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THIRDDIVISION

FORFOM
DEVELOPMENT
G.R.No.124795
CORPORATION,

Petitioner,
Present:

YNARESSANTIAGO,J.,

Chairperson.

AUSTRIAMARTINEZ,

CHICONAZARIO,
versus
NACHURAand

REYES,JJ.

Promulgated:
PHILIPPINE
NATIONAL

RAILWAYS,
December10,2008
Respondent.
xx

DECISION

CHICONAZARIO,J.:
BeforeusisaPetitionforReviewonCertiorariunderRule45oftheRulesofCourtwhich
[1]
seekstosetasidetheDecision oftheCourtofAppealsdated24April1996.

Petitioner Forfom Development Corporation (Forfom) is a domestic corporation duly

organizedandexistingunderthelawsofthePhilippineswithprincipalofficeatCabuyao,Laguna,
while respondent Philippine National Railways (PNR) is a government corporation engaged in
proprietary functions with principal office at the PNR Railway Station, C.M. Recto Avenue,
Tutuban,Binondo,Manila.

Thefacts,strippedofthenonessentials,areasfollows:

ForfomistheregisteredownerofseveralparcelsoflandinSanVicente,SanPedro,Laguna
underTransferCertificatesofTitle(TCT)Nos.T34384,T34386and34387,alloftheRegistryof
DeedsofLaguna. Said parcels of land were originally registered in the name of Felix Limcaoco,
predecessorininterest of Forfom, under Original Certificates of Title (OCT) Nos. (0326) 0384

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predecessorininterest of Forfom, under Original Certificates of Title (OCT) Nos. (0326) 0384
and(0328)0386.

In a cabinet meeting held on 1 November 1972, then President Ferdinand E. Marcos

approved the Presidential Commuter Service Project, more commonly known as the Carmona
Project of the President. Per Resolution No. 751 dated 2 November 1972 of the PNR Board of
Directors,itsGeneralManagerwasauthorizedtoimplementtheproject.The San PedroCarmona
Commuter Line Project was implemented with the installation of railroad facilities and
appurtenances.

During the construction of said commuter line, several properties owned by private
individuals/corporations were traversed as rightofway. Among the properties through which the
commuterlinepassedwasa100,128squaremeterportionownedbyForfomcoveredbyTCTNos.
T34384,T34386andT34387.

On24August1990,ForfomfiledbeforetheRegionalTrialCourt(RTC)ofBinan,Lagunaa
[2]
complaint for Recovery of Posssession of Real Property and/or Damages. It alleged that PNR,
withtheaidofmilitarymen,andwithoutitsconsentandagainstitswill,occupied100,128square
meters of its property located in San Pedro, Laguna and installed thereon railroad and railway
facilities and appurtenances. It further alleged that PNR rented out portions of the property to
squattersalongtherailroadtracks.Despiterepeatedverbalandwrittendemandsforthereturnofthe
propertyorforthepaymentofitsprice,PNRfailedtocomply. It prayed that PNR be ordered to
vacatethepropertyandtocausetheevictionofallshantiesandsquattersthatPNRhadtakeninas
lessees,andthatitberestoredtothepeacefuloccupationandenjoymentthereof.Itlikewiseasked
thatForfombeorderedtopay(a)P1,000.00permonthperhectarefromoccupationoftheproperty
untilthesameisvacatedasrentalsplusinterestat24%perannum(b)P1,600,000.00asunrealized
incomefromoccupationofthepropertyuptothepresentplus12%interestperannumuntilfully
paid(c)P150,000.00foractualdamagesonaccountofthedestructionofcropsandimprovements
onthepropertywhentheoccupationofthepropertycommencedplus12%interestperannumuntil
fullypaid(d)atleastP100,000.00asexemplarydamages(e)P100,000.00plus15%oftheamount
[3]
andpropertiestoberecoveredasattorneysfeesand(f)costsofthesuit.

[4]
In its Amended Answer, PNR alleged that, per authority granted by law (Presidential
Decree No. 741), it acquired parcels of land used in the construction of the railway track to
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Carmona,Cavite.It,however,deniedthatthepropertyacquiredfromForfomwasleasedtotenants.
It likewise denied that the acquisition of Forfoms property was made without the consent of Dr.
FelixLimcaoco,theformerowneroftheproperty.Itstressedthattheacquisitionoftheproperties
used in the project was done through negotiations with the respective owners. It asserted that no
cropwasdamagedwhenitacquiredthepropertysubjectofthecase.Further,itdeniedliabilityfor
unrealizedincome,exemplarydamagesandattorneysfees.

PNRexplainedthatformerPresidentFerdinandE.Marcosapprovedwhatwasknowntobe
theCarmonaProjecta5.1kilometerrailroadextensionlinefromSanPedro,LagunatoSanJose,
Carmona, Cavite to serve the squatters resettlement area in said localities. It claimed that it
negotiated with the respective owners of the affected properties and that they were paid just
compensation. Dr. Felix Limcaoco, it said, was not paid because he failed to present the
corresponding titles to his properties. It claimed that the right to and just compensation for the
subjectpropertywasthedeclaredfairmarketvalueatthetimeofthetakingwhichwasP0.60per
square meter. It disclosed that in a meeting with the representatives of Dr. Limcaoco, the price
agreeduponwasP1.25persquaremeter,theamounttheadjoiningownerswaspaid.Itprayedthat
theinstantcomplaintbedismissed,andthattheownerofthepropertiesinvolvedbecompelledto
accepttheamountofP1.25persquaremeteraspricefortheproperties.

