PEZA v.

Jose Pulido

Case is about the plea of the owner of expropriated property for the much-delayed payment of just
compensation.

Facts:
1. The controversy has its genesis in the action for the expropriation of 3 parcels of irrigated riceland
situated in Rosario, Cavite that the petitioner commenced on May 15, 1981 in CFI of Cavite against the
several individual owners.

2. The parcels of riceland were

a. Lot 1408 in the names of Jose Pulido and Vicenta Panganiban
b. Lot 1409-B-2 co owned by Francisco Progalidad and Medardo Progalidad
c. Lot 1406 registered in the name of Salud Jimenez

3. During the pendency of the case, Lot 1406 was subdivided into Lot 1406A and 1406B.

4. On July 11, 1991, RTC sustained the right of the petitioner to expropriate the 3 parcels of riceland,
but later partly reconsidered and released Lot 1406A from expropriation.

5. Petitioner appealed to the CA

6. On Jan 4, 1993, petitioner and the Estate of Salud Jimenez (died on Oct 30, 1984) entered into a
Compromise Agreement, stipulating:
a. That the petitioner “agrees to withdraw its appeal from the Order of the Honorable Court
which released lot 1406A from the expropriation proceedings” and the estate of Jimenez, in turn
“agrees to waive, quitclaim and forfeit its claim for damages and loss of income which it sustained by
reason of the possession of the said lot from 1981 up to the present.”
b. The parties agree that the estate of Salud Jimenez would transfer Lot 1406B to the petitioner
in exchange for “Lot 434”
c. The swap arrangement “recognizes the fact that the lot 1406B … is considered expropriated
in favor of the government” and the payment for which being Lot 434
d. The parties “agree that they will abide by the terms of the foregoing agreement in good faith
and the Decision to be rendered based on this Compromise Agreement is immediately final and
executory.”

7. CA remanded the case to the RTC or the consideration and approval of the Compromise Agreement

8. RTC approved the Compromise Agreement. Contrary to its express undertaking under the
Compromise Agreement, the petitioner failed to transfer the title of Lot 434 to the Estate of Salud
Jimenez because the registered owner was Progressive Realty Estate Inc. not the petitioner. As a result,
the Estate of Salud Jimenez filed a Motion to Partially Annul the Order.

9. On Aug 4, 1997, RTC annulled the Compromise Agreement and directed the petitioner to peacefully
return Lot 1406B to the Estate of Salud Jimenez. Petitioner went to the CA by petition for certiorari and
prohibition, essentially to nullify the order.
10. In its decision, the CA partially granted the petition for certiorari and prohibition, set aside the order
of the RTC on the return of the Lot 1406B to the Estate of Salud Jimenez; and directed that the RTC
determine the just compensation for Lot 1406B.

The Court explained that the Estate of Salud Jimenez had already acknowledged the propriety of the
expropriation of Lot 1406B by entering into the Compromise Agreement, and that the provisions of the
Compromise Agreement had consequently related only to the form or mode of payment of the just
compensation for Lot 1406B, that, in lieu of cash, another lot (Lot 434) was to be delivered as just
compensation to the estate of Salud Jimenez, stating:

The only issue for consideration is the manner and amount of payment due to the estate. In fact,
aside from the withdrawal of PEZA’s appeal to the CA concerning Lot 1406A, the matter of payment of
just compensation was the only subject of the compromise agreement. Under the compromise
agreement, the estate was supposed to receive Lot 434 in exchange for lot 1406B. When PEZa failed to
fulfill its obligation to deliver, the estate can again demand for the payment but not the return of the
expropriated lot. This interpretation by the CA is in accordance with Sec 4-8, Rule 67 of the Rules of
Court.

Issue:
Whether or not the just compensation should be based on the value or the assessment rate prevailing in
1981 or in fair market value in 1981, the time of the filing of its expropriation complaint, which was
the time of the taking.
Shorter version:
Whether or not just compensation should be based on the value of Lot 1406B prevailing in 1981 or in
1993.

