67.
4 Republic of the Philippines a Writ of Possession on the subject property5 consonant with Presidential
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 158609 July 27, 2007
SPOUSES MARIAN B. LINTAG and ANGELO T. ARRASTIA,
represented herein by Attorney-in-Fact REMEDIOS BERENGUER
LINTAG, Petitioners,
vs.
NATIONAL POWER CORPORATION, Respondent.
DECISION
NACHURA, J.:
This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of
Civil Procedure seeking the reversal of the Court of Appeals (CA)
Decision2 dated November 29, 2002 and praying that the Order3 of the
Regional Trial Court (RTC) of Sorsogon, Sorsogon, dated July 10, 2001,
be reinstated and affirmed in toto.
The Facts
Petitioners-spouses Marian Berenguer-Lintag and Angelo T. Arrastia
(petitioners) are the registered owners of a property with an area of
80,001 square meters, covered by Transfer Certificate of Title (TCT) No.
T-24855 and located at Barangay Bibincahan, Sorsogon, Sorsogon.
On December 4, 1996, respondent National Power Corporation (NPC)
filed a Complaint4 for Eminent Domain against petitioners in order to
acquire an easement of a right of way over a portion of the said property,
consisting of 8,050 square meters (subject property) with an initial
assessed value at ₱2,468.09. NPC averred that such acquisition was
necessary and urgent for the construction and maintenance of NPC's 350
KV Leyte-Luzon HVDC Power Transmission Project.
On January 17, 1997, after the deposit of the initial assessed value of the
subject property amounting to ₱2,468.09 with the Philippine National
Bank, the RTC, upon an ex-parte motion of NPC, ordered the issuance of
Decree (PD) No. 42.6
On January 24, 1997, the Writ of Possession7 was issued in favor of
NPC.8
On May 25, 2000, the RTC issued an Order9 appointing three (3) new
Commissioners to appraise the value of the subject property. They were
directed to take their oath within five (5) days from receipt of said Order,
to notify the parties and their respective counsels as to the date of the
conduct of ocular inspection of the subject property, and to submit a
report within fifteen (15) days from the completion of the ocular
inspection.
On June 15, 2000, two commissioners filed a motion praying that the
RTC use the previous Commissioners' Report as basis in determining the
amount of just compensation.10
On July 11, 2000, petitioners filed a Motion11 asking the Court to order the
NPC to pay them or their Attorney-in-Fact Remedios Berenguer Lintag
(Remedios Lintag) the amount of ₱49,665.63, as the tentative value of
the damaged improvements.
On August 28, 2000, the RTC directed Field Personnel Wenifredo A.
Halcon, Jr. and Augusto V. Ramos, Jr. to confirm that the damage to the
improvements in the subject property amounted to ₱49,665.63.12 NPC
paid the said amount.
On September 13, 2000, pre-trial was held and a pre-trial Order13 was
issued. The case was set for trial on the merits on November 15, 2000.
However, on November 7, 2000, Republic Act (RA) No. 8974 entitled "An
Act To Facilitate The Acquisition Of Right-Of-Way, Site Or Location For
National Government Infrastructure Projects And For Other Purposes"
was approved.
On February 14, 2001, petitioners filed a Motion14 asking the RTC to
direct the NPC to comply with RA No. 8974. In the said motion,
petitioners asseverated that pursuant to Sec. 4 of RA No. 8974, they are
entitled to 100% of the value of the subject property based on the current
relevant zonal valuation made by the Bureau of Internal Revenue (BIR),
which at the time was pegged at ₱700.00 per square meter. Thus,
petitioners prayed that NPC be directed to pay ₱5,635,000.00 for the
subject property.
The Ruling of the RTC
On July 10, 2001, the RTC issued an Order directing the NPC to comply
with RA No. 8974. The court held that RA No. 8974 is procedural in
nature, and, thus, may be given retroactive effect, viz.:
WHEREFORE, premises considered, the plaintiff is ordered to pay the
defendants the amount equivalent to one hundred (100%) percent of the
current Bureau of Internal Revenue's zonal valuation of their property
consisting of eight thousand fifty (8,050) square meters affected by the
electrical project involved in this case within fifteen (15) days after receipt
of this Order.
Set the continuation of hearing for the determination of just compensation
to August 31, 2001 at 8:30 o'clock in the morning.
SO ORDERED.
NPC filed a motion for reconsideration which was denied by the RTC in
its Order15 dated September 7, 2001. Aggrieved, NPC went to the CA via
Petition for Certiorari16 under Rule 65 of the Rules of Civil Procedure.
The CA's Ruling
In its November 29, 2002 Decision, the CA declared that RA No. 8974
cannot be applied retroactively since an initial deposit had already been
made and possession of the subject property had already been obtained
by NPC. Moreover, the CA held that the retroactive application of said
law would impose a greater burden on the part of the State where none
had existed before. It would inflict substantial injury to a substantive right.
Finally, the CA opined that RA No. 8974 itself made no mention of
retroactivity. The CA disposed, to wit:
WHEREFORE, the petition at bench is GRANTED, and the impugned
orders are SET ASIDE. The temporary restraining order earlier issued is
hereby converted into a writ of preliminary injunction upon the same bond
posted by the petitioner. Without costs.
SO ORDERED.
On January 14, 2003, petitioners filed a Motion for
Reconsideration17 which the CA denied in its Resolution18 dated May 15,
2003.
Hence, this Petition based on the following grounds:
1) The CA committed a reversible error when it declared that RA
No. 8974 cannot be applied retroactively because it is a
substantive law and not a remedial statute; and
2) Assuming for the sake of argument that RA No. 8974 is not
retroactive, how should the petitioners be promptly paid just
compensation?
Petitioners contend that the Government's deliberate delay of payment of
just compensation is the evil sought to be remedied by RA No. 8974; that
despite the issuance of Administrative Order (AO) No. 50 and NPC
Resolution No. 98-184, NPC never had the intention of making prompt
payment of just compensation; and that just compensation does not only
mean correct determination of the amount to be paid but also the prompt
payment thereof. Petitioners manifest that NPC, as observed by the RTC,
failed to pay the initial deposit of ₱32,930.00 as mandated by PD
42.19Thus, petitioners submit that they are entitled to the prompt payment
of just compensation and on account of NPC's delay in the payment
thereof, the imposition of legal interest is warranted.20
On the other hand, NPC through the Office of the Solicitor General (OSG)
counters that RA No. 8974 is not a remedial statute that can be given
retroactive effect, and submits that Sec. 4 thereof is a substantive
provision as it vests substantive rights; that the legislature did not intend
RA No. 8974 to have retroactive application; that the silence of the
Implementing Rules of RA No. 8974 as to prospectivity does
not ipso facto render it retroactive; that the RTC no longer had jurisdiction
to amend its final Order dated January 17, 1997 for initial deposit and
possession; and that the valuation fixed by the RTC is improper since the
case involves an easement, and thus, NPC should be required to pay
only an easement fee.21
The Court's Ruling
The petition is bereft of merit.
Petitioners' first ground must fail.
In the case of Republic v. Gingoyon,22 this Court held that RA No. 8974 is
a substantive law, to wit:
It likewise bears noting that the appropriate standard of just
compensation is a substantive matter. It is well within the province
of the legislature to fix the standard, which it did through the
enactment of Rep. Act No. 8974. Specifically, this prescribes the new
standards in determining the amount of just compensation in
expropriation cases relating to national government infrastructure
projects, as well as the payment of the provisional value as a prerequisite
to the issuance of a writ of possession.
This ruling was reiterated in this Court's Resolution23 of February 1, 2006,
which further states that:
[I]f the rule takes away a vested right, it is not procedural, and so the
converse certainly holds that if the rule or provision creates a right, it
should be properly appreciated as substantive in nature. Indubitably, a
matter is substantive when it involves the creation of rights to be enjoyed
by the owner of property to be expropriated. The right of the owner to
receive just compensation prior to acquisition of possession by the State
of the property is a proprietary right, appropriately classified as a
substantive matter and, thus, within the sole province of the legislature to
legislate on.
1avvphil
It is possible for a substantive matter to be nonetheless embodied in a
rule of procedure, and to a certain extent, Rule 67 does contain matters
of substance. Yet the absorption of the substantive point into a
procedural rule does not prevent the substantive right from being
superseded or amended by statute, for the creation of property rights is a
matter for the legislature to enact on, and not for the courts to decide
upon. Indeed, if the position of the Government is sustained, it could very
well lead to the absurd situation wherein the judicial branch of
government may shield laws with the veneer of irrepealability simply by
absorbing the provisions of law into the rules of procedure. When the
1987 Constitution restored to the judicial branch of government the sole
prerogative to promulgate rules concerning pleading, practice and
procedure, it should be understood that such rules necessarily pertain to
points of procedure, and not points of substantive law.
It is a well-entrenched principle that statutes, including administrative
rules and regulations, operate prospectively unless the legislative intent
to the contrary is manifest by express terms or by necessary
implication24 because the retroactive application of a law usually divests
rights that have already become vested.25 This is based on the Latin
maxim: Lex prospicit non respicit (the law looks forward, not backward).
In the application of RA No. 8974, the Court finds no justification to depart
from this rule. First, RA No. 8974 is a substantive law. Second, there is
nothing in RA No. 8974 which expressly provides that it should have
retroactive effect. Third, neither is retroactivity necessarily implied from
RA No. 8974 or in any of its provisions. Unfortunately for the petitioners,
the silence of RA No. 8974 and its Implementing Rules on the matter
cannot give rise to the inference that it can be applied retroactively. In the
two (2) cases26 wherein this Court applied the provisions of RA No. 8974,
the complaints were filed at the time the law was already in full force and
effect. Thus, these cases cannot serve as binding precedent to the case
at bench.
As to petitioners' second ground, the parties may be guided by the
following principles.
Expropriation of lands consists of two stages:
The first is concerned with the determination of the authority of the
plaintiff to exercise the power of eminent domain and the propriety of its
exercise in the context of the facts involved in the suit. It ends with an
order, if not of dismissal of the action, "of condemnation declaring that the
plaintiff has a lawful right to take the property sought to be condemned,
for the public use or purpose described in the complaint, upon the
payment of just compensation to be determined as of the date of the filing
of the complaint x x x.
The second phase of the eminent domain action is concerned with the
determination by the court of "the just compensation for the property
sought to be taken." This is done by the court with the assistance of not
more than three (3) commissioners x x x.27
It is only upon the completion of these two stages that expropriation is
said to have been completed. The process is not complete until payment
of just compensation.28 Accordingly, the issuance of the writ of
possession in this case does not write finis to the expropriation
proceedings. To effectuate the transfer of ownership, it is necessary for
the NPC to pay the property owners the final just compensation.29
We observe that petitioners are not questioning the authority of the NPC
to exercise the power of eminent domain nor the propriety of its exercise.
While the constitutional restraint of public use has been overcome, the
imperative just compensation is still wanting. Thus, petitioners now
appeal for the prompt payment of just compensation. Indeed, just
compensation is not only the correct determination of the amount to be
paid to the property owner but also the payment of the property within a
reasonable time. Without prompt payment, compensation cannot be
considered "just."30
amount in their prayer before this Court, the same shall simply be
considered by the RTC and included in the determination of the final just
compensation.
WHEREFORE, the instant petition is hereby DENIED. The Regional Trial
Court of Sorsogon, Sorsogon, guided by the foregoing principles, is
hereby directed to proceed with the hearing of the expropriation case,
docketed as Civil Case No. 96-6295, and to resolve the issue of just
compensation with utmost dispatch. No costs.

This Court understands the plight of petitioners. It has been ten (10) SO ORDERED.
years since they were divested of possession of their property, but they
still have to be paid just compensation. It may be noted that the
expropriation case still pends at the RTC, and it is in that case where a
determination of the amount of just compensation shall be made.
Inasmuch as this determination necessarily involves factual matters, and
considering that this Court is not a trier of facts, at this point, we can only
direct the RTC to try the case expeditiously, so that the amount of just
compensation for the subject property can be fixed and promptly paid, as
justice and equity dictate.

For this purpose, the RTC must bear in mind that it is the value of the
land at the time of the taking or at the time of the filing of the complaint,
whichever came first, not the value of the land at the time of the rendition
of judgment which should be considered.31 In this case, where the
institution of

an expropriation action preceded the taking of the subject property, just

compensation is based on the value of the land at the time of the
filing of the complaint. This is provided by the Rules of Court, the
assumption of possession by the expropriator ordinarily being conditioned
on its deposit with the National or Provincial Treasurer of the amount
equivalent to the value of the property as provisionally ascertained by the
court having jurisdiction of the proceedings.32

Finally, this Court takes cognizance of petitioners' manifestation that the

NPC, as found by the RTC, failed to pay the initial deposit of ₱32,930.00
as required in PD 42.33 The RTC had already fixed this amount on the
basis of its initial factual findings. The assailed CA Decision adopted the
RTC's factual findings. NPC's Comment filed with this Court and even its
petition for certiorari before the CA did not address, much less contest,
this fact. Because this factual finding was not disputed by the NPC in its
pleadings before the CA and before this Court, it is, therefore, deemed
admitted.34 However, inasmuch as petitioners made no mention of this
 67.5 Republic of the Philippines Phil- 243189 425 P45,900.00 425 45,900.00 P1,062,500.00
SUPREME COURT Ville
Manila Sy Chi 29737 8,425 P658,690.00 2,924 P228,606.47 P7,310,000.00
Siong
FIRST DIVISION
On January 3, 2001, petitioner filed a complaint for expropriation before
G.R. No. 172243 June 26, 2007 the Regional Trial Court of Caloocan City for the acquisition of the
aforedescribed parcels of land. The case was raffled to Branch 131 of
REPUBLIC OF THE PHILIPPINES, represented by the TOLL that court.
REGULATORY BOARD, petitioner,
vs. After filing an Amended Complaint to reflect the proper schedule of
PHIL-VILLE DEVELOPMENT AND HOUSING CORPORATION and SY valuation of the properties sought to be expropriated, petitioner deposited
CHI SIONG AND CO., INC., respondents. with the Land Bank of the Philippines the amount of Two Million Three
Hundred Eleven Thousand Two Hundred Pesos (₱2,311,200.00),
DECISION representing the total zonal value of the properties under expropriation.
Thereafter, it filed with the court a Motion for Issuance of Writ of
GARCIA, J.: Possession.