[5]
In an Order dated 29 October 1990, the pretrial conference on the case was set. On 13
March1991,forfailureofthepartiestoreachanyagreement,pretrialwasterminatedandtrialof
[6]
thecasescheduled. Thereafter,trialonthemeritsensued.

ThefollowingwitnessestestifiedforForfom:(1)LeonCapati(2)MaritesDimaculangan(3)
MarileneL.deGuzman(4)GavinoRosasdeClaroand(5)JoseElazegui.

[7]
Mr. Leon Capati, employee of Forfom, testified that he knew Dr. Felix Limcaoco, Sr.
becauseheworkedforhimsince1951untilhisdeath.HeknewForfomDevelopmentCorporation
tobeacorporationformedbythechildrenofDr.Limcaocoandownerofthepropertiesleftbehind
bysaiddoctor.HesaidheworkedasoverseerinHaciendaLimcaocoinSanPedro,Lagunaowned
byDr.Limcaoco.SaidhaciendawasconvertedtotheOlympiaComplexSubdivisionnowowned
byForfom.BeingaworkerofForfom,hedisclosedthatin1972,thePNRforciblytookportionsof
thepropertyofForfom.Armedmeninstalledrailroadsandevenusedbulldozerswhichcausedthe
destructionofaroundelevenhectaresofsugarland.Since1972,hesaidPNRusedthepropertyfor
itsbenefitandevenleasedpartofittopeoplelivingneartherailroad.Atthattime,heclaimedthat
the value of sugarcane was P200.00 per piko and that the plantation harvested sixty (60) tons

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the value of sugarcane was P200.00 per piko and that the plantation harvested sixty (60) tons
annuallyworthP224,000.00.In all, from 1972 to 1985, he claimed Forfom lost P2,917,200.00 in
ruinedsugar,unrealizedharvest,excludingunrealizedharvestforninemangotreeswhichyielded
60kaingspertreeperharvest.

[8]
Ms.MaritesDimaculangan, anofficerofForfom,corroboratedthetestimonyofMr.Leon
[9]
Capati.Shepresenteddocuments showingthatHaciendaLimcaocowaspreviouslyownedbyDr.
FelixLimcaoco,thentheownershipwastransferredtoForfom.AsproofthatHaciendaLimcaoco
was converted into a lowcost housing subdivision known as the Olympia Complex Subdivision,
she presented permits from the Human Settlements Regulatory Commission and from the
[10]
[11]
MunicipalityofSanPedro.
Shealsoadducedinevidenceseveralletters
allegedlyshowing
thatPNRoccupiedthepropertyownedbytheLimcaocos.Asaresult,aroundelevenhectaresofthe
[12]
sugarcaneplantationweredestroyed.
From1972to1985,sheclaimedthatpartoftheproperty
takenbyPNRwasleasedtosquattersbesidetherailroadtracks.SheaddedthatForfomincurreda
loss totaling P2,917,200.00. She claimed that the current price of land contiguous to the parcels
takenbyPNRwasP1,000.00persquaremeter.

[13]
Ms. Marilene L. De Guzman,
Executive VicePresident of Forfom and daughter of the
LateDr.FelixLimcaoco,corroboratedthetestimoniesofMr.CapatiandMs.Dimaculangan. She
disclosedthathisfatherdiedon25March1973. She learned from her father and from Mr. Leon
Capatithatwhenthearmedmentookaportionoftheirproperty,thearmedmendidnotshowany
court order or authority from any agency of the government. The armed men used bulldozers
destroying11hectaresofsugarcaneandsomemangotrees.Shesaidthosetakenoverwereusedas
railroadtracksandaportionbesidethetrackswerebeingleasedtosquatters.Sherevealedthatthe
[14]
presentfairmarketvalueoflandatOlympiaComplexisP1,400.00persquaremeter.
Iftheland
is not developed, same can be sold for P800.00 per square meter. She said from the time their
propertywastakenoverbyPNR,herfamilyhasbeenwritingtoPNRregardingcompensationfor
[15]
theirland.

Ms.DeGuzmansaidthepropertywasstillinthenameofDr.FelixLimcaoco,Sr.andMrs.
Olympia Limcaoco when the PNR took over a portion of their properties. She said she was not
informedbyMr.CapatithatthePNRtookthesaidpropertyoverpursuanttoaPresidentialMandate
in order to provide transportation for relocated squatters. She explained that her father and Mr.
Capatiwerenotadvisedtoharvesttheircropsandweresurprisedbythetakingoveroftheland.

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[16]
Mr. Gavino Rosas de Claro,
Land Register Examiner of the Register of Deeds of
Calamba, Laguna, testified as representative of the Register of Deeds. He brought in Court the
[17]
[18]
originals of TCT Nos. T34384
and T34386,
both in the name of Forfom Development
[19]
CorporationandOCTNos.(O326)O384
and(O328)O386,bothinthenameofDr.Felix
[20]
Limcaoco, Sr.
Thereafter, photocopies thereof were compared with the originals which were
foundtobefaithfulreproductionsofthesame.

[21]
Jose Elazegui,
Supervisor, Southern Tagalog Facoma, Inc. was presented to show the
productionofsugarandmolassesonthepropertyofForfom.Hepresentedduplicateoriginalcopies
[22]
ofTuosnginaningTubofortheyears19841985,19851986,19861987and19871988.
The
documentsshowedtheproduction(averageyieldperareaperpicul)inotherpropertiesownedby
Forfomotherthanthepropertiessubjectmatterofthiscase.

