of the offered
amount has been duly deposited.
14
In their motion to require petitioner to comply with RA 8974, respondents countered that
they:
x x x contest PEZA’s proferred value as it is not a just compensation for the property sought to
be expropriated.
15
When petitioner moved for reconsideration after the RTC granted respondents’ aforemen-
tioned motion, it argued that:
The inapplicability of R. A. No. 8974 is further highlighted by the fact that it requires a deposit
based on the current zonal valuation of the property. To apply such valuation to the instant
case would be to violate the cardinal principle in eminent domain proceedings that the just
compensation for the property should be its fair market value at the time of taking. The na-
ture and character of the land at the time of its taking is the principal criterion to determine just
compensation to the landowner (National Power Corporation vs. Henson, 300 SCRA 751
[1998]). (Emphasis supplied)
Clearly, there was a confusion regarding the nature of the amount to be paid for the issuance of
16
a writ of possession. In Capitol Steel Corporation v. PHIVIDEC Industrial Authority, we clarified
that the payment of the provisional value as a condition for the issuance of a writ of possession
is different from the payment of just compensation for the expropriated property. While the
provisional value is based on the current relevant zonal valuation, just compensation is based
on the prevailing fair market value of the property.1avvph!1.zw+
17
In that case, we agreed with the CA’s explanation that:
The first refers to the preliminary or provisional determination of the value of the property. It
serves a double-purpose of pre-payment if the property is fully expropriated, and of an indem-
nity for damages if the proceedings are dismissed. It is not a final determination of just compen-
sation and may not necessarily be equivalent to the prevailing fair market value of the property.
Of course, it may be a factor to be considered in the determination of just compensation.
Just compensation, on the other hand, is the final determination of the fair market value of the
property. It has been described as "the just and complete equivalent of the loss which the own-
er of the thing expropriated has to suffer by reason of the expropriation." Market value[s,] has
also been described in a variety of ways as the "price fixed by the buyer and seller in the open
market in the usual and ordinary course of legal trade and competition; the price and value of
the article established as shown by sale, public or private, in the ordinary way of business; the
fair value of the property between one who desires to purchase and one who desires to sell;
the current price; the general or ordinary price for which property may be sold in that locality."
(Emphasis in the original)
There is therefore no need yet to determine with reasonable certainty the final amount of just
18
compensation in resolving the issue of a writ of possession. In fact, it is the ministerial duty of
19
the trial court to issue the writ upon compliance with the requirements of Section 4 of the
law. No hearing is required and the court cannot exercise its discretion in order to arrive at the
amount of the provisional value of the property to be expropriated as the legislature has al-
20
ready fixed the amount under the aforementioned provision of the law.
It is only after the trial court ascertains the provisional amount to be paid that just compensa-
tion will be determined.
In establishing the amount of just compensation, the parties may present evidence relative to
21
the property’s fair market value, as provided under Section 5 of RA 8974. Thus:
Sec. 5. Standards for the Assessment of the Value of the Land Subject of Expropriation Proceed-
ings or Negotiated Sale. – In order to facilitate the determination of just compensation, the
court may consider, among other well-established factors, the following relevant standards:
(a) The classification and use for which the property is suited;
(b) The developmental costs for improving the land;
(c) The value declared by the owners;
(d) The current selling price of similar lands in the vicinity;
(e) The reasonable disturbance compensation for the removal and/or demolition of certain im-
provements on the land and for the value of improvements thereon;
(f) The size, shape or location, tax declaration and zonal valuation of the land;
(g) The price of the land as manifested in the ocular findings, oral as well as documentary evi-
dence presented; and
(h) Such facts and events as to enable the affected property owners to have sufficient funds to
acquire similarly-situated lands of approximate areas as those required from them by the gov-
ernment, and thereby rehabilitate themselves as early as possible.
This must be so as just compensation should take into account the consequential benefits and
22
damages which may arise from the expropriation. Furthermore, it is well to remember that
the concept of just compensation does not mean fairness to the property owner alone. It must
 23 25
also be just to the public which ultimately bears the cost of expropriation. decision, in accordance with the guidelines laid down in RA 8974 and its implementing rules.
Lastly, RA 8974 provides that "the court shall determine the just compensation to be paid the WHEREFORE, the petition is hereby DENIED.
24 No costs.
owner within sixty (60) days from the date of filing of the expropriation case." In this case, al-
most eight years have passed since petitioner commenced the expropriation proceedings on SO ORDERED.
August 27, 2001. We, however, hold that it is still feasible to comply with the spirit of the law by
requiring the trial court to make such determination within sixty (60) days from finality of this