Simply put, the lone legal issue involved in this petition for review is Both respondents separately moved to dismiss the complaint on the main
whether, under the facts obtaining in this case, a final determination of ground that the trial court lacked jurisdiction over the res. However, in its
just compensation in an expropriation proceedings must first be made Order of April 3, 2002, the trial court denied both motions and asserted
before an order of expropriation may be issued by the court. In its jurisdiction over the case. In time, respondents separately moved for
Decision1 of January 27, 2006 in CA-G.R. SP No. 89878, as reiterated in reconsideration but their motions were denied by the court in its
its Resolution2 of April 10, 2006, the Court of Appeals (CA) answered the subsequent Order of June 18, 2002. In the same Order, the court
issue in the affirmative. Disagreeing, petitioner Republic, as represented directed the issuance of a writ of possession in favor of petitioner and
by the Toll Regulatory Board, has come to this Court via this recourse to required the respondents to file their respective answers to the complaint.
seek the annulment and setting aside of the CA decision and resolution.
Of the two respondents impleaded as defendants in the complaint, only
But first the facts: Sy Chi Siong filed its Answer, thereunder reiterating the grounds pleaded
in its earlier motion to dismiss. In the alternative, it prayed for just
In an effort to ease traffic congestion on the North Luzon Expressway, compensation.
petitioner Republic, through the Toll Regulatory Board, sought to widen
the Balintawak Toll Plaza which would necessarily affect two (2) parcels As regards respondent Phil-Ville, petitioner alleged that this respondent
of land registered under the names of herein respondents Phil-Ville "has yet to file its responsive pleading to the complaint for expropriation."
Development and Housing Corporation (Phil-Ville, for brevity) and Sy Chi
Siong and Co., Inc. (Sy Chi Siong, for short). The parcels of land are Thereafter, petitioner filed a Motion for Issuance of Order of Expropriation
more particularly described as follows: and Appointment of Commissioners on the rationale that the respondents
had never challenged its right to expropriate their properties subject of
Owner TCT No./ Total Assessed Affected Assessed Zonal Value ofthe suit.
Area Value of Area Value of the Affected
Lot No. Entire Area Affected Area Area In an Order dated January 27, 2005, the trial court, even as it found the
(sq. aforementioned motion meritorious, deferred action on the petitioner’s
m.) prayer for an order of expropriation and instead set the same motion for
hearing on March 7, 2005 "so that the parties may nominate the
commissioners who will ascertain and report to the court the just
compensation for the aforementioned properties." Partly reads the Order:
The motion is impressed with merit.
It is worthy to mention that: "The right of eminent domain is usually
understood to be an ultimate right of the sovereign power to appropriate
any property within its territorial sovereignty for a public purpose"
[Republic vs. Court of Appeals, 383 SCRA 611, 2002].
An examination of the amended Complaint clearly show the overriding
necessity of expropriating the subject properties in order to give way to
the construction, rehabilitation and expansion of the North Luzon
Expressway, which is undoubtedly for public purpose and benefit.
Premises considered, the "Motion for issuance of Order of Expropriation"
is hereby deferred pending final determination of just compensation.
Meanwhile, let this case be set for hearing on March 7, 2005 at 8:30 in
the morning so that the parties may nominate the commissioners who will
ascertain and report to the court the just compensation for the
aforementioned properties. [Emphasis supplied]
On February 22, 2005, petitioner filed a Motion for Partial
Reconsideration of the above Order, arguing that since the case had
been set for hearing on March 7, 2005 for the nomination of the
commissioners and necessarily for the conduct of hearing for the
determination of just compensation, "it is proper that an order of
expropriation be forthwith issued before such determination of just
compensation proceeds," citing, as basis therefor, Section 4, Rule 67 of
the 1997 Rules of Civil Procedure, and adding that where a defendant in
an expropriation case raises only the issue of just compensation, the
court "should forthwith enter an order of expropriation."
In an Order dated March 7, 2005, the trial court denied petitioner's motion
for partial reconsideration, to wit:
The Court is of the opinion that the contentions of the counsel for the
petitioner [are] exactly the opposite of what the rules provide. The
provision of the rules relied upon, Section 4 Rule 67 is quite clear that this
Court may issue an order of expropriation declaring that the plaintiff has a
lawful right to take the property sought to be expropriated, for the public
use or purpose described in the complaint, upon the payment of just
compensation. Thus, just compensation of the subject properties must
first be determined and paid before the Court can issue an order of
expropriation.
Premises considered, the 'Motion for Partial Reconsideration' is hereby
DENIED for lack of merit. (Italics supplied).
Dissatisfied, petitioner then went to the CA on certiorari, thereat docketed
as CA-G.R. SP No. 89878, imputing grave abuse of discretion on the part
of the trial court in insisting on the payment of just compensation before
an order of expropriation may be issued.
As stated at the threshold hereof, the appellate court, in its herein
assailed Decision dated January 27, 2006, upheld the trial court. Partly
says the CA in its challenged decision:
Jurisprudential law has already settled that condemnation suits involve
two stages: the order authorizing expropriation, and the judgment on just
compensation. An order of expropriation is a court's resolution upholding
the State's lawful right to take property sought to be expropriated and
thus forecloses any objection to the petitioner's authority to expropriate
for the public purpose stated in the complaint. This is implied in Rule 67,
Section 4. The order can be issued unless there are objections and
defenses against the condemnation proceedings that would require the
presentation of evidence, and only after an adjudication of these
objections and defenses can a court proceed with the second stage of
the expropriation proceedings.
However, under the circumstances at bar, there is already no more issue
as to the petitioner's authority to expropriate and the propriety of its
exercise, which the lot owners themselves had acknowledged and
admitted, and that the State has already been given the right to enter
upon and to use the lots. In fact, the project has already been completed.
We thus find no grave abuse of discretion on the court's deferment of the
issuance of the Order of expropriation pending the determination of just
compensation, for this is not a major procedural flaw fatal to the action of
the petitioner.
The only substantial issue now is the amount of compensation. The
court a quo merely aims to secure its prompt adjudication and payment to
the owners, and the order would only be a formality. Hence, the second
stage of expropriation may proceed, the issuance of an order in this case
is only a permissive one and discretionary on the part of the trial court. A
failure to issue an expropriation order is no bar at all to the State to wield
its power of eminent domain. In the case at bar, what will actually
complete the vesting of title in favor of the State is the actual payment of
just compensation to the owners of the condemned properties.
WHEREFORE, in view of the foregoing, the instant petition is hereby
DENIED. No pronouncement as to costs. (Emphasis supplied).
SO ORDERED.
With its motion for reconsideration having been denied by the CA in its
equally assailed resolution of April 10, 2006, petitioner is now with
us via the present recourse on the following submissions:
I plaintiff has a lawful right to take the property sought to be condemned,
AN ORDER OF EXPROPRIATION MERELY REQUIRES A
DETERMINATION OF THE AUTHORITY TO EXERCISE THE POWER
OF EMINENT DOMAIN; ITS ISSUANCE DOES NOT HINGE ON THE
PAYMENT OF JUST COMPENSATION; AND
II
PAYMENT OF JUST COMPENSATION IS NOT A CONDITION SINE
QUA NON FOR THE ISSUANCE OF AN ORDER OF EXPROPRIATION.
WE GRANT the petition.
Section 4, Rule 67 of the Rules of Court provides:
Section 4. Order of expropriation. - If the objections to and the defenses
against the right of the plaintiff to expropriate the property are overruled,
or when no party appears to defend as required by this Rule, the court
may issue an order of expropriation declaring that the plaintiff has a
lawful right to take the property sought to be expropriated, 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 taking of the
property or the filing of the complaint, whichever came first.
A final order sustaining the right to expropriate the property may be
appealed by any party aggrieved thereby. Such appeal, however, shall
not prevent the court from determining the just compensation to be paid.
After the rendition of such an order, the plaintiff shall not be permitted to
dismiss or discontinue the proceeding except on such terms as the court
deems just and equitable. [Emphasis supplied]
As is evident from the foregoing, there are two (2) stages in every action
for expropriation, namely:
1. Determination of the authority of the plaintiff to exercise the power of
eminent domain and the propriety of its exercise in the context of the
facts involved in the suit. This ends with an order, if not of dismissal of the
action, of condemnation [or order of expropriation] declaring that the
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; and
2. Determination by the court of the just compensation for the property
sought to be taken.3
Petitioner Republic is correct in saying that an order of expropriation
denotes the end of the first stage of expropriation. Its end then paves the
way for the second stage – the determination of just compensation, and,
ultimately, payment. An order of expropriation puts an end to any
ambiguity regarding the right of the petitioner to condemn the
respondents’ properties. Because an order of expropriation merely
determines the authority to exercise the power of eminent domain and
the propriety of such exercise, its issuance does not hinge on the
payment of just compensation. After all, there would be no point in
determining just compensation if, in the first place, the plaintiff’s right to
expropriate the property was not first clearly established.
During the first stage, if the defendant had denied or objected to the
plaintiff's right to expropriate, a hearing would have been held to decide
upon whether the land was private, and whether the purpose was, in fact,
public.4However, once the objections and defenses against the right of
the plaintiff to expropriate are overruled, an order of expropriation may
issue. With all the more reason must this be so when, as in this case,
there is no contest or objection by either of the herein respondents as to
the petitioner’s right to expropriate.
Neither respondent raised an issue as to petitioner's right to expropriate
its parcels of land, or the public purpose of the expropriation. For sure,
respondent Phil-Ville even allowed petitioner unimpeded entry and
unlimited access to the portion of its property under expropriation for the
eventual construction, completion, operation and maintenance of the
North Luzon Expressway Project.

After the trial court determined the right of petitioner to condemn the
subject properties for the expansion and rehabilitation of the North Luzon
Expressway, the first stage of the expropriation proceedings should have
been properly terminated with the issuance of an order of expropriation
declaring that petitioner has the right to take the properties.

To stress, payment of just compensation is not a condition sine qua

non to the issuance of an order of expropriation. In expropriation
proceedings, it is the transfer of title to the land expropriated that must
wait until the indemnity is actually paid.5 This is made all the more clear
when note is taken of the second paragraph of Section 4, Rule 67, supra,
which states that the defendant may appeal from the order of
expropriation by filing a record on appeal, which appeal does not prevent
the court from determining the just compensation to be paid.

Further, a perusal of Section 5, Rule 67 bolsters this point:

Section 5. Ascertainment of Compensation. - Upon the rendition of the

order of expropriation, the court shall appoint not more than three (3)
competent and disinterested persons as commissioners to ascertain and
report to the court the just compensation for the property sought to be
taken. x x x

Clearly, it is after the rendition of the order of expropriation that the court
shall appoint commissioners to ascertain the just compensation for the
property sought to be taken.

WHEREFORE, the petition is GRANTED and the assailed decision and

resolution of the Court of Appeals are ANNULLED and SET
ASIDE. Accordingly, the trial court is directed to issue an order of
expropriation in favor of petitioner Republic.

No costs.