Forthedefendant,Mrs.EdnaRamos,DepartmentManageroftheRealEstateDepartmentof
[23]
thePNR,tookthestand.
ShetestifiedthatshewasfamiliarwiththeacquisitionbythePNRof
the right of way for the San PedroCarmona Commuter Line. It was acquired and established by
Presidential Mandate and pursuant to the authority of the PNR to expropriate under its charter
[24]
(PresidentialDecreeNo.741).
SheexplainedthatPresidentFerdinandE.Marcosauthorizedthe
PNRtoacquiresaidrightofwayinaCabinetMeetingon1November 1972 as evidenced by an
[25]
excerptoftheminutesofthemeetingofthePNRBoardofDirectorsonResolutionNo.751.
Therightofwaywasacquiredtoprovideacheap,efficientandsafemeansoftransportationtothe
squatters who were relocated in Cavite. The commuter line, she said, was primarily for service
[26]
ratherthanprofit.Asshownbytheletter
dated 30 April 1974 of Nicanor T. Jimenez, former
GeneralManagerofthePNR,toMrs.OlympiaHemedesVda.deLimcaoco,theacquisitionofthe
rightofwaywaswiththeknowledgeandconsentofDr.FelixLimcaoco,Sr.

Mrs. Ramos disclosed that the total area acquired by the PNR for the San PedroCarmona
Commuter Line was 15.7446 hectares or sixteen (16) lots in all owned by seven (7) private
landownersandthree(3)corporations.AmongtheprivatelandownerswereIsabelOliver,Leoncia
Blanco,CatalinaSanchez,TomasOliver,AlejandroOliverandAntonioSibulo.PerrecordofPNR,
they were paid P1.25 per square meter for their lands. They executed Absolute Deeds of Sale in
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[27]
favor of the PNR, as a result of which, titles to the lands were transferred to PNR.
The
remaining 9 lots belonging to the three private corporations Forfom Development Corporation,
Alviar Development Manufacturing & Trading Supply Corp. and Life Realty Development
Corporationwerenotpaidforbecausethesecorporationswerenotabletopresenttheirrespective
titles,whichhadbeenusedasloancollateralsinthePhilippineNationalBankandtheGovernment
[28]
ServiceInsuranceSystem.
Theunitpricepersquaremeter,whichthenegotiatingpanelofthe
PNRandtherepresentativesofthethreecorporationswasconsideringthen,wasP1.25.Inaletter
dated3October1975,Mr.FelixLimcaoco,Jr.ofForfomwasaskingforP12.00persquaremeter
[29]
fortheirlandandP150,000.00fordamagedsugarcropsandmangotrees.
Shelikewisesaidshe
hadtheminutesoftheconferencebetweenMr.LimcaocoandthePNRChiefConstructionEngineer
[30]
heldatthePNRGeneralManagersOfficeon24July1979.

Mrs.Ramosclarifiedthatasamatterofpolicy,PNRemployeesandotherpersonswerenot
allowed to settle on the PNRs right of way. Squatting along the right of way had never been
encouraged. To prevent its proliferation, special contracts were entered into with selected parties
understrictconditionstovacatethepropertyleaseduponnotice.Sheexplainedthattheleasingof
PNRsrightofwaywasanincidentalpowerandwasinresponsetothegovernmentssocialhousing
project.
Initsdecisiondated29October1992,thetrialcourtruledgenerallyinfavorofplaintiff,the
dispositiveportionreading:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff and

againstdefendantorderingthelattertopaytheformerthefollowing:

1. Just compensation of the subject real properties consisting of 100,128 square meters and
coveredbyTCTNos.T34387,T34384andT34386atP10.00persquaremeter,withlegalinterest
fromthetimeofactualtakingofplaintiffsrealpropertiesuntilpaymentismadebythedefendant

2.TheamountofP4,480,000.00asunearnedincomeofplaintifffrom1972uptothecurrent
year,andthereafter,theamountofP224,000yearly,withlegalinterestuntilpaymentismade

3.ActualdamagesintheamountofP150,000correspondingtosugarcanecropsandmango
treesdestroyedordamagedasaresultoftheunlawfultakingofplaintiffsrealproperties,withlegal
interestuntilpaymentismade

4.TheamountofP100,000asandforattorneysfees

5.TheamountofP150,000forlitigationexpensesplusthecostsofthissuit.

Plaintiffsclaimforrecoveryofpossessionandtheotherprayersinthecomplaintarehereby
[31]
dismissedforwantofmerit.

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ThetrialcourtfoundthatthepropertiesofForfomweretakenbyPNRwithoutdueprocessoflaw
and without just compensation. Although the power of eminent domain was not exercised in
accordance with law, and PNR occupied petitioners properties without previous condemnation
proceedings and payment of just compensation, the RTC ruled that, by its acquiescence, Forfom
wasestoppedfromrecoveringthepropertiessubjectofthiscase.Astoitsrighttocompensationand
damages,itsaidthatthesamecouldnotbedenied.ThetrialcourtdeclaredthatP10.00persquare
meterwasthefairandequitablemarketvalueoftherealpropertiesatthetimeofthetakingthereof.
Notcontentedwiththedecision,bothpartiesappealedtotheCourtofAppealsbyfilingtheir
[32]
respective Notices of Appeal.
PNR questioned the trial courts ruling fixing the just
compensationatP10.00persquaremeterandnotthedeclaredvalueofP0.60persquaremeteror
thefairmarketvalueofP1.25paidtoanadjacentowner.Itlikewisequestionedtheawardofactual
damagesandunearnedincometoForfom.
On24April1996,theappellatecourtdisposedofthecaseasfollows:

WHEEFORE, the decision appealed from is hereby AFFIRMED insofar as (1) it denies plaintiffs
claimforrecoveryofpossessionand(2)itawardsjustcompensationattherateofP10.00persquare
meterwhichdefendantmustpaytoplaintiff,butwithlegalrateofinterestthereonherebyspecifically
fixedatsix(6)percentperannumstartingfromJanuaryof1973untilfullpaymentismade.However,
the appealed decision is MODIFIED in the sense that plaintiffs claim for damages is DENIED for
lackofmerit.