Ruling:
RTC
A. The just compensation for Lot 1406B should be based on the value or assessment rate prevalent in
1993, the year the parties entered into the Compromise Agreement and thereby agreed that the just
compensation for Lot 1406B was Lot 434.

The just compensation of Lot 1406B was P6,200/square meter as substantiated by the several
documents presented to show the value of properties adjacent to Lot 1406B namely:
1. the Deed of Sale of Lot 1406A executed in 1994 whereby it was sold to MERALCO for
P6,395/square meter
2. a certified true copy of the 1998 zonal valuation of properties along the PEZA road containing the
zonal valuations of residential and commercial properties in the area to be, respectively P4000/sq meter
and P8000/sq meter.
3. an appraisal report on Lot 1406B by an independent appraiser stating that the value of properties in
the vicinity of Lot 1406B was P7500/sq meter in 1997
4. other documents showing payment of just compensation by PEZA to the owners of previously
expropriated properties adjacent to or near Lot 1406B

The total compensation to be paid should bear interest at the legal rate reckoned from Aug 23, 1993.

The doctrine of the law of the case means that whatever is irrevocably established as the controlling
legal rule between the same parties in the same case, whether correct on general principles or not,
continues to be the law of the case for as long as the facts on which the legal rule was predicated
continue to be the facts of the case before the court. It applies in a situation where CA has made a
ruling on a question on appeal and thereafter remands the case to the lower court for further
proceedings; the question then settled by the CA becomes the law of the case binding the lower court
and any subsequent appeal, and questions necessarily involved and dealt with in a former appeal will
be regarded as the law of the case in a subsequent appeal, although the questions are not expressly
treated in the opinion of the court inasmuch as the presumption is that all the facts in the case bearing
on the point decided have received due consideration whether all or none of them are mentioned in the
opinion.

B. P6200/sq meter is the correct just compensation for Lot 1406B

With the annulment of the Compromise Agreement, the payment of just compensation for Lot 1406B
now has to be made in cash. In that regard, the order of the Court to remand to the RTC for the
determination of just compensation was undubitably for the sole objective of ascertaining the
equivalent monetary value in 1993 of Lot 1406B or Lot 434.

C. Estate of Salud Jimenesz entitled to interest of 12% per annum

The power or eminent domain is not an unlimited power. Sec 9, Art 3 of the 1987 Constitution sets
down the essential limitations upon this inerent right of the State to take private property, namely:
a. that the taking must be for a public purpose
b that just compensation must be paid to the owner.

The State must first establish that the exercise of eminent domain is for a public purpose, which, here,
is already settled. What remains to be determined is the just compensation. The owner is entitled to
legal interest from the time of the taking of the property until the actual payment in order to place the
owner in a position as good as, but not better than, the position he was in before the taking occurred.

It is undeniable that just compensation was not promptly made to the Estate of Salud Jimenez for the
taking of Lot 1406-B by the petitioner. The move to compensate through the swap arrangement under
the Compromise Agreement was aborted or amounted to nothing through no fault of the Estate of Salud
Jimenez. The petitioner, which should have known about the inefficacy of the swapping of Lot 434 for
Lot 1406- B, could even be said to have resorted to the swapping for the purpose of delaying the
payment. Thus, it was solely responsible for the delay. In fact, the Estate of Salud Jimenez was
compelled to seek the rescission of the Compromise Agreement, a process that prolonged even more
the delay in the payment of just compensation. In view of this, the CA's fixing of legal interest at only
6% per annum cannot be upheld and must be corrected, for that rate would not ensure that
compensation was just in the face of the long delay in payment.

Wherefore, we deny the petition for review on certiorari filed by PEZA, and affirm the decision
promulgated by the CA, subject to the modification that the legal interest chargeable on the unpaid just
compensation for Lot 1406B is 12% per annum reckoned from Aug 23, 1993 on the unpaid gross value
of P81,331,600 for Lot 1406B.