SO ORDERED.
 67.6 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 176487 August 25, 2009
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, Petitioner,
vs.
FAR EAST ENTERPRISES, INC., ARSOL MANAGEMENT
CORPORATION,* MARIA CHRISTINA C. BERNASCONI, JORGE C.
BERNASCONI, RENE C. BERNASCONI, REGINA B. TUASON,
CHRISTIAN C. BERNASCONI, MARTIN C. BERNASCONI, JAIME C.
BERNASCONI and CHRISTINA MARIE C.
BERNASCONI,Respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari under Rule 45 of the 1997
Rules of Civil Procedure which seeks to reverse and set aside the
Decision1 of the Court of Appeals dated 9 November 2006 in CA-G.R. SP
No. 72425 which dismissed petitioner Republic of the Philippines’ Petition
for Certiorari, and its Resolution2 dated 5 February 2007 denying
petitioner’s motion for reconsideration. The Court of Appeals held that the
Regional Trial Court of Nasugbu, Batangas, Branch 14, in Civil Case No.
674, did not act with grave abuse of discretion amounting to lack or
excess of jurisdiction in issuing the Resolution dated 17 June 2002
ordering petitioner to make an additional payment of ₱425.00 per square
meter for the subject properties of respondents Far East and the
Bernasconis before the issuance of an Order to take possession of the
subject properties, and a writ of possession.
On 23 November 2001, the Republic of the Philippines, represented by
the Secretary of the Department of Public Works and Highways (DPWH),
filed a Complaint3 for Eminent Domain before the Regional Trial Court of
Nasugbu, Batangas against Far East Enterprises, Inc. (Far East), Arsol
Management Corporation (Arsol), Maria Christina C. Bernasconi, Jorge
C. Bernasconi, Rene C. Bernasconi, Regina B. Tuason, Christian C.
Bernasconi, Martin C. Bernasconi, Jaime C. Bernasconi and Christina
Marie C. Bernasconi (Bernasconis).
The complaint alleged, inter alia, that:
5. Defendants are the declared owners of parcels of land situated
at Barangay Balaytigue, Nasugbu, Batangas as shown in the Tax
Declarations attached as Annexes "A", "B", "C", "D", "E", "F", "G",
"H", "I", "J", "K", "L", "M", and "N", and certificates of title attached
as annexes "O", "P", "Q", "R", "S", "T", "U", "V", "W", "X", "Y", "Z"
and "AA" and more particularly described below together with the
affected areas sought to be expropriated and the corresponding
zonal values, to wit:
xxxx
6. To enable the plaintiff to construct the Ternate-Nasugbu Tali
Batangas Road, a public purpose authorized by law to be
undertaken by plaintiff, it is both necessary and urgent for plaintiff
to acquire portions of the above parcels of land consisting of a
total area of 29, 786 sq. m., more or less, shown in the attached
sketch plan marked as Annex "CC" and made and integral part
hereof.
7. The portion of above-described parcels of land sought to be
expropriated have not been applied to nor expropriated for any
public use and are selected by plaintiff as the site of the right-of-
way in connection with the construction of the Ternate-Nasugbu
Tali Batangas in a manner compatible with the greatest public
good and the least public injury.
8. Plaintiff has negotiated with defendants for the acquisition of
portions of the properties for the public purpose as above-stated
at a price prescribed by law, but failed to reach an agreement
with them notwithstanding the negotiations.
9. Under Section 7 of the Executive Order No. 1035 dated June
25, 1985, plaintiff represented by the DPWH is authorized to
institute expropriation proceedings through the Office of the
Solicitor General.
10. Pursuant to Section 4 of Republic Act No. 89744 in relation to
Section 12 of the Implementing Rules and Regulations thereof,
 plaintiff shall have the right to take or enter upon the possession
of the real properties involves upon the issue of this Honorable
Court of a Writ of Possession in favor of the plaintiff.
xxxx
on the merits. It likewise asked that petitioner, after trial, be ordered to
pay just compensation plus interest and penalties due for a property (Lot
272) located along the Nasugbu-Ternate Road in Natipunan, Nasugbu,
Batangas, which was taken from it by the petitioner and used in a
previous road project without payment of just compensation.

11. Plaintiff is willing to deposit the total amount of ₱2.233M
representing the zonal valuation of the affected portions of the
subject parcels of land as stated in paragraphs 5 and 6 hereof
and which for purposes of the issuance of the corresponding writ
if possession, is required to be deposited by plaintiff with the
authorized government depository, subject to the orders and final
disposition of this Honorable Court.5
Respondent Far East filed its Answer8 dated 11 January 2002 which
raised the following affirmative special defenses:
10.2 That answering defendant manifests that on or about March
2001, during the meeting held at its office, plaintiff made an offer
to purchase the properties, of the answering defendant, subject
matter of this case, at ₱200.00 per square meter. x x x.

The properties subjects of this case are all located in Barangay 10.2.1 That during the said meeting, answering defendant
Balaytigue, Nasugbu, Batangas. The particulars of the parcels of land are bargained for a higher price but Atty. Lamberto Aguilar, Legal
as follows: Office of Department of Public Works and Highway (DPWH, for
brevity), suggested that answering defendant accept the said
Owner OCT/TCT No. Lot/Block No. Tax Declaration No. Area Affected in amount of compensation at ₱75.00 per square meter because he
Square Meters
claims that the actual use of the real estate properties, although
Far East T-60966 Block 76 014-01029 1,704classified as residential by the Municipal Assessor of Nasugbu, is
Far East T-15189 Lot 339 014-01102 2,988agricultural;
Far East T-60540 Lot 536 014-01106 2,346
10.2.2 That in compliance with the suggestion of plaintiff to put
Far East T-57762 Lot 535 014-01105 3,051
into writing our counter-offer, answering defendant wrote the
Far East TP-1835 Lot 51 014-01313 former informing it of its desired amount and requesting for a
2,317
copy of the revised parcellary survey plan showing the area to be
Bernasconis T-54825 Lot 549 014-01119 2,053
affected after reduction in width of the right of way from 30 meters
Bernasconis T-54825 Lot 550 014-01120 190to 20 meters intended by the DPWH. 1avv phi 1

Arsol T-50152 Lot 534 014-00182 1,432

10.2.3 That after learning of its rights as landowner under
Arsol T-50168 Lot 254 014-0098 1,356
Administrative Order No. 50 and Republic Act (RA, for brevity)
Arsol T-50158 Lot 53 014-0097 No. 8974, answering defendant in a letter dated July 16, 2001,
2,960
retracted the previous amount offered to plaintiff in its letter dated
Arsol T-51059 Lot 190 014-0088 2,398
April 6, 2001 and, instead offered the said properties on a
Arsol T-50160 Lot 191 014-0087 negotiated sale at the amount of at least ₱600.00 per square
4,484
Arsol T-50170 Lot 256 014-00175 457meter.
Arsol T-51064 Lot 250 014-00109 1,898
x x x x.