[33]
Nopronouncementastocosts.

Except for the deletion of the award of damages, attorneys fees and litigation expenses, the
appellatecourtagreedthewithtrialcourt.Wequote:

There is no dispute that defendant neither commenced an expropriation proceedings nor paid just
compensation prior to its occupation and construction of railroad lines on the subject property.
Nevertheless, plaintiffs prayer to recover the property cannot be granted. Immediately after the
occupation,orwithinareasonabletimethereafter,thereisnoshowingthatthesamewasopposedor
questionedbyplaintifforitsrepresentativesonthegroundthatdefendantneverfiledanexpropriation
proceedings and that no just compensation was ever paid. Neither is there a showing that plaintiff
sought to recover the property because the taking was done forcibly with the aid of armed men.
Instead,andthisisborneoutbycertaincommunicationsbetweenthepartiesthroughtheirrespective
officersorrepresentatives,whatplaintiffactuallydidwastonegotiatewithdefendantforthepurpose
offixingtheamountwhichthelattershouldpayasjustcompensationand,iftherebeany,damages.x
xx.

xxxx

Clearly,acontinuingnegotiationbetweenthepartiestookplaceforthepurposeonlyoffixing
the amount of just compensation and not because plaintiff wanted to recover the subject property.
Thus,thefailureofdefendanttofirstfileanexpropriationproceedingsandpayjustcompensationis
now beside the point.And even if the contention of plaintiff that defendant used force is true, the
former can no longer complain at this time. What controls now is the fact that by its own act of
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former can no longer complain at this time. What controls now is the fact that by its own act of
negotiating with defendant for the payment of just compensation, plaintiff had in effect made
representationsthatitacquiescedtothetakingofitspropertybydefendant.Wethereforeagreewith
the lower court that plaintiff, by its acquiescence, waived its right, and is thus estopped, from
recoveringthesubjectpropertyorfromchallenginganysupposedirregularityinitsacquisition.

xxxx

Plaintiffsrighttorecoverjustcompensation,however,remains.Onthismatter,weagreewith
theP10.00persquaremetervaluationfixedbythetrialcourtxxx.

xxxx

With the long delay in the payment of just compensation however, defendant should pay
interest thereon at the legal rate of six (6) percent per annum from the time of occupation until
[34]
paymentismade.xxx.

Stillunsatisfiedwiththedecision,Forfomfiledtheinstantpetitionforreviewoncertiorari
raisingthefollowingissues:

A.THEHONORABLECOURTOFAPPEALSERREDINHOLDINGTHATPETITIONER
CANNOTRECOVERPOSSESSIONOFITSLANDDESPITETHEADMISSIONTHATITWAS
FORCIBLYTAKEN(DURINGTHEMARTIALLAWERA)WITHOUTANYEXPROPRIATION
PROCEEDING OR PAYMENT OF COMPENSATION SIMPLY BECAUSE PETITIONER DID
NOTOPPOSETHEARMEDANDFORCIBLETAKINGTHEREOF:

B.THEHONORABLECOURTOFAPPEALSEMPLOYEDDOUBLESTANDARDOFJUSTICE
IN ADMITTING HEARSAY EVIDENCE OF PNR YET REJECTING THAT OF PETITIONER
WHICH IS PROPERLY IDENTIFIED WITH ABUNDANT CROSS EXAMINATION
CONDUCTEDONTHEBASISOFPETITIONERSREJECTEDEVIDENCE:

C.THE HONORABLE COURT OF APPEALS ERRED GRIEVOUSLY IN HOLDING THAT IN

THIS ACTION THE FAILURE OF DEFENDANT TO FIRST FILE AN EXPROPRIATION
PROCEEDINGS AND PAY JUST COMPENSATION (FOR THE PROPERTY OF PETITIONER
FORCIBLYTAKENBYPRIVATERESPONDENT)IS(NOW)BESIDETHEPOINT.

D. THE HONORABLE COURT OF APPEALS ERRED IN AGREEING WITH THE RTC IN

FIXING THE COMPENSATION FOR THE LAND FORCIBLY TAKEN BY PNR AT A
RIDICULOUS, OUTRAGEOUS, AND ABSURD PRICE OF P10.00 PER SQUARE METER
DESPITETHEEVIDENCESHOWINGTHATTHEPRICEOFLANDINTHEADJACENTAND
SURROUNDINGAREASISMORETHANP1,500.00PERSQUAREMETER:

E. THE HONORABLE COURT OF APPEALS ERRED IN IGNORING THE EVIDENCE

ESTABLISHING THE RIGHT OF THE PETITIONER TO BE AWARDED ACTUAL OR
COMPENSATORYDAMAGES,ATTORNEYSFEES,ANDUNREALIZEDINCOME:

F.THEHONORABLECOURTOFAPPEALSERREDINANDABUSEDITSDISCRETIONIN
ADOPTING DOUBLE STANDARD IN ITS EVALUATION OF THE EVIDENCE AND IN
ADMITTING PNRs PATENTLY HEARSAY EVIDENCE WHILE REJECTING PETITIONERS
RELEVANTMATERIALANDADMISSIBLEEVIDENCE:

G. THE HONORABLE COURT OF APPEALS DEVIATED FROM ESTABLISHED

JURISPRUDENCE IN UNJUSTIFIABLY IGNORING AND SETTING ASIDE THE FINDINGS
OF FACTS OF THE TRIAL COURT THAT ARE IN FACT SUPPORTED BY ABUNDANT
EVIDENCE:
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EVIDENCE:

H. THE HONORABLE COURT OF APPEALS APPARENTLY SUPPRESSED THE EVIDENCE

THAT PRIVATE RESPONDENT PNR APART FROM FORCIBLY TAKING THE LAND OF
PETITIONER WITH THE EMPLOYMENT OF ARMED MEN, RENTED OUT PORTIONS OF
SAIDLANDTOITSTENANTSWHOPAIDHEFTYRENTALSFORTHEUSEOFTHESAME
[35]
ASRESIDENTIALLOTS(ANDNOTFORPUBLICPURPOSES).

Ontheotherhand,PNRacceptedthedecisionoftheCourtofAppealsandnolongerappealed.

The primary question to be resolved is: Can petitioner Forfom recover possession of its property
becauserespondentPNRfailedtofileanyexpropriationcaseandtopayjustcompensation?

ThepowerofeminentdomainisaninherentandindispensablepoweroftheState.Beinginherent,
[36]
thepowerneednotbespecificallyconferredonthegovernmentbytheConstitution.
Section9,
ArticleIIIstatesthatprivatepropertyshallnotbetakenforpublicusewithoutjustcompensation.
[37]
Theconstitutionalrestraintsarepublicuseandjustcompensation.

ThefundamentalpowerofeminentdomainisexercisedbytheLegislature.Itmaybedelegatedby
[38]
Congresstothelocalgovernments,otherpublicentitiesandpublicutilities.
Inthecaseatbar,
[39]
PNR,underitscharter,
hasthepowerofexpropriation.

A number of circumstances must be present in the taking of property for purposes of eminent
domain: (1) the expropriator must enter a private property (2) the entrance into private property
mustbeformorethanamomentaryperiod(3)theentryintothepropertyshouldbeunderwarrant
or color of legal authority (4) the property must be devoted to a public purpose or otherwise
informally, appropriately or injuriously affected and (5) the utilization of the property for public
usemustbeinsuchawayastoousttheowneranddeprivehimofallbeneficialenjoymentofthe
[40]
property.

Inthecaseatbar,theexpropriator(PNR)enteredthepropertyofForfom,aprivateland.The
entranceintoForfomspropertywaspermanent,notforafleetingorbriefperiod.PNRhasbeenin
control,possessionandenjoymentofthesubjectlandsinceDecember1972orJanuary1973.PNRs
entry into the property of Forfom was with the approval of then President Marcos and with the
authorization of the PNRs Board of Directors. The property of Forfom measuring around eleven
hectares was devoted to public use railroad tracks, facilities and appurtenances for use of the
CarmonaCommuterService.WiththeentranceofPNRintotheproperty,Forfomwasdeprivedof

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CarmonaCommuterService.WiththeentranceofPNRintotheproperty,Forfomwasdeprivedof
materialandbeneficialuseandenjoymentoftheproperty.Itisclearfromtheforegoingthatthere
wasatakingofpropertywithintheconstitutionalsense.

Forfomarguesthatthepropertytakenfromitshouldbereturnedbecausetherewasneither
expropriationcasefiledbyPNRnorjustcompensationpaidforthesame.

It can be gathered from the records that Forfom accepted the fact of the taking of its land
when it negotiated with PNR for just compensation, knowing fully well that there was no
expropriation case filed at all. Forfoms inaction for almost eighteen (18) years to question the
absenceofexpropriationproceedingsanditsdiscussionswithPNRastohowmuchpetitionershall
be paid for its land preclude it from questioning the PNRs power to expropriate or the public
purposeforwhichthepowerwasexercised.Inotherwords,ithaswaiveditsrightandisestopped
fromassailingthetakeoverofitslandonthegroundthattherewasnocaseforexpropriationthat
wascommencedbyPNR.

[41]
InManilaRailroadCo.v.Paredes,
thefirstcaseinthisjurisdictioninwhichtherewasan
attempt to compel a public service corporation, endowed with the power of eminent domain, to
vacate the property it had occupied without first acquiring title thereto by amicable purchase or
expropriationproceedings,wesaid:

x x x whether the railroad company has the capacity to acquire the land in dispute by virtue of its
delegated power of eminent domain, and, if so, whether the company occupied the land with the
expressorimpliedconsentoracquiescenceoftheowner.Ifthesequestionsoffactbedecidedinthe
affirmative, it is uniformly held that an action of ejectment or trespass or injunction will not lie
againsttherailroadcompany,butonlyanactionfordamages,thatis,recoveryofthevalueoftheland
taken,andtheconsequentialdamages,ifany.Theprimaryreasonforthusdenyingtotheownerthe
remediesusuallyaffordedtohimagainstusurpersistheirremedialinjurywhichwouldresulttothe
railroad company and to the public in general. It will readily be seen that the interruption of the
transportationserviceatanypointontherightofwayimpedestheentireserviceofthecompanyand
causes loss and inconvenience to all passengers and shippers using the line. Under these
circumstances,publicpolicy,ifnotpublicnecessity,demandsthattheownerofthelandbedeniedthe
ordinarilyremediesofejectmentandinjunction.Thefactthattherailroadcompanyhasthecapacity
to eventually acquire the land by expropriation proceedings undoubtedly assists in coming to the
conclusionthatthepropertyownerhasnorighttotheremediesofejectmentorinjunction.Thereis
alsosomethingakintoequitableestoppelintheconductofonewhostandsidlybyandwatchesthe
constructionoftherailroadwithoutprotest.xxx.Buttherealstrengthoftheruleliesinthefactthat
itisagainstpublicpolicytopermitapropertyowner,undersuchcircumstances,tointerferewiththe
service rendered to the public by the railroad company. x x x. (I)f a landowner, knowing that a
railroadcompanyhasentereduponhislandandisengagedinconstructingitsroadwithouthaving
compliedwithastatuterequiringeitherpaymentbyagreementorproceedingstocondemn,remains
inactiveandpermitsittogoonandexpendlargesumsinthework,heisestoppedfrommaintaining
eithertrespassorejectmentfortheentry,andwillberegardedashavingacquiescedtherein,andwill
berestrictedtoasuitfordamages.

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[42]
Further,inDeYnchaustiv.ManilaElectricRailroad&LightCo.,
weruled:

Theownerofland,whostandsby,withoutobjection,andseesapublicrailroadconstructedoverit,
cannot,aftertheroadiscompleted,orlargeexpenditureshavebeenmadethereonuponthefaithof
hisapparentacquiescence,reclaimtheland,orenjoinitsusebytherailroadcompany.Insuchacase
therecanonlyremaintotheownerarightofcompensation.

xxxx

One who permits a railroad company to occupy and use his land and construct its roads
thereonwithoutremonstranceorcomplaint,cannotafterwardsreclaimitfreefromtheservitudehe
has permitted to be imposed upon it. His acquiescence in the companys taking possession and
constructingitsworksundercircumstanceswhichmadeimperativehisresistance,ifheeverintended
tosetupillegality,willbeconsideredawaiver.Butwhilethispresumedwaiverisabartohisaction
todispossessthecompany,heisnotdeprivedofhisactionfordamagesforthevalueoftheland,of
forinjuriesdonehimbytheconstructionoroperationoftheroad.

xxxx

Weconcludethatxxxthecomplaintinthisactionprayingforpossessionandfordamages
for the alleged unlawful detention of the land in question, should be dismissed x x x but that such
dismissal x x x should be without prejudice to the right of the plaintiff to institute the appropriate
proceedingstorecoverthevalueofthelandsactuallytaken,ortocompeltherailroadcorporationto
take the necessary steps to secure the condemnation of the land and to pay the amount of the
compensationanddamagesassessedinthecondemnationproceedings.

[43]
In Ansaldo v. Tantuico, Jr.,
a case involving the takeover by the Government of two
privatelotstobeusedforthewideningofaroadwithoutthebenefitofanactionforexpropriation
oragreementwithitsowners,weheldthattheownerstherein,havingbeensilentformorethantwo
decades,weredeemedtohaveconsentedtosuchtakingalthoughtheyknewthattherehadbeen
no expropriation case commenced and therefore had no reason to impugn the existence of the
powertoexpropriateorthepublicpurposeforwhichthatpowerhadbeenexercised.Insaidcase,
wedirectedtheexpropriatortoforthwithinstitutetheappropriateexpropriationactionovertheland,
sothatjustcompensationduetheownersmaybedeterminedinaccordancewiththeRulesofCourt.
From the aforecited cases, it is clear that recovery of possession of the property by the
landowner can no longer be allowed on the grounds of estoppel and, more importantly, of public
policy which imposes upon the public utility the obligation to continue its services to the public.
Thenonfilingofthecaseforexpropriationwillnotnecessarilyleadtothereturnofthepropertyto
thelandowner.Whatislefttothelandowneristherightofcompensation.

Forfom argues that the recovery of its property is justified because PNR failed to pay just
compensationfromthetimeitspropertywastaken.Wedonotagree.Itissettledthatnonpayment
of just compensation does not entitle the private landowners to recover possession of their
[44]

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[44]
expropriatedlot.

Forfom contends that since there is enormous proof that portions of the property taken by
PNRwerebeingleasedtothirdpartiestherewasenoughjustificationfortheCourtofAppealsto
orderthereturntopetitioneroftheleasedportionsaswellastherentsreceivedtherefrom.

We find such contention to be untenable. As ruled above, Forfoms inaction on and

acquiescencetothetakingofitslandwithoutanyexpropriationcasebeingfiled,anditscontinued
negotiation with PNR on just compensation for the land, prevent him from raising any issues
regardingthepowerandrightofthePNRtoexpropriateandthepublicpurposeforwhichtheright
wasexercised.Theonlyissuethatremainsisjustcompensation.Havingnorighttofurtherquestion
PNRsactoftakingoverandthecorrespondingpublicpurposeofthecondemnation,Forfomcannot
nowobjecttoPNRsleaseofportionsofthelandtothirdparties.Theleasingoutofportionsofthe
property is already a matter between PNR and third persons in which Forfom can no longer
participate.Thesamenolongerhasanybearingontheissueofjustcompensation.

Forfomfurtheraversthattheleasingoutofportionsofthepropertytothirdpersonsisbeyondthe
scopeofpublicuseandthusshouldbereturnedtoit.Wedonotagree.Thepublicuserequisitefor
thevalidexerciseofthepowerofeminentdomainisaflexibleandevolvingconceptinfluencedby
changingconditions.Atpresent,itmaynotbeamisstostatethatwhateverisbeneficiallyemployed
[45]
for the general welfare satisfies the requirement of public use.
The term public use has now
been held to be synonymous with public interest, public benefit, public welfare, and public
[46]
[47]
convenience.
It includes the broader notion of indirect public benefit or advantage.
Whatevermaybebeneficiallyemployedforthegeneralwelfaresatisfiestherequirementofpublic
[48]
use.

Intheinstantcase,Mrs.RamosofthePNRexplainsthattheleasingofPNRsrightofwayis
anincidentalpowerandisinresponsetothegovernmentssocialhousingproject.Shesaidthatto
preventtheproliferationofsquattingalongtherightofway,specialcontractswereenteredintowith
selectedpartiesunderstrictconditionstovacatethepropertyleaseduponnotice.Tothecourt,such
purposeisindeedpublic,foritaddressestheshortageinhousing,whichisamatterofconcernfor
thestate,asitdirectlyaffectspublichealth,safety,environmentandthegeneralwelfare.

Forfomclaimsitwasdenieddueprocesswhenitspropertywasforciblytakenwithoutdue
compensationforit.Forfomisnotbeingdenieddueprocess.Ithasbeengivenitsdayincourt.The
factthatitscauseisbeingheardbythisCourtisevidencethatitisnotbeingdenieddueprocess.

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factthatitscauseisbeingheardbythisCourtisevidencethatitisnotbeingdenieddueprocess.

Wenowgototheissueofjustcompensation.

UnderSection5ofthe1997RulesofCivilProcedure,thecourtshallappointnotmorethan
threecompetentanddisinterestedpersonsascommissionerstoascertainandreporttothecourtthe
just compensation for the property. Though the ascertainment of just compensation is a judicial
[49]
prerogative,
theappointmentofcommissionerstoascertainjustcompensationfortheproperty
sought to be taken is a mandatory requirement in expropriation cases. While it is true that the
findingsofcommissionersmaybedisregardedandthetrialcourtmaysubstituteitsownestimateof
thevalue,itmayonlydosoforvalidreasonsthatis,wherethecommissionershaveappliedillegal
principlestotheevidencesubmittedtothem,wheretheyhavedisregardedaclearpreponderanceof
evidence, or where the amount allowed is either grossly inadequate or excessive. Thus, trial with
theaidofthecommissionersisasubstantialrightthatmaynotbedoneawaywithcapriciouslyor
[50]
fornoreasonatall.

Inthecasebeforeus,thetrialcourtdeterminedjustcompensation,butnotinanexpropriation
case. Moreover, there was no appointment of commissioners as mandated by the rules. The
appointmentofcommissionersisoneofthestepsinvolvedinexpropriationproceedings.Whatthe
judgedidinthiscasewascontrarytowhattherulesprescribe.Thejudgeshouldnothavemadea
determinationofjustcompensationwithoutfirsthavingappointedtherequiredcommissionerswho
wouldinitiallyascertainandreportthejustcompensationforthepropertyinvolved.Thisbeingthe
case, we find the valuation made by the trial court to be ineffectual, not having been made in
accordancewiththeprocedureprovidedforbytherules.

Thenextissuetoberesolvedisthetimewhenjustcompensationshouldbefixed.Isitatthe
timeofthetakingor,asForfommaintains,atthetimewhenthepriceisactuallypaid?

Where actual taking was made without the benefit of expropriation proceedings, and the
owner sought recovery of the possession of the property prior to the filing of expropriation
proceedings,theCourthasinvariablyruledthatitisthevalueofthepropertyatthetimeoftaking
[51]
that is controlling for purposes of compensation.
In the case at bar, the just compensation
shouldbereckonedfromthetimeoftakingwhichisJanuary1973.Thedeterminationthereofshall
be made in the expropriation case to be filed without delay by the PNR after the appointment of
commissionersasrequiredbytherules.

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Admittedly,thePNRsoccupationofForfomspropertyforalmosteighteen(18)yearsentitles
thelattertopaymentofinterestatthelegalrateofsix(6%)percentonthevalueofthelandatthe
[52]
timeoftakinguntilfullpaymentismadebythePNR.

For almost 18 years, the PNR has enjoyed possession of the land in question without the
benefit of expropriation proceedings. It is apparent from its actuations that it has no intention of
filinganyexpropriationcaseinordertoformallyplacethesubjectlandinitsname.Alltheseyears,
ithasgivenForfomtherunaround,failingtopaythejustcompensationitrightlydeserves. PNRs
uncaring and indifferent posture must be corrected with the awarding of exemplary damages,
attorneysfeesandexpensesoflitigation.However,sinceForfomnolongerappealedthedeletionby
both lower courts of said prayer for exemplary damages, the same cannot be granted. As to
attorneys fees and expenses of litigation, we find the award thereof to be just and equitable. The
amounts of P100,000.00 as attorneys fees and P50,000.00 as litigation expenses are reasonable
underthepremises.

Asexplainedabove,theprayerforthereturnoftheleasedportions,togetherwiththerental
receivedtherefrom,isdenied.Unearnedincomeforyearsafterthetakeoverofthelandislikewise
denied.HavingturnedoverthepropertytoPNR,Forfomhasnomorerighttoreceiveanyincome,
if there be any, derived from the use of the property which is already under the control and
possessionofPNR.