Arsol filed its Answer with Counterclaim7 dated 7 January 2002. It prayed 10.2.4 That Plaintiff never replied to answering defendant’s letter
that the prayer of petitioner (plaintiff therein) for a writ of possession be under date of April 6, 2001. However, instead of commenting to
denied unless full payment of just compensation would be made after trial the price we offered by way of negotiated sale on the July 16,
2001 letter, and acting in bad faith as well by not observing due
process as evidenced by failure of the DPWH to provide the
requested revised parcellary plan necessary for the defendant to
make an informed final decision, plaintiff chose instead to
endorse its complaint to the OSG for filing in court and, true to the
statement made by Atty. Aguilar, fixed the amount of
compensation at the amount of ₱75.00 per square meter. x x x.
10.3 That plaintiff misleads the Honorable Court in stating that the
zonal valuation of the subject properties is ₱75.00 per square
meter as the said amount corresponds only to agricultural lands,
not to residential lands owned by answering defendant and
subject of this complaint, as determined in the schedule of BIR
zonal valuation attached as Annex "BB" in its complaint;
xxxx
10.4 That the subject properties except for one (1) property, are
parts and parcels of Talibeach Subdivision, a residential
subdivision, in line with the approved subdivision plans and/or by
the said subdivision’s Deed of Restriction, xerox copies of which
are attached as annexes "4" to "4-1";
10.4.1 That, in addition, the properties are located in the same
general area of other residential subdivisions such as Peninsula
de Punta Fuego, and Maya-Maya Subdivisions as well as
approximately 3 kilometers from two other residential subdivisions
currently being developed as sold, specifically, Terrazas de Punta
Fuego and Kawayan Cove Subdivision;
10.4.2 That Per Proclamation 1801 and Zoning Ordinance No. 03
of the Municipality of Nasugbu under date of April 1982, as
approved by the Human Settlements Regulatory Commission
under Resolution No. 123 under date of May 4, 1983, the area is
declared as a Residential, Tourism and tourism potential area
and therefore, may not even moreso be considered, classified as
agricultural as self-servingly claimed by the DPWH Legal Officer,
Atty. Aguilar. x x x.
10.5 That as previously stated, the amount of ₱75.00 per square
meter corresponds to agricultural lands located at Brgy.
Balaytigue, Nasugbu, Batangas and not to residential lands such
as those of answering defendant subject of the complaint, as
determined in Annex "BB" in the complaint;
xxxx
10.6 That similarly situated developed lots in the area are sold at
the range of ₱4,000.00 to 9,000.00 per square meter more or
less. x x x.
10.7 All in all answering defendant is not objecting to the
expropriation of its properties but it must be paid justly in respect
to not only the final compensation but also in respect to the initial
compensation to be deposited in full with the court, in conformity
with R.A. No. 8974 & A.O. No. 50 x x x.9
Respondent Far East prayed that, after due notice and hearing, the
complaint be given due course by ordering petitioner to comply with the
mandate of Section 4 (a) of Republic Act No. 8974 by depositing in its
name the initial amount of ₱7,433,600.00 or ₱600.00 per square meter
for the total area of 12,406 sq.m. of its properties to be used in the
construction of the Ternate-Nasugbu Tali Batangas Road. It also asked
that said amount be released to it and that the just compensation for its
lands be fixed.
In their Joint Answer10 dated 11 January 2002, the Bernasconis admitted
they were the lawful and registered owners of parcels of land – Lots Nos.
549 and 550 – covered by Transfer Certificates of Title (TCTs) No. T-
54825, containing a total area of 2,243 sq.m., being expropriated by
petitioner. They denied that petitioner made an offer to purchase the
properties, subject matter of the case. They further adopted all the claims
and defenses that were interposed by Far East and were applicable to
their properties. Thus, they prayed that the complaint be given due
course and petitioner be ordered to comply with Section 4(a) of Republic
Act No. 8974 by depositing in their names the initial amount of ₱
1,345,800.00 or ₱600.00 per square meter for the 2,243 sq.m. of their
property being expropriated. They asked that said amount be released to
them, and that the just compensation for their properties be fixed.
Petitioner filed separate replies to the Answers of Arsol and Far East/the
Bernasconis.11 Far East and the Bernasconis submitted their respective
rejoinders to the reply filed by petitioner.12
On 7 February 2002, respondent Arsol filed a Motion to Release Deposit,
praying that the amount that may properly accrue for its lands sought to
be expropriated be released as partial payment, to be taken from the
funds deposited by petitioner for the benefit of all the defendants.13
In its Order dated 8 February 2002, the trial court ordered petitioner to
comply and manifest its compliance with the guidelines of Section 12 of
the Implementing Rules and Regulations of Republic Act No. 8974, within
ten days from receipt thereof, before it would issue an order for petitioner
to take possession of the affected properties, so it may commence the
implementation of the project mentioned in the complaint.14
On 15 March 2002, petitioner filed its Compliance and Motion for
Issuance of Order and Writ of Possession.15 It stated that DPWH Region
IV certified that the amount of two million two hundred twenty-two
thousand five hundred fifty pesos (₱2,222,550.00) had been allotted and
made available to cover payment of properties sought to be expropriated
as follows:
1. Arsol Management Corporation ₱1,123,875.00
14,985 sq.m. @ - ₱75.00/sq.m.
2. Maria Christina Bernasconi, et al. - ₱ 168,225.00
2,243 sq.m. @ - ₱75.00/sq.m.
3. Far East Enterprises - ₱ 930,450.00
12,406 sq.m. @ ₱75.00/sq.m.
₱ 2,222,550.00
It informed the trial court that DPWH Regional Director Nestor V. Agustin
sent separate letters to the defendants tendering the price equivalent of
100% of the zonal valuation declared by the Bureau of Internal Revenue
(BIR) for their respective properties to be expropriated. Far East and the
Bernasconis disagreed with the price offered by petitioner. In view
thereof, petitioner was constrained to deposit with the trial court the total
amount of ₱2,222,550.00 in three Land Bank checks in the names of the
defendants, for its proper disposition.
In their respective comments on petitioner’s compliance, both Far East
and the Bernasconis claimed that petitioner intentionally and wantonly
disregarded and misled the trial court by stating that their properties were
classified as agricultural to justify the deposit it made. The documents it
submitted stated, however, that the properties sought to be expropriated
were classified as residential with a zonal valuation of ₱600.00 per
square meter. They prayed that the issuance of the writ of possession be
deferred until petitioner had deposited with the trial court the correct
amounts of ₱1,345,800.00 (for the Bernasconis) and ₱7,443,600.00 (for
Far East), and that the previous amounts (₱168,225.00 for the
Bernasconis and ₱930,450.00 for Far East) deposited be withdrawn by
them under protest without prejudice to the ruling of the trial court on the
correct amount of zonal valuation of residential lands in Balaytigue,
Nasugbu, Batangas.16
In an Order dated 2 April 2002, the trial court ordered petitioner to correct
its zonal valuation with respect to Far East and the Bernasconis and to
make the corresponding deposit therefor. It added that the motion for the
issuance of an order and a writ of possession filed by petitioner shall be
acted upon after the correct deposit was made. It found that the amounts
deposited as regards Far East and the Bernasconis were not sufficient
because these were based on a zonal valuation of ₱75.00 per square
meter. It said that the deposit should be based on ₱500.00 per square
meter, because the subject lands were residential lands. As to Arsol, the
trial court found the deposit of petitioner at ₱75.00 per square meter was
correct and directed Arsol to claim the check for ₱1,123,875.00 from the
Clerk of Court, under a proper receipt.17 On the same day, Arsol received
the check in the amount of ₱1,123,875.00 representing the initial
payment of just compensation for its lands which were subject of the
expropriation proceedings.18
Far East and the Bernasconis filed a Joint Motion to Release
Deposits.19 The trial court granted the same per its Order dated 15 April
2002 ordering the release to Far East and the Bernasconis the amounts
of ₱930,450.00 and ₱168,225.00, respectively, without prejudice to the
final determination of just compensation for the affected properties.20 On
17 April 2002, Far East and the Bernasconis received the checks
corresponding to said amounts.21
Petitioner filed its Motion for Reconsideration dated 17 April 2002,
arguing that the trial court erred in ordering it to correct the zonal
valuation of Far East and the Bernasconis’ properties at ₱500.00 per
square meter instead of ₱75.00 per square meter. It prayed that the trial
court reconsider its Order dated 2 April 2002 and a new one be issued
declaring that the deposit made by it was sufficient compliance with
Section 4 of Republic Act No. 8974 and Section 8 of its Implementing
Rules and Regulations. It further asked that an order be issued for the
conduct of an ocular inspection of the subject properties of Far East and
the Bernasconis to determine their actual classifications.22 Far East and
the Bernasconis filed their Joint Opposition to/Comment on the Motion for
Reconsideration.23 Arsol likewise filed its Comment, arguing that
petitioner must deposit the additional amount to obtain the writ of
possession.24
In a Resolution dated 26 April 2002, the trial court granted petitioner’s
motion for reconsideration. The trial court found the deposit (at ₱75.00
per square meter) made by petitioner sufficient and substantial
compliance with Section 4 of Republic Act No. 8974 and Section 8 of its
Implementing Rules and Regulations, and that Far East and the
Bernasconis had already received the checks as deposits for their
properties under expropriation. It ordered the petitioner to take
possession of the affected properties and to start the implementation of
the road project. It likewise ordered the issuance of a writ of possession
commanding the proper officer to place petitioner in possession of the
affected portions of said properties.25
Far East and the Bernasconis filed their Joint Motion for Reconsideration
dated 2 May 2002 praying that the Order dated 26 April 2002 be
reconsidered, and that the court order petitioner to deposit the balance of
₱425.00 per square meter in order to comply with the required deposit of
the zonal value of ₱500.00 per square meter, as correctly ordered by
respondent court in its Order dated 2 April 2002.26
Petitioner filed its Opposition to Defendants’ Joint Motion for
Reconsideration,27 to which Far East and the Bernasconis filed a Reply
dated 14 June 2002.28
The trial court issued a Resolution29 dated 17 June 2002, the relevant
portions of which read:
After a re-assessment of the respective arguments of both parties, the
Court finds merit in the joint motion for reconsideration.
For one, the definition of agricultural land is clear and leaves nothing for
any other interpretation. The plaintiff has not shown any other definition of
agricultural land, different from the above definition. The fact, as claimed
by the plaintiff, that the lands of the movants are idle, raw and
undeveloped, with no houses thereon, does not unmake the same as
residential because they were already classified as such long before this
case was filed. The fact that the subject properties may be suitable for
agricultural uses does not make it agricultural because they were
classified as residential per plaintiff’s Annexes "A" to "G" of the
Complaint. The very tax declarations of the movants’ properties (Annexes
"A" to "G", Complaint) show that subject properties are indeed residential
and not agricultural.
In this connection, tax declarations do not prove ownership of the
property. It is only an evidence of possession. It is the titles of the
properties that show their ownership (Annexes "O" to "T" of the
Complaint). The Court realizes its lack of discretion to substitute its
judgment for the authority of the Municipality of Nasugbu, Batangas, on
land reclassification, on the mere premise that the properties of the
movants and of Arsol adjoin each other.
RA 8974 gives no discretion to the Court to determine the classification of
the expropriated properties.
Plaintiff cannot question the very contents of its documents which are
parts and parcels of its complaint. It is a cardinal rule in adjective law that
pleadings are binding on the pleader.
In fine, the Court is fully convinced to give weight to the contents of
plaintiff’s Exhs. "A" to "G" and "BB", Complaint. Therefore, the deposit of
₱75.00 per square meter made by plaintiff as regards movants’
properties is insufficient because the zonal valuation of the same is fixed
at ₱500.00 per square meter.
WHEREFORE, foregoing premises considered, the order of April 26,
2002 is reconsidered and set aside. Plaintiff is ordered to make the
additional deposit of ₱425.00 per square meter for the properties of the
movants before the order to possess and writ of possession issue.
Respondents Far East and the Bernasconis filed a Joint Motion for
Compliance dated 21 June 2002 asking the trial court to order petitioner
to comply with the Resolution dated 17 June 2002 by depositing the
additional amount of ₱425.00 per square meter.30
In its Manifestation and Urgent Motion for Issuance of Writ of Possession
dated 10 July 2002, petitioner informed the trial court that it would elevate
the Order requiring it to deposit the additional ₱425.00 per square meter
to a higher court. It also said that in the interest of expediting the
implementation of the project the completion of which was of utmost
urgency, it had already made in protest a deposit of the additional amount
of ₱425.00 per square meter as specified in the trial court’s Resolution
dated 17 June 2002. As proof thereof, it said it attached the Certificate as
to Availability of Funds wherein the total amount of ₱6,225,825.00
(₱953,275.00 in favor of the Bernasconis and ₱5,272,550.00 in favor of
Far East) had been allotted for the purpose. Thus, it prayed that a writ of
possession be immediately issued.31
The trial court found that petitioner did not attach the Certificate as to
Availability of Funds in its Manifestation and Urgent Motion dated 10 July
2002. Thus, in its Order dated 23 July 2002, the trial court ordered
petitioner to submit said certification within ten days from receipt of its
Order.32 In their Joint Comment on and Opposition to petitioner’s
manifestation and motion dated 26 July 2002, Far East and the
Bernasconis prayed that the writ of possession be issued to petitioner
only after payment of the balance of the zonal values of their properties
had been made.33
Petitioner filed its Compliance dated 12 August 2002 with the Order dated
23 July 2002 attaching therewith the Certificate as to Availability of Funds
in the amount of ₱6,225,825.00. It also apologized for its failure to attach
said certificate in its Manifestation and Urgent Motion dated 10 July 2002.
In an Order dated 20 August 2002, the trial court ordered petitioner to pay
the amounts of ₱953,775.00 and ₱5,272,550.00 to the Bernasconis and
Far East, respectively, or to deposit said amounts in court for payment to
respondents within ten days from receipt, after which a writ of possession
shall be issued.34
On 28 August 2002, petitioner filed a Petition for Certiorari with the Court
of Appeals seeking the reversal of the trial court’s Resolution dated 17
June 2002 requiring it to make the additional deposit of ₱425.00 per
square meter. It further asked the appellate court to require the trial court
to conduct an ocular inspection of the expropriated properties to
determine their actual use and to allow it to present its evidence of the
classification of said lands.35The appeal was docketed as CA-G.R. SP
No. 72425.
While CA-G.R. SP No. 72425 was pending before the Court of Appeals,
petitioner filed its Motion for Reconsideration of the Order of the trial court
dated 20 August 2002, arguing that it sufficiently complied with the law
when it issued the certificate of availability of funds. It further argued that
the trial court’s directive to pay the zonal valuation based on the
residential classification of the properties would render moot the issue
before the Court of Appeals.36 Far East and the Bernasconis filed a Joint
Comment on/Opposition to the motion.37
In its Resolution dated 28 November 2002, the trial court reconsidered its
Resolution dated 20 August 2002 and granted petitioner’s motion for
reconsideration. It ordered that a writ of possession be issued and that
petitioner be placed in possession of the properties subject of the
expropriation case.38 Far East and the Bernasconis filed a Joint Motion for
Reconsideration39 of said resolution, which the trial court denied in an
Order dated 12 September 2003.40
Far East and the Bernasconis filed a Joint Petition for Certiorari before
the Court of Appeals praying that the Order of the trial court dated 12
September 2003 be set aside.41 The petition was docketed as CA-G.R.
SP No. 80278.
Far East and the Bernasconis then filed a Joint Motion for Clarification
and Suspension of Proceedings dated 16 February 2004.42 In an Order
dated 11 August 2004, the trial court granted the motion and suspended
the proceedings of the case pending resolution of CA-G.R. SP No. 72425
and CA-G.R. SP No. 80278 before the Court of Appeals.43
On 28 February 2005, the Court of Appeals, in CA-G.R. SP No. 80278,
denied the petition for certiorari filed by Far East and the Bernasconis.
Their Joint Motion for Reconsideration44 was likewise denied in a
Resolution dated 31 August 2005.45 Far East and the Bernasconis
appealed to this Court via a Joint Petition for Certiorari.46 The case was
docketed as G.R. No. 170178. This Court dismissed the petition for being
the wrong mode of appeal.47 Far East and the Bernasconis moved to
reconsider the dismissal, but we denied their motion with finality stating
that even if the petition were to be treated as a petition for review on
certiorari under Rule 45, the same should nevertheless be denied for
being filed out of time.48
On 9 November 2006, the Court of Appeals in CA-G.R. SP No. 72425
rendered its decision dismissing, for lack of merit, the petition filed by
petitioner DPWH.49 The appellate court found that the trial court did not
act with grave abuse of discretion amounting to lack or excess of
jurisdiction in ordering petitioner to make the additional payment of
₱425.00 per square meter for the subject properties of Far East and the
Bernasconis before the issuance of the order to take possession, and the
writ of possession. The pertinent portions of the decision read:
Petitioner submitted to respondent court the Land Bank checks payable
to private respondents, as well as to Arsol, and a certification as to
availability of funds. However, private respondents Far East and the
Bernasconis disagreed with the amount of petitioner’s deposit and prayed
in their Joint Motion for Reconsideration of the Resolution dated 26 April
2002 that petitioner be ordered to deposit the balance of Php425.00 per
square meter in order to comply with the zonal value of Php500.00 per
square meter, as contained in the Order dated 02 April 2002. They
argued that their land is residential and that the zonal value of P500.00
per square meter should be paid to them, instead of the zonal value of
P75.00 per square meter for agricultural lands. This Joint Motion of
private respondents was granted by respondent court in the Resolution
dated 17 June 2002. The said Resolution is now being assailed by
petitioner.
We sustain the ruling of respondent court in the assailed Resolution.
However, to be more precise, petitioner should make the additional initial
payment (not deposit) of Php425.00 per square meter for the properties
of private respondents before the order to take possession and writ of
possession can be issued.
Petitioner itself attached to its Complaint as Annex "BB" a certified
photocopy of the BIR’s Schedule of Zonal Values of Real Properties in
the Municipality of Nasugbu, Batangas. The zonal valuation of properties
in Brgy. Balaytigue were classified as follows:
BRGY. BALAYTIGUE
ALL LOTS50 RR 500.00 600.00
A 75.00 80.00
CR 1,500.00 1,700.00
GP 200.00
Further, petitioner also appended to its Complaint as Annexes "A" to "G"
the Tax Declarations of private respondent Far East and Maria Christina
C. Bernasconi showing that the properties sought to be expropriated are
classified as "Residential." Petitioner’s very own attachments to its
Complaint show that private respondents’ properties are residential and
not agricultural.
Thus, based on Section 4 of R.A. No. 8974 and Section 8 of the
Implementing Rules and Regulations of R.A. No. 8974, petitioner should
have paid immediately to private respondents the amount equivalent to
the sum of 100% of the value of the property based on the BIR zonal
valuation of private respondents’ residential lots in Barangay Balaytigue,
Nasugbu, Batangas in the amount of Php500.00 per square meter, and
not Php75.00 per square meter which is the BIR current zonal valuation
for agricultural lots in said barangay. R.A. No. 8974 and its Implementing
Rules and Regulations are clear as to the amount of payment which
petitioner, through DPWH, the implementing agency, has to make, even
as early as the filing of petitioner’s Complaint. No amount of verbiage on
petitioner’s part can alter the plain and unequivocal provisions of the law
and the implementing rules. Thus, respondent court did not act with grave
abuse of discretion when it relied upon private respondents’ tax
declarations (Complaint’s Annexes "A" to "G"), and the BIR zonal
valuation of real properties in Nasugbu, Batangas (Complaint’s Annex
"BB"); found the amount of Php75.00 per square meter insufficient as
regards private respondents’ subject residential properties, the zonal
valuation of which is Php500.00 per square meter; and ordered petitioner
to make the additional payment of Php425.00 per square meter before
the order to take possession and writ of possession can be issued in
petitioner’s favor. As held in Republic v. Gingoyon [G.R. No. 166429, 19
December 2005, 478 SCRA 474, 520], R.A. No. 8974 provides, as the
relevant standard for initial compensation, the market value of the
property as stated in the tax declaration or the current relevant zonal
valuation of the BIR, whichever is higher.
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. In both cases, the private owner does not receive
compensation prior to the deprivation of property. On the other hand,
Rep. Act No. 8974 mandates immediate payment of the initial just
compensation prior to the issuance of the writ of possession in favor of
the Government. Rep. Act No. 8974 is plainly clear in imposing the
requirement of immediate prepayment, and no amount of statutory
deconstruction can evade such requisite. It enshrines a new approach
towards eminent domain that reconciles the inherent unease attending
expropriation proceedings with a position of fundamental equity. While
expropriation proceedings have always demanded just compensation in
exchange for private property, the previous deposit requirement impeded
immediate compensation to the private owner, especially in cases
wherein the determinations of the final amount of compensation would
prove highly disputed. Under the new modality prescribed by Rep. Act
No. 8974, the private owner sees immediate monetary recompense with
the same degree of speed as the taking of his/her property.
While eminent domain lies as one of the inherent powers of the State,
there is no requirement that it undertake a prolonged procedure, or that
the payment of the private owner be protracted as far as practicable. In
fact, the expedited procedure of payment, as highlighted under Rep. Act
No. 8974, is inherently more fair, especially to the layperson who would
be hard-pressed to fully comprehend the social value of expropriation in
the first place. Immediate payment placates to some degree whatever ill-
will that arises from expropriation, as well as satisfies the demand of
basic fairness.
It is therefore erroneous for petitioner to contend that respondent court
abdicated its authority in determining just compensation. The
compensations to private respondents based on the BIR zonal valuation
of the properties sought to be expropriated at Php500.00 per square
meter is merely the immediate payment of the initial just compensation
prior to the issuance of the writ of possession in order to effectuate the
transfer of possession in favor of petitioner.
The issuance of the writ of possession does not write finis to the
expropriation proceedings. Expropriation is not completed until payment
to the property owner of just compensation. To effectuate transfer of
ownership, it is necessary of the Government to pay the property owner
the final just compensation.
Indeed, the determination of just compensation in expropriate
proceedings is a judicial function. Section 5 of R.A. No. 8974 enumerates
certain relevant standards which respondent court may consider, in order
to facilitate the determination of just compensation.
xxxx
Thus, it is at this stage of the expropriation proceedings where the judicial
function of determining just compensation is to be exercised by
respondent court. It is also at this point when petitioner’s evidence
regarding the use of the subject properties, value declared by the owners,
current selling price, ocular findings, etc. will into play.51
Petitioner filed its Motion for Reconsideration dated 4 December
2006.52 On 5 February 2007, the Court of Appeals denied the same.53
Hence, this petition for review.
Petitioner raises the following grounds in support of the petition:
I
IN RULING THAT PETITIONER SHOULD IMMEDIATELY PAY THE BIR
ZONAL VALUATION OF THE PROPERTY BEFORE TAKING
POSSESSION, THE COURT OF APPEALS FAILED TO RESOLVE
THE LIS MOTA OF THE CASE, THAT IS, WHICH FACTORS SHOULD
CONTROL IN DETERMINING THE CLASSIFICATION OF THE
PROPERTY FOR PURPOSES OF PAYMENT OF THE BIR ZONAL
VALUATION; COROLLARY THERETO, THE HONORABLE COURT’S
RELIANCE IN REPUBLIC VS. GINGOYON ("GINGOYON"), IS NOT
CONTROLLING IN THIS CASE, BECAUSE THE CLASSIFICATION OF
THE PROPERTY SOUGHT TO BE EXPROPRIATED IS NOT IN AN
ISSUE IN GINGOYON, AS IT IS IN THIS PETITION.
II
THE COURT A QUO GRAVELY ERRED IN REFUSING TO APPLY THE
STANDARDS SET IN R.A. NO. 8974 IN DETERMINING THE
CLASSIFICATION OF THE PROPERTIES SUBJECT OF
EXPROPRIATION.
A. TAX DECLARATIONS AND THE MUNICIPAL
ZONING ORDINANCE ARE NOT CONTROLLING BUT
ARE MERE FACTORS AMONG SEVERAL OTHER
FACTORS IN DETERMINING THE CLASSIFICATION
OF THE EXPROPRIATED PROPERTY.
B. THE CLASSIFICATION OF THE SURROUNDING
PROPERTIES AND THE ACTUAL USE OF THE
PROPERTY SOUGHT TO BE EXPROPRIATED AT THE
TIME OF THE TAKING, PARTICULARLY IN THIS CASE
WHERE THE LAND IS RAW, UNCULTIVATED,
AGRICULTURAL PROPERTY, SHOULD BE
CONSIDERED IN DETERMINING THE
CLASSIFICATION OF THE PROPERTY FOR
PURPOSES OF PAYMENT OF THE BIR ZONAL
VALUATION;
C. ACCORDINGLY, IN CASE OF DOUBT AS TO THE
CLASSIFICATION OF THE PROPERTY, THE COURT
SHOULD MAKE A JUDICIAL DETERMINATION OF THE
CLASSIFICATION OF THE PROPERTY FOR
 PURPOSES OF PAYMENT OF THE BIR ZONAL
VALUATION;
III
COROLLARY THERETO, AND IN ACCORDANCE WITH THE RULE ON
MULTIPLE ADMISSIBILITY OF EVIDENCE, THE FACT THAT
PETITIONER INTRODUCED TAX DECLARATIONS OF THE
EXPROPRIATED PROPERTIES SOLELY AS PROOF OF OWNERSHIP
OF THE EXPROPRIATED PROPERTY DOES NOT PRECLUDE
PETITIONER FROM QUESTIONING RESPONDENTS’ UNILATERAL
STATEMENT IN THEIR TAX DECLARATIONS THAT THE
PROPERTIES ARE RESIDENTIAL.
In paying a property owner 100% of the value of a property based on the
current relevant zonal valuation of the BIR for the purpose of an issuance
of a writ of possession, under which classification of the expropriated
property should petitioner, as the implementing agency, be required to
make such payment? This, according to petitioner, is the issue in this
petition.
Section 4 of Republic Act No. 8974 (An Act to Facilitate the Acquisition of
Right-of-Way, Site or Location for National Government Infrastructure
Projects and for Other Purposes) provides the guidelines for
expropriation proceedings. Said section reads:
SECTION 4. Guidelines for Expropriation Proceedings. — Whenever it is
necessary to acquire real property for the right-of-way, site or location for
any national government infrastructure project through expropriation, the
appropriate 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 one
hundred percent (100%) of the value of the property based on the
current relevant zonal valuation of the Bureau of Internal
Revenue (BIR); and (2) the value of the improvements and/or
structures as determined under Section 7 hereof;
(b) In provinces, cities, municipalities and other areas where there
is no zonal valuation, the BIR is hereby mandated within the
period of sixty (60) days from the date of filing of the expropriation
case, to come up with a zonal valuation for said area; and
(c) In case the completion of a government infrastructure project
is of utmost urgency and importance, and there is no existing
valuation of the area concerned, the implementing agency shall
immediately pay the owner of the property its proffered value
taking into consideration the standards prescribed in Section 5
hereof.
Upon 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.
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.
In the event that the owner of the property contests the implementing
agency's proffered value, the court shall determine the just compensation
to be paid the owner within sixty (60) days from the date of filing of the
expropriation case. When the decision of the court becomes final and
executory, the implementing agency shall pay the owner the difference
between the amount already paid and the just compensation as
determined by the court. (Underscoring supplied)
Under said law, the requirements for authorizing immediate entry in
expropriation proceedings involving real property are: (1) the filing of a
complaint for expropriation sufficient in form and substance; (2) due
notice to the defendant; (3) payment of an amount equivalent to 100% of
the value of the property based on the current relevant zonal valuation of
the BIR including payment of the value of the improvements and/or
structures if any, or if no such valuation is available and in cases of
utmost urgency, the payment of the proffered value of the property to be
seized; and (4) presentation to the court of a certificate of availability of
funds from the proper officials.54
Upon compliance with the requirements, a complainant 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 exercises neither
its discretion nor its 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 Republic Act No. 8974.55
In the instant case, petitioner does not dispute that the provisional value
to be paid before a writ of possession can be issued is 100% of the value
of the property based on the current relevant zonal valuation by the BIR.
What it questions is the classification of the properties sought to be
expropriated, which will then be used in determining the 100% value of
the property based on the current relevant zonal valuation of the BIR.
Petitioner contends that the subject properties are agricultural for the
following reasons: (1) the BIR Zonal Valuation classifies properties in
Barangay Balaytigue, Nasugbu, Batangas as Residential, Agricultural,
Commercial and Industrial; (2) the properties involved are actually used
for agricultural purposes (raw, undeveloped with no houses); and (3) all
the adjoining properties are classified as agricultural. On the other hand,
respondents Far East and the Bernasconis assert that their properties are
residential pursuant to Municipal Ordinance No. 3 enacted by the
Sangguniang Bayan of Nasugbu, Batangas on 3 May 1982, and that said
reclassification was reflected in their corresponding tax declarations for
the properties.
Petitioner argues that in cases where there is a dispute on the
classification of the property, the trial court is under obligation to judicially
determine the classification of the property prior to requiring the payment
of the amount based on the BIR zonal value. It should be allowed to
present evidence of the proper classification of the properties. Petitioner
adds that nothing in Republic Act No. 8974 compels it or the Court to
classify the property based on tax declarations, for the latter has judicial
discretion to ascertain the classification and nature of the property based
on the standards set under Section 5 of Republic Act No. 8974. Petitioner
states that the expropriation court is not bound by a property owner’s
statement in the tax declaration that his property is residential or by a
municipal zoning ordinance that classifies the property as such, when
there exists controverting evidence to the contrary. Thus, petitioner faults
both the trial court and the appellate court for ruling that the lands
involved are residential, notwithstanding petitioner’s claim that the there
is evidence to show that the same are agricultural.
It is clear from the foregoing that petitioner is questioning the
classification of the lands involved.
We agree with petitioner that the courts have judicial discretion to
determine the classification of lands, because such classification is one of
the relevant standards for the assessment of the value of lands, subject
of expropriation proceedings. It is one factor that the courts consider in
determining just compensation. The determination of just compensation
is a function addressed by the courts of justice and may not be usurped
by any other branch or official of the government.56 However, we would
like to make it clear that Section 5 of Republic Act No. 8974 lists the
relevant standards that are to be considered in determining just
compensation for and not classification of lands, as petitioner would like
us to believe.
Section 5 of Republic Act No. 8974 enumerates the standards that assist
in the determination of just compensation:
SEC. 5. Standards for the Assessment of the Value of the Land Subject
of Expropriation Proceedings 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 improvements 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 evidence 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
government, and thereby rehabilitate themselves as early as
possible.
The more important query to be resolved is: Are the courts, in the first
instance, the proper venue in which to resolve any dispute involving the
classification of lands?
We do not think so.
By questioning the classification of the lands involved, petitioner is, in
effect, questioning the propriety, wisdom and legality of the act of the
Municipal Council of Nasugbu, Batangas of reclassifying the subject
lands as Residential. Per certification of the Office of the Municipal
Planning and Development Coordinator/Zoning Administrator of the
Municipality of Nasugbu, Batangas, the lands of Far East and the
Bernasconis sought to be expropriated were classified as Residential,
pursuant to Municipal Zoning Ordinance No. 3 dated 3 May 1982, as
approved under Resolution No. 123, series of 1983 dated 4 May 1983 by
the Human Settlement Regulatory Commission (now HLURB57).
This Court recognizes the power of a local government to reclassify and
convert lands through local ordinance, especially if said ordinance is
approved by the HLURB.58 In Pasong Bayabas Farmers Association, Inc.
v. Court Appeals,59 we acknowledged the power of local government units
to adopt zoning ordinances. Discretion is vested in the appropriate
government agencies to determine the suitability of a land for residential,
commercial, industrial or other purposes.60 It is also a settled rule that an
ordinance enjoys the presumption of validity.61 Having the power to
classify lands, the local government unit may consider factors that are
just, reasonable and legal, for it is within the local government unit’s
power to determine these. However, if they abuse their authority in the
performance of this duty, the courts, if prompted, can step in.
Section 20 of Republic Act No. 7160, otherwise known as the Local
Government Code of 1991, empowers the local government units to
reclassify agricultural lands:
Sec. 20. Reclassification of Lands. - (a) A city or municipality may,
through an ordinance passed by the Sanggunian after conducting public
hearings for the purpose, authorize the reclassification of agricultural
lands and provide for the manner of their utilization or disposition in the
following cases: (1) when the land ceases to be economically feasible
and sound for agricultural purposes as determined by the Department of
Agriculture or (2) where the land shall have substantially greater
economic value for residential, commercial, or industrial purposes, as
determined by the Sanggunian concerned: Provided, That such
reclassification shall be limited to the following percentage of the total
agricultural land area at the time of the passage of the ordinance:
(1) For highly urbanized and independent component cities,
FIFTEEN PERCENT (15%);
(2) For component cities and first to third class municipalities, ten
percent (10%); and
(3) For fourth to sixth class municipalities, five percent
(5%); Provided further, That agricultural lands distributed to
agrarian reform beneficiaries pursuant to Republic Act No. 6657,
otherwise known as "The Comprehensive Agrarian Reform Law,"
shall not be affected by the said reclassification and the
conversion of such lands into other purposes shall be governed
by Section 65 of said Act.
xxxx
(c) The local government units shall in conformity with existing
laws, continue to prepare their respective comprehensive land
use plans enacted though zoning ordinances which shall be the
primary and dominant bases for the future use of land
resources: Provided, That the requirements for food production,
human settlements, and industrial expansion shall be taken into
consideration in the preparation of such plans.
xxxx
(e) Nothing in this section shall be construed as repealing,
amending or modifying in any manner the provisions of R.A. No.
6657.
In the case before us, the lands in question had long been (almost 20
years) reclassified as residential before the instant case was filed. All
those years, no one questioned the ordinance reclassifying the lands. If
petitioner would like to have the reclassification of the lands involved
changed to agricultural, the just and reasonable way of doing it is to go to
the municipal council -- not the courts – that enacted the ordinance and to
ask that the lands be reclassified again as agricultural. Technical matters
such as zoning classifications and building certifications should be
primarily resolved first by the administrative agency whose expertise
relates therein.62 The jurisprudential trend is for courts to refrain from
resolving a controversy involving matters that demand the special
competence of administrative agencies, "even if the question[s] involved
[are] also judicial in character."63 In this manner, we give the respect due
to these agencies (the municipal council and the Human Settlement
Regulatory Commission [now HLURB]), which unquestionably have
primary jurisdiction to rule on matters of classification of lands.
In Solmayor v. Arroyo,64 we declared:
Well settled is the principle that by reason of the special knowledge and
expertise of administrative agencies over matters falling under their
jurisdiction, they are in a better position to pass judgment thereon; thus
their findings of fact in that regard are generally accorded great respect, if
not finality, by the courts. Accordingly, since specialized government
agencies tasked to determine the classification of parcels of land, such as
the Bureau of Soils and the HLURB, among other agencies, have already
certified that the subject land is residential/commercial, the Court must
accord such conclusions great respect, if not finality, in the absence of
evidence to the contrary.65
Under Section 3(m), Rule 131 of the Rules of Court, there is a
presumption that official duty has been regularly performed. Thus, in the
absence of evidence to the contrary, there is a presumption that public
officers performed their official duties regularly and legally and in
compliance with applicable laws, in good faith, and in the exercise of
sound judgment.66 This presumption applies to this case.
If after going to the local government unit or government agencies that
made the classification of the lands and the implementing agency fails to
obtain the redress they seek (proper classification), despite evidence
clearly showing erroneous classification, it is only then that it can go to
the court to ask for intervention.
In the case at bar, the trial court and the Court of Appeals based their
classification of the lands concerned, not only on the tax declarations, but
more importantly on the certification issued by the Office of the Municipal
Planning and Development Coordinator/Zoning Administrator of the
Municipality of Nasugbu, Batangas that said lands had been (re)classified
as residential pursuant to Municipal Zoning Ordinance No. 3 dated 3 May
1982 as approved under Resolution No. 123, series of 1983 dated 4 May
1983 by the Human Settlement Regulatory Commission (now HLURB).
The tax declarations adduced and the certification show that the lands
concerned are classified as residential. There is no discrepancy between
the two as regards classification. Even if there is any inconsistency, what
prevails is the determination for zoning purposes.67
There is no question that a local government unit can determine the
suitability of a land for residential, commercial, industrial of for other
purposes. It can do this through an ordinance passed by the Sanggunian
for the purpose.68Moreover, under Section 447 of Republic Act No. 7160,
the Sangguniang Bayan or the Municipal Council, as the legislative body
of the municipality, has the power to enact ordinances for the general
welfare of the municipality and its inhabitants. Among the functions of the
Sangguniang Bayan enumerated under Section 447 of Republic Act No.
7160 are:
(2) Generate and maximize the use of resources and revenues for the
development plans, program objectives and priorities of the municipality
as provided for under Section 18 of this Code with particular attention to
agro-industrial development and countryside growth and progress, and
relative thereto, shall:
xxxx
(vii) Adopt a comprehensive land use plan for the municipality: Provided,
That the formulation, adoption, or modification of said plan shall be in
coordination with the approved provincial comprehensive land use plan;
(vii) Reclassify land within the jurisdiction of the municipality subject to
the pertinent provision of this Code; x x x.
Under the facts obtaining, this Court agrees with both lower courts that
the classification of the lands concerned is residential. No other
certification from the municipal council has been presented to show that a
new zoning ordinance has been passed by it changing the present
classification of the lands, subject of the expropriation case. Even if we
consider the allegations of petitioner that said lands are actually used for
agriculture, and that the lands adjoining the same are all classified as
agricultural, the same will not necessarily change said classification to
agricultural.
1avv phi 1
Even assuming that the lands are still used for agricultural purposes, this
will not cause the reversion of the classification of the lands to
agricultural. In Pasong Bayabas Farmers Association, Inc. v. Court
Appeals,[69] we ruled that the failure of the landowner to complete the
housing project did not have the effect of reverting the property to its
former classification. In De Guzman v. Court of Appeals,70 we held that
the continuous tillage of the land and the non-commencement of the
construction of the market complex did not strip the land of its
classification as commercial. Furthermore, even assuming that all the
adjoining lands are still classified as agricultural, this does not mean that
lands involved cannot be classified differently, as in this case. In the
certification issued by the Office of the Municipal Planning and
Development Coordinator/Zoning Administrator of the Municipality of
Nasugbu, Batangas, the parcels of land reclassified, including those of
Far East and the Bernasconis which petitioner seeks to expropriate, were
individually listed.
We note that petitioner, in its Complaint, classified the lands of Far East
and the Bernasconis as Residential/Agricultural, while the properties of
Arsol were classified as Agricultural.71 Petitioner uniformly pegged the
zonal valuation of all the lands sought to be expropriated at ₱75.00 per
square meter. The classification it made for the lands of Far East and the
Bernasconis was residential/agricultural, but the zonal valuation was for
agricultural lands. From the tax declarations72 it attached to the complaint,
it is clear that the lands of Far East and the Bernasconis were classified
as Residential. Why not use then the zonal valuation for residential,
which was ₱500.00 per square meter? As to the lands of Arsol, they were
classified as agricultural in the tax declarations, so petitioners used the
zonal valuation for agricultural lands, which was ₱75.00 per square
meter. From the foregoing, it can be gathered that from the very inception
of this case, petitioner, though knowing that the lands of Far East and the
Bernasconis were classified as residential, still used the zonal valuation
for agricultural lands (₱75.00 per square meter). Petitioner knew that the
lands of Far East and the Bernasconis were classified as residential, and
this was why it indicated in its complaint the classification
"Residential/Agricultural." It cannot simply do away with the classification
made in the tax declaration. It also used the said classification
("Residential/Agricultural") to justify the zonal value it indicated in the
complaint. Thus, petitioner classified the lands of Far East and the
Bernasconis in its own way, contrary to the documents it had. What
further militates against petitioner’s claim that the lands of Far East and
the Bernasconis are agricultural is the certification of the Office of the
Municipal Planning and Development Coordinator/Zoning Administrator
of the Municipality of Nasugbu, Batangas that the said lands have been
classified as residential by Municipal Zoning Ordinance No. 3 dated 3
May 1982 as approved under Resolution No. 123, series of 1983 dated 4
May 1983 by the Human Settlement Regulatory Commission (now
HLURB).
Inasmuch as what is involved in this case is the payment of the amount
equivalent to 100% of the value of the property based on the current
relevant zonal valuation of the BIR, we must distinguish the same from
just compensation. In Capitol Steel Corporation v. Phividec Industrial
Authority,73 we ruled:
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 indemnity for damages if the proceedings
are dismissed. It is not a final determination of just compensation 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 owner of the thing expropriated
has to suffer by reason of the expropriation." Market values, 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.
As the preliminary or provisional determination of the value of the
property equivalent to 100% of the value of the property based on the
current relevant zonal valuation of the BIR, said amount serves a double
purpose of pre-payment if the property is fully expropriated, and of
indemnity for damages if the proceedings are dismissed. Said provisional
value must be paid to the owner of the land before a writ of possession
may be issued. The issuance of a certificate of availability of funds will
not suffice for the purpose of issuance of a writ of possession.
After payment of the provisional amount, the court may now proceed to
determine the amount of just compensation. Petitioner can now present
its evidence relative to the properties’ fair market value as provided in
Section 5 of Republic Act No. 8974.74

WHEREFORE, premises considered, the decision of the Court of

Appeals dated 9 November 2006 in CA-G.R. SP No. 72425 is hereby
AFFIRMED. No costs.

SO ORDERED.
 67.7 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 168967 February 12, 2010
CITY OF ILOILO represented by HON. JERRY P. TREÑAS, City
Mayor, Petitioner,
vs.
HON. LOLITA CONTRERAS-BESANA, Presiding Judge, Regional
Trial Court, Branch 32, and ELPIDIO JAVELLANA, Respondents.
DECISION
DEL CASTILLO, J.:
It is arbitrary and capricious for the government to initiate expropriation
proceedings, seize a person’s property, allow the order of expropriation to
become final, but then fail to justly compensate the owner for over 25
years. This is government at its most high-handed and irresponsible, and
should be condemned in the strongest possible terms. For its failure to
properly compensate the landowner, the City of Iloilo is liable for
damages.
This Petition for Certiorari under Rule 65 of the Rules of Court with a
prayer for the issuance of a temporary restraining order seeks to overturn
the three Orders issued by Regional Trial Court (RTC) of Iloilo City,
Branch 32 on the following dates: December 12, 2003 (the First Assailed
Order),1 June 15, 2004 (the Second Assailed Order),2and March 9, 2005
(the Third Assailed Order) (the three aforementioned Orders are
collectively referred to as the Assailed Orders).3
Factual Antecedents
The essential facts are not in dispute.
On September 18, 1981, petitioner filed a Complaint4 for eminent domain
against private respondent Elpidio T. Javellana (Javellana) and Southern
Negros Development Bank, the latter as mortgagee. The complaint
sought to expropriate two parcels of land known as Lot Nos. 3497-CC
and 3497-DD registered in Javellana’s name under Transfer Certificate of
Title (TCT) No. T-44894 (the Subject Property) to be used as a school
site for Lapaz High School.5 Petitioner alleged that the Subject Property
was declared for tax purposes in Tax Declaration No. 40080 to have a
value of ₱60.00 per square meter, or a total value of ₱43,560.00. The
case was docketed as Civil Case No. 14052 and raffled to then Court of
First Instance of Iloilo, Branch 7.
On December 9, 1981, Javellana filed his Answer6 where he admitted
ownership of the Subject Property but denied the petitioner’s avowed
public purpose of the sought-for expropriation, since the City of Iloilo
already had an existing school site for Lapaz High School. Javellana also
claimed that the true fair market value of his property was no less than
₱220.00 per square meter. 7
On May 11, 1982, petitioner filed a Motion for Issuance of Writ of
Possession, alleging that it had deposited the amount of ₱40,000.00 with
the Philippine National Bank-Iloilo Branch. Petitioner claimed that it was
entitled to the immediate possession of the Subject Property, citing
Section 1 of Presidential Decree No. 1533,8 after it had deposited an
amount equivalent to 10% of the amount of compensation. Petitioner
attached to its motion a Certification issued by Estefanio C. Libutan, then
Officer-in-Charge of the Iloilo City Treasurer’s Office, stating that said
deposit was made.9
Javellana filed an Opposition to the Motion for the Issuance of Writ of
Possession10 citing the same grounds he raised in his Answer – that the
city already had a vast tract of land where its existing school site was
located, and the deposit of a mere 10% of the Subject Property’s tax
valuation was grossly inadequate.
On May 17, 1983, the trial court issued an Order11 which granted
petitioner’s Motion for Issuance of Writ of Possession and authorized the
petitioner to take immediate possession of the Subject Property. The
court ruled:
Premises considered, the Motion for the Issuance of a Writ of Possession
dated May 10, 1982, filed by plaintiff is hereby granted. Plaintiff is hereby
allowed to take immediate possession, control and disposition of the
properties known as Lot Nos. 3497-CC and 3497-DD x x x.12
Thereafter, a Writ of Possession13 was issued in petitioner’s favor, and
petitioner was able to take physical possession of the properties
sometime in the middle of 1985. At no time has Javellana ever denied
that the Subject Property was actually used as the site of Lapaz National
High School. Aside from the filing by the private respondent of
his Amended Answer on April 21, 1984,14 the expropriation proceedings
remained dormant.
Sixteen years later, on April 17, 2000, Javellana filed an Ex Parte
Motion/Manifestation, where he alleged that when he finally sought to
withdraw the ₱40,000.00 allegedly deposited by the petitioner, he
discovered that no such deposit was ever made. In support of this
contention, private respondent presented a Certification from the
Philippine National Bank stating that no deposit was ever made for the
expropriation of the Subject Property.15Private respondent thus
demanded his just compensation as well as interest. Attempts at an
amicable resolution and a negotiated sale were unsuccessful. It bears
emphasis that petitioner could not present any evidence – whether
documentary or testimonial – to prove that any payment was actually
made to private respondent.
Thereafter, on April 2, 2003, private respondent filed a
Complaint16 against petitioner for Recovery of Possession, Fixing and
Recovery of Rental and Damages. The case was docketed as Civil Case
No. 03-27571, and raffled to Branch 28 of the Iloilo City Regional Trial
Court. Private respondent alleged that since he had not been
compensated for the Subject Property, petitioner’s possession was
illegal, and he was entitled to recovery of possession of his lots. He
prayed that petitioner be ordered to vacate the Subject Property and pay
rentals amounting to ₱15,000.00 per month together with moral,
exemplary, and actual damages, as well as attorney’s fees. 1avvphi1
On May 15, 2003, petitioner filed its Answer,17 arguing that Javellana
could no longer bring an action for recovery since the Subject Property
was already taken for public use. Rather, private respondent could only
demand for the payment of just compensation. Petitioner also maintained
that the legality or illegality of petitioner’s possession of the property
should be determined in the eminent domain case and not in a separate
action for recovery of possession.
Both parties jointly moved to consolidate the expropriation case (Civil
Case No. 14052) and the case for recovery of possession (Civil Case No.
03-27571),18 which motion was granted by the trial court in an Order
dated August 26, 2003.19 On November 14, 2003, a commission was
created to determine the just compensation due to Javellana.20
On November 20, 2003, private respondent filed a Motion/Manifestation
dated November 19, 2003 claiming that before a commission is created,
the trial court should first order the condemnation of the property, in
accordance with the Rules of Court. Javellana likewise insisted that the
fair market value of the Subject Property should be reckoned from the
date when the court orders the condemnation of the property, and not the
date of actual taking, since petitioner’s possession of the property was
questionable.21 Before petitioner could file its Comment, the RTC issued
an Order dated November 21, 2003 denying the Motion.22
Undeterred, Javellana filed on November 25, 2003, an Omnibus Motion
to Declare Null and Void the Order of May 17, 1983 and to Require
Plaintiff to Deposit 10% or ₱254,000.00. Javellana claimed that the
amount is equivalent to the 10% of the fair market value of the Subject
Property, as determined by the Iloilo City Appraisal Committee in 2001, at
the time when the parties were trying to negotiate a settlement.23
First Assailed Order
On December 12, 2003, the RTC issued the First Assailed Order, which
nullified the Order dated May 17, 1983 (concerning the issuance of a writ
of possession over the Subject Property). The trial court ruled:
x x x the Order dated May 17, 1983 is hereby declared null and void and
the plaintiff [is] hereby ordered to immediately deposit with the PNB the
10% of the just compensation after the Commission shall have rendered
its report and have determined the value of the property not at the time it
was condemned but at the time the complaint was filed in
court.24 (Emphasis ours)
Second Assailed Order
Neither party sought reconsideration of this Order.25 Nonetheless, about
six months later, the RTC issued the Second Assailed Order, which it
denominated as an "Amended Order". The Second Assailed Order was
identical to the first, except that the reckoning point for just compensation
was now the "time this order was issued," which is June 15, 2004.
x x x the Order dated May 17, 1983 is hereby declared null and void and
the plaintiff [is] hereby ordered to immediately deposit with the PNB the
10% of the just compensation after the Commission shall have rendered
its report and have determined the value of the property not at the time it
was condemned but at the time this order was issued. (Underscoring in Value per Fair Market
original text) Reckoning Point B
square meter Value

This time, petitioner filed a Motion for Reconsideration claiming that there 1981 - at the
based on three or
was no legal basis for the issuance of the Second Assailed time the
₱110.00/sqm ₱79,860.00 of similar types o
Order.26 Javellana opposed, arguing that since the May 17, 1983 Order complaint was
the s
and the Second Assailed Order were interlocutory in character, they were filed
always subject to modification and revision by the court anytime.27 Appraisal by
1981 – at the
Development Ba
time the
Third Assailed Order ₱686.81/sqm ₱498,625.22 value, zonal valu
complaint was
other banks, re
filed
After the parties were able to fully ventilate their respective neighb
positions,28 the public respondent issued the Third Assailed Order,
Appraisal by t
denying the Motion for Reconsideration, and ruling as follows: 2002 ₱3,500.00/sqm ₱2,541,000.00
Committee, Office
The Order dated June 15, 2004 among other things stated that parties Private Appraisal
2004 ₱4,200.00/sqm ₱hP3,049,200.00
and counsels must be bound by the Commissioner’s Report regarding Cal Catolico d
the value of the property not at the time it was condemned but at the time
this order was issued. Hence, the present petition.

This is true inasmuch as there was no deposit at the PNB and their taking Petitioner’s Arguments
was illegal.
Petitioner is before us claiming that (1) the trial court gravely abused its
The plaintiff thru [sic] Atty. Laurea alleged that this Court had a change of discretion amounting to lack or excess of jurisdiction in overturning the
heart and issued an Amended Order with the same wordings as the order Order dated May 17, 1983, which was already a final order; and (2) just
of December 12, 2003 but this time stated not at the time it was compensation for the expropriation should be based on the Subject
condemned but at the time the order was issued. Naturally, this Court in Property’s fair market value either at the time of taking or filing of the
the interest of justice, can amend its order because there was no deposit complaint.
by plaintiff.
Private Respondent’s Arguments
The jurisprudence cited by plaintiff that the just compensation must be
determined as of the date of the filing of the complaint is true if there was
Private respondent filed his Comment on October 3, 2005,31 arguing that
a deposit. Because there was none the filing was not in accordance with
(1) there was no error of jurisdiction correctible by certiorari; and (2) that
law, hence, must be at the time the order was issued.
the Assailed Orders were interlocutory orders that were subject to
amendment and nullification at the discretion of the court.
The allegation of defendant thru [sic] counsel that the orders attacked by
plaintiff thru [sic] counsel saying it has become final and executory are
Issues
interlocutory orders subject to the control of the Judge until final judgment
is correct. Furthermore, it is in the interes[t] of justice to correct errors.29
There are only two questions we need answer, and they are not at all
novel. First, does an order of expropriation become final? Second, what
In the meantime, on April 15, 2004, the Commission submitted its Report,
is the correct reckoning point for the determination of just compensation?
providing the following estimates of value, but without making a proper
recommendation:30
 Our Ruling
Expropriation proceedings have two stages. The first phase ends with an
order of dismissal, or a determination that the property is to be acquired
for a public purpose.32 Either order will be a final order that may be
appealed by the aggrieved party.33 The second phase consists of the
determination of just compensation. 34 It ends with an order fixing the
amount to be paid to the landowner. Both orders, being final, are
appealable.35
An order of condemnation or dismissal is final, resolving the question of
whether or not the plaintiff has properly and legally exercised its power of
eminent domain.36 Once the first order becomes final and no appeal
thereto is taken, the authority to expropriate and its public use can no
longer be questioned.37 1avv phi 1
Javellana did not bother to file an appeal from the May 17, 1983 Order
which granted petitioner’s Motion for Issuance of Writ of Possession and
which authorized petitioner to take immediate possession of the Subject
Property. Thus, it has become final, and the petitioner’s right to
expropriate the property for a public use is no longer subject to review.
On the first question, therefore, we rule that the trial court gravely erred in
nullifying the May 17, 1983 Order.
We now turn to the reckoning date for the determination of just
compensation. Petitioner claims that the computation should be made as
of September 18, 1981, the date when the expropriation complaint was
filed. We agree.
In a long line of cases, we have constantly affirmed that:
x x x just compensation is to be ascertained as of the time of the taking,
which usually 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 the time of the
filing of the complaint.38
When the taking of the property sought to be expropriated coincides with
the commencement of the expropriation proceedings, or takes place
subsequent to the filing of the complaint for eminent domain, the just
compensation should be determined as of the date of the filing of the
complaint.39 Even under Sec. 4, Rule 67 of the 1964 Rules of Procedure,
under which the complaint for expropriation was filed, just compensation
is to be determined "as of the date of the filing of the complaint." Here,
there is no reason to depart from the general rule that the point of
reference for assessing the value of the Subject Property is the time of
the filing of the complaint for expropriation.40
Private respondent claims that the reckoning date should be in 2004
because of the "clear injustice to the private respondent who all these
years has been deprived of the beneficial use of his properties."
We commiserate with the private respondent. The school was
constructed and has been in operation since 1985. Petitioner and the
residents of Iloilo City have long reaped the benefits of the property.
However, non-payment of just compensation does not entitle the private
landowners to recover possession of their expropriated lot.41
Concededly, Javellana also slept on his rights for over 18 years and did
not bother to check with the PNB if a deposit was actually made by the
petitioner. Evidently, from his inaction in failing to withdraw or even verify
the amounts purportedly deposited, private respondent not only accepted
the valuation made by the petitioner, but also was not interested enough
to pursue the expropriation case until the end. As such, private
respondent may not recover possession of the Subject Property, but is
entitled to just compensation.42 It is high time that private respondent be
paid what was due him after almost 30 years.
We stress, however, that the City of Iloilo should be held liable for
damages for taking private respondent’s property without payment of just
compensation. In Manila International Airport Authority v. Rodriguez,43 the
Court held that a government agency’s prolonged occupation of private
property without the benefit of expropriation proceedings undoubtedly
entitled the landowner to damages:
Such pecuniary loss entitles him to adequate compensation in the
form of actual or compensatory damages, which in this case should
be the legal interest (6%) on the value of the land at the time of
taking, from said point up to full payment by the MIAA. This is based
on the principle that interest "runs as a matter of law and follows from the
right of the landowner to be placed in as good position as money can
accomplish, as of the date of the taking x x x.
xxxx
For more than twenty (20) years, the MIAA occupied the subject lot
without the benefit of expropriation proceedings and without the MIAA
exerting efforts to ascertain ownership of the lot and negotiating with any
of the owners of the property. To our mind, these are wanton and
irresponsible acts which should be suppressed and corrected.
Hence, the award of exemplary damages and attorneys fees is in
order. x x x.44 (Emphasis supplied)

WHEREFORE, the petition is GRANTED. The Orders of the Regional

Trial Court of Iloilo City, Branch 32 in Civil Case No. 14052 and Civil
Case No. 03-27571 dated December 12, 2003, June 15, 2004, and
March 9, 2005 are hereby ANNULLED and SET ASIDE.

The Regional Trial Court of Iloilo City, Branch 32 is DIRECTED to

immediately determine the just compensation due to private respondent
Elpidio T. Javellana based on the fair market value of the Subject
Property at the time Civil Case No. 14052 was filed, or on September 18,
1981 with interest at the legal rate of six percent (6%) per annum from
the time of filing until full payment is made.

The City of Iloilo is ORDERED to pay private respondent the amount of

₱200,000.00 as exemplary damages.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 164195 October 12, 2010
APO FRUITS CORPORATION and HIJO PLANTATION,
INC., Petitioners,
vs.
LAND BANK OF THE PHILIPPINES, Respondent.
RESOLUTION
BRION, J.:
We resolve the petitioners’ motion for reconsideration addressing our
Resolution of December 4, 2009 whose dispositive portion directs:
WHEREFORE, the Court denies the petitioners’ second motion for
reconsideration (with respect to the denial of the award of legal interest
and attorney’s fees), and reiterates the decision dated February 6, 2007
and the resolution dated December 19, 2007 of the Third Division.
For a fuller and clearer presentation and appreciation of this Resolution,
we hark back to the roots of this case.
Factual Antecedents
Apo Fruits Corporation (AFC) and Hijo Plantation, Inc. (HPI), together
also referred to as petitioners, were registered owners of vast tracks of
land; AFC owned 640.3483 hectares, while HPI owned 805.5308
hectares. On October 12, 1995, they voluntarily offered to sell these
landholdings to the government via Voluntary Offer to Sell applications
filed with the Department of Agrarian Reform (DAR).
On October 16, 1996, AFC and HPI received separate notices of land
acquisition and valuation of their properties from the DAR’s Provincial
Agrarian Reform Officer (PARO). At the assessed valuation of
₱165,484.47 per hectare, AFC’s land was valued at ₱86,900,925.88,
while HPI’s property was valued at ₱164,478,178.14. HPI and AFC
rejected these valuations for being very low.
In its follow through action, the DAR requested the Land Bank of the
Philippines (LBP) to deposit ₱26,409,549.86 in AFC’s bank account and
₱45,481,706.76 in HPI’s bank account, which amounts the petitioners
then withdrew. The titles over AFC and HPI’s properties were thereafter
cancelled, and new ones were issued on December 9, 1996 in the name
of the Republic of the Philippines.
On February 14, 1997, AFC and HPI filed separate petitions for
determination of just compensation with the DAR Adjudication Board
(DARAB). When the DARAB failed to act on these petitions for more than
three years, AFC and HPI filed separate complaints for determination and
payment of just compensation with the Regional Trial Court (RTC) of
Tagum City, acting as a Special Agrarian Court. These complaints were
subsequently consolidated.
On September 25, 2001, the RTC resolved the consolidated cases, fixing
the just compensation for the petitioners’ 1,338.6027 hectares of land1 at
₱1,383,179,000.00, with interest on this amount at the prevailing market
interest rates, computed from the taking of the properties on December 9,
1996 until fully paid, minus the amounts the petitioners already received
under the initial valuation. The RTC also awarded attorney’s fees.
LBP moved for the reconsideration of the decision. The RTC, in its order
of December 5, 2001, modified its ruling and fixed the interest at the rate
of 12% per annum from the time the complaint was filed until finality of
the decision. The Third Division of this Court, in its Decision of February
6, 2007, affirmed this RTC decision.
On motion for reconsideration, the Third Division issued its Resolution of
December 19, 2007, modifying its February 6, 2007 Decision by deleting
the 12% interest due on the balance of the awarded just compensation.
The Third Division justified the deletion by the finding that the LBP did not
delay the payment of just compensation as it had deposited the pertinent
amounts due to AFC and HPI within fourteen months after they filed their
complaints for just compensation with the RTC. The Court also
considered that AFC had already collected approximately ₱149.6 million,
while HPI had already collected approximately ₱262 million from the LBP.
The Third Division also deleted the award of attorney’s fees.
All parties moved for the reconsideration of the modified ruling. The Court
uniformly denied all the motions in its April 30, 2008 Resolution. Entry of
Judgment followed on May 16, 2008.
Notwithstanding the Entry of Judgment, AFC and HPI filed the following
motions on May 28, 2008: (1) Motion for Leave to File and Admit Second
Motion for Reconsideration; (2) Second Motion for Reconsideration, with
respect to the denial of the award of legal interest and attorney’s fees;
and (3) Motion to Refer the Second Motion for Reconsideration to the
Honorable Court En Banc.
The Third Division found the motion to admit the Second Motion for
Reconsideration and the motion to refer this second motion to the Court
En Banc meritorious, and accordingly referred the case to the Court En
Banc. On September 8, 2009, the Court En Banc accepted the referral.
The Court En Banc Resolution
On December 4, 2009, the Court En Banc, by a majority vote, denied the
petitioners’ second motion for reconsideration based on two
considerations.
First, the grant of the second motion for reconsideration runs counter to
the immutability of final decisions. Moreover, the Court saw no reason to
recognize the case as an exception to the immutability principle as the
petitioners’ private claim for the payment of interest does not qualify as
either a substantial or transcendental matter or an issue of paramount
public interest.
Second, on the merits, the petitioners are not entitled to recover interest
on the just compensation and attorney’s fees because they caused the
delay in the payment of the just compensation due them; they
erroneously filed their complaints with the DARAB when they should have
directly filed these with the RTC acting as an agrarian court. Furthermore,
the Court found it significant that the LBP deposited the pertinent
amounts in the petitioners’ favor within fourteen months after the petitions
were filed with the RTC. Under these circumstances, the Court found no
unreasonable delay on the part of LBP to warrant the award of 12%
interest.
The Chico-Nazario Dissent
Justice Minita V. Chico-Nazario,2 the ponente of the original December
19, 2007 Resolution (deleting the 12% interest), dissented from the Court
En Banc’s December 4, 2009 Resolution.
On the issue of immutability of judgment, Justice Chico-Nazario pointed
out that under extraordinary circumstances, this Court has recalled
entries of judgment on the ground of substantial justice. Given the special
circumstances involved in the present case, the Court En Banc should
have taken a second hard look at the petitioners’ positions in their second
motion for reconsideration, and acted to correct the clearly erroneous
December 19, 2007 Resolution.
Specifically, Justice Chico-Nazario emphasized the obligation of the
State, in the exercise of its inherent power of eminent domain, to pay just
compensation to the owner of the expropriated property. To be just, the
compensation must not only be the correct amount to be paid; it must
also be paid within a reasonable time from the time the land is taken from
the owner. If not, the State must pay the landowner interest, by way of
damages, from the time the property was taken until just compensation is
fully paid. This interest, deemed a part of just compensation due, has
been established by prevailing jurisprudence to be 12% per annum.
On these premises, Justice Nazario pointed out that the government
deprived the petitioners of their property on December 9, 1996, and paid
the balance of the just compensation due them only on May 9, 2008. The
delay of almost twelve years earned the petitioners interest in the total
amount of ₱1,331,124,223.05.
Despite this finding, Justice Chico-Nazario did not see it fit to declare the
computed interest to be totally due; she found it unconscionable to apply
the full force of the law on the LBP because of the magnitude of the
amount due. She thus reduced the awarded interest to ₱400,000,000.00,
or approximately 30% of the computed interest.
The Present Motion for Reconsideration
In their motion to reconsider the Court En Banc’s December 4, 2009
Resolution (the present Motion for Reconsideration), the petitioners
principally argue that: (a) the principle of immutability of judgment does
not apply since the Entry of Judgment was issued even before the lapse
of fifteen days from the parties’ receipt of the April 30, 2008 Resolution
and the petitioners timely filed their second motion for reconsideration
within fifteen days from their receipt of this resolution; (b) the April 30,
2008 Resolution cannot be considered immutable considering the special
and compelling circumstances attendant to the present case which fall
within the exceptions to the principle of immutability of judgments; (c) the
legal interest due is at 12% per annum, reckoned from the time of the
taking of the subject properties and this rate is not subject to reduction.
The power of the courts to equitably reduce interest rates applies solely
to liquidated damages under a contract and not to interest set by the
Honorable Court itself as due and owing in just compensation cases; and
(d) the Honorable Court’s fears that the interest payments due to the
petitioners will produce more harm than good to the system of agrarian
reform are misplaced and are based merely on conjectures.
The Comment of the Land Bank of the Philippines
The LBP commented on the petitioners’ motion for reconsideration on
April 28, 2010. It maintained that: (a) the doctrine of immutability of the
decisions of the Supreme Court clearly applies to the present case; (b)
the LBP is not guilty of undue delay in the payment of just compensation
as the petitioners were promptly paid once the Court had determined the
final value of the properties expropriated; (c) the Supreme Court rulings
invoked by the petitioners are inapplicable to the present case; (d) since
the obligation to pay just compensation is not a forbearance of money,
interest should commence only after the amount due becomes
ascertainable or liquidated, and the 12% interest per annum applies only
to the liquidated amount, from the date of finality of judgment; (e) the
imposition of 12% interest on the balance of P971,409,831.68 is
unwarranted because there was no unjustified refusal by LBP to pay just
compensation, and no contractual breach is involved; (f) the deletion of
the attorney’s fees equivalent to 10% of the amount finally awarded as
just compensation is proper; (g) this case does not involve a violation of
substantial justice to justify the alteration of the immutable resolution
dated December 19, 2007 that deleted the award of interest and
attorney’s fees.
The Court’s Ruling
We find the petitioners’ arguments meritorious and accordingly GRANT
the present motion for reconsideration.
Just compensation – a Basic Limitation on the State’s
Power of Eminent Domain
At the heart of the present controversy is the Third Division’s December
19, 2007 Resolution which held that the petitioners are not entitled to
12% interest on the balance of the just compensation belatedly paid by
the LBP. In the presently assailed December 4, 2009 Resolution, we
affirmed the December 19, 2007 Resolution’s findings that: (a) the LBP
deposited "pertinent amounts" in favor of the petitioners within fourteen
months after they filed their complaint for determination of just
compensation; and (b) the LBP had already paid the petitioners
₱411,769,168.32. We concluded then that these circumstances refuted
the petitioners’ assertion of unreasonable delay on the part of the LBP.
A re-evaluation of the circumstances of this case and the parties’
arguments, viewed in light of the just compensation requirement in the
exercise of the State’s inherent power of eminent domain, compels us to
re-examine our findings and conclusions.
Eminent domain is the power of the State to take private property for
public use.3 It is an inherent power of State as it is a power necessary for
the State’s existence; it is a power the State cannot do without.4 As an
inherent power, it does not need at all to be embodied in the Constitution;
if it is mentioned at all, it is solely for purposes of limiting what is
otherwise an unlimited power. The limitation is found in the Bill of
Rights5 – that part of the Constitution whose provisions all aim at the
protection of individuals against the excessive exercise of governmental
powers.
Section 9, Article III of the 1987 Constitution (which reads "No private
property shall be taken for public use without just compensation.")
provides two essential limitations to the power of eminent domain,
namely, that (1) the purpose of taking must be for public use and (2) just
compensation must be given to the owner of the private property.
It is not accidental that Section 9 specifies that compensation should be
"just" as the safeguard is there to ensure a balance – property is not to be
taken for public use at the expense of private interests; the public,
through the State, must balance the injury that the taking of property
causes through compensation for what is taken, value for value.
Nor is it accidental that the Bill of Rights is interpreted liberally in favor of
the individual and strictly against the government. The protection of the
individual is the reason for the Bill of Rights’ being; to keep the exercise
of the powers of government within reasonable bounds is what it seeks.6
The concept of "just compensation" is not new to Philippine constitutional
law,7 but is not original to the Philippines; it is a transplant from the
American Constitution.8 It found fertile application in this country
particularly in the area of agrarian reform where the taking of private
property for distribution to landless farmers has been equated to the
"public use" that the Constitution requires. In Land Bank of the
Philippines v. Orilla,9 a valuation case under our agrarian reform law, this
Court had occasion to state:
Constitutionally, "just compensation" is the sum equivalent to the market
value of the property, broadly described as the price fixed by the seller in
open market in the usual and ordinary course of legal action and
competition, or the fair value of the property as between the one who
receives and the one who desires to sell, it being fixed at the time of the
actual taking by the government. Just compensation is defined as the full
and fair equivalent of the property taken from its owner by the
expropriator. It has been repeatedly stressed by this Court that the true
measure is not the taker's gain but the owner's loss. The word "just" is
used to modify the meaning of the word "compensation" to convey the
idea that the equivalent to be given for the property to be taken shall be
real, substantial, full and ample.10 [Emphasis supplied.]
In the present case, while the DAR initially valued the petitioners’
landholdings at a total of ₱251,379,104.02,11 the RTC, acting as a special
agrarian court, determined the actual value of the petitioners’
landholdings to be ₱1,383,179,000.00. This valuation, a finding of fact,
has subsequently been affirmed by this Court, and is now beyond
question. In eminent domain terms, this amount is the "real, substantial,
full and ample" compensation the government must pay to be "just" to the
landowners.
Significantly, this final judicial valuation is far removed from the initial
valuation made by the DAR; their values differ by ₱1,131,799,897.00 – in
itself a very substantial sum that is roughly four times the original DAR
valuation. We mention these valuations as they indicate to us how
undervalued the petitioners’ lands had been at the start, particularly at the
time the petitioners’ landholdings were "taken". This reason apparently
compelled the petitioners to relentlessly pursue their valuation claims all
they way up to the level of this Court.
While the LBP deposited the total amount of ₱71,891,256.62 into the
petitioners’ accounts (₱26,409,549.86 for AFC and ₱45,481,706.76 for
HPI) at the time the landholdings were taken, these amounts were mere
partial payments that only amounted to 5% of the ₱1,383,179,000.00
actual value of the expropriated properties. We point this aspect out to
show that the initial payments made by the LBP when the petitioners’
landholdings were taken, although promptly withdrawn by the petitioners,
could not by any means be considered a fair exchange of values at the
time of taking; in fact, the LBP’s actual deposit could not be said to be
substantial even from the original LBP valuation of ₱251,379,103.90.
Thus, the deposits might have been sufficient for purposes of the
immediate taking of the landholdings but cannot be claimed as amounts
that would excuse the LBP from the payment of interest on the unpaid
balance of the compensation due. As discussed at length below, they
were not enough to compensate the petitioners for the potential income
the landholdings could have earned for them if no immediate taking had
taken place. Under the circumstances, the State acted oppressively and
was far from "just" in their position to deny the petitioners of the potential
income that the immediate taking of their properties entailed.
Just Compensation from the Prism of the Element of Taking.
Apart from the requirement that compensation for expropriated land must
be fair and reasonable, compensation, to be "just," must also be made
without delay.12 Without prompt payment, compensation cannot be
considered "just" if the property is immediately taken as the property
owner suffers the immediate deprivation of both his land and its fruits or
income.
This is the principle at the core of the present case where the petitioners
were made to wait for more than a decade after the taking of their
property before they actually received the full amount of the principal of
the just compensation due them.13 What they have not received to date is
the income of their landholdings corresponding to what they would have
received had no uncompensated taking of these lands been immediately
made. This income, in terms of the interest on the unpaid principal, is the
subject of the current litigation.
We recognized in Republic v. Court of Appeals14 the need for prompt
payment and the necessity of the payment of interest to compensate for
any delay in the payment of compensation for property already taken. We
ruled in this case that:
The constitutional limitation of "just compensation" is considered to be the
sum equivalent to the market value of the property, broadly described to
be the price fixed by the seller in open market in the usual and ordinary
course of legal action and competition or the fair value of the property as
between one who receives, and one who desires to sell, i[f] fixed at the
time of the actual taking by the government. Thus, if property is taken for
public use before compensation is deposited with the court having
jurisdiction over the case, the final compensation must include interest[s]
on its just value to be computed from the time the property is taken to the
time when compensation is actually paid or deposited with the court. In
fine, between the taking of the property and the actual payment, legal
interest[s] accrue in order to place the owner in a position as good as (but
not better than) the position he was in before the taking
occurred.15 [Emphasis supplied.]
Aside from this ruling, Republic notably overturned the Court’s previous
ruling in National Power Corporation v. Angas16 which held that just
compensation due for expropriated properties is not a loan or
forbearance of money but indemnity for damages for the delay in
payment; since the interest involved is in the nature of damages rather
than earnings from loans, then Art. 2209 of the Civil Code, which fixes
legal interest at 6%, shall apply.
In Republic, the Court recognized that the just compensation due to the
landowners for their expropriated property amounted to an effective
forbearance on the part of the State. Applying the Eastern