As to actual damages corresponding to the sugarcane and mango trees that were allegedly
destroyedwhenPNRenteredandtookpossessionofthesubjectland,wefindthatthesame,beinga
questionoffact,isbetterlefttobedeterminedbytheexpropriationcourtwherethePNRwillbe
filingtheexpropriationcase.Evidenceforsuchclaimmaybeintroducedbeforethecondemnation
[53]
proceedings.

WHEREFORE,theinstantpetitionisPARTIALLYDENIED insofar as it denies Forfom

Development Corporations prayer for recovery of possession (in whole or in part) of the subject
land,unearnedincome,andrentals.ThepetitionisPARTIALLYGRANTEDinthatattorneysfees
andlitigationexpensesintheamountsofP100,000.00andP50,000.00, respectively, are awarded.
The Philippine National Railways is DIRECTED to forthwith institute the appropriate
expropriationactionoverthelandinquestion,sothatjustcompensationduetoitsownermaybe
determinedinaccordancewiththeRulesofCourt,withinterestatthelegalrateofsix(6%)percent
per annum from the time of taking until full payment is made. As to the claim for the alleged

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per annum from the time of taking until full payment is made. As to the claim for the alleged
damagedcrops,evidenceofthesame,ifany,maybepresentedbeforetheexpropriationcourt. No
costs.

SOORDERED.

MINITAV.CHICONAZARIO
AssociateJustice

WECONCUR:

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson

MA.ALICIAAUSTRIAMARTINEZANTONIOEDUARDOB.NACHURA
AssociateJusticeAssociateJustice

RUBENT.REYES
AssociateJustice

ATTESTATION

IattestthattheconclusionsintheaboveDecisionwerereachedinconsultationbeforethecasewas
assignedtothewriteroftheopinionoftheCourtsDivision.

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson,ThirdDivision

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CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitution,andtheDivisionChairpersonsAttestation,
itisherebycertifiedthattheconclusionsintheaboveDecisionwerereachedinconsultationbefore
thecasewasassignedtothewriteroftheopinionoftheCourtsDivision.

REYNATOS.PUNO
ChiefJustice
[1]
Penned by Associate Justice Romeo A. Brawner with Associate Justices Alfredo L. Benipayo and Buenaventura J. Guerrero,
concurringCArollo,pp.164173.
[2]
RaffledtoBranch24.
[3]
Records,pp.16.
[4]
Id.at7780.
[5]
Id.at38.
[6]
Id.at90.
[7]
Id.at507510.
[8]
Id.at125129.
[9]
Id.at137149.
[10]
Id.at204207.
[11]
Id.at150177.
[12]
Id.at178203.
[13]
Id.at340344.
[14]
Id.at599612.
[15]
Id.at532549.
[16]
TSN,2October1991,pp.217.
[17]
Records,pp.513514.
[18]
Id.at517518.
[19]
Id.at515516.
[20]
Id.at519520.
[21]
TSN,2October1991,pp.1834.
[22]
Records,pp.591594.
[23]
Id.at709712.
[24]
Id.at681691.
[25]
Id.at692693.
[26]
Id.at696.
[27]
Id.at699703.
[28]
Id.at704705.
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Id.at704705.
[29]
Id.at706707.
[30]
Id.at708.
[31]
Id.at727.
[32]
Id.at728and730.
[33]
CArollo,p.172.
[34]
Id.at167170.
[35]
Rollo,pp.1112.
[36]
Manapatv.CourtofAppeals,G.R.No.110478,15October2007,536SCRA32,4748.
[37]
Reyesv.NationalHousingAuthority,443Phil.603,610(2003).
[38]
NationalPowerCorporationv.CourtofAppeals,479Phil.850,860(2004).
[39]
RepublicActNo.4156,asamendedbyRepublicActNo.6366andPresidentialDecreeNo.741.
[40]
HeirsofMateoPidacanandRomanaEigov.AirTransportationOffice,G.R.No.162779,15June2007,524SCRA679,686687.
[41]
32Phil.534,537538(1915).
[42]
36Phil.908,911912(1917).
[43]
G.R.No.50147,3August1990,188SCRA300.
[44]
Reyesv.NationalHousingAuthority,supranote37at613.
[45]
Manapatv.CourtofAppeals,G.R.No.110478,15October2007,536SCRA32,55.
[46]
Reyesv.NationalHousingAuthority,supranote37at610.
[47]
DidipioEarthSavers'MultiPurposeAssociation,Incorporated(DESAMA)v.Gozun,G.R.No.157882,30March2006,485SCRA
586,613.
[48]
HeirsofJuanchoArdonav.Hon.Reyes,210Phil.187,203204(1983).
[49]
ExportProcessingZoneAuthorityv.Dulay,G.R.No.L59603,29April1987,149SCRA305,311.
[50]
NationalPowerCorp.v.delaCruz,G.R.No.156093,2February2007,514SCRA56,70.
[51]
ManilaInternationalAirportAuthorityv.Rodriguez,G.R.No.161836,28February2006,483SCRA619,627.
[52]
NationalPowerCorporationv.Angas,G.R.Nos.6022526,8May1992,208SCRA542,548549Urtulav.Republic,130Phil.449,
454455(1968).
[53]
PhilippineOilDevelopmentCo.,Inc.v.Go,90Phil.692,696(1952).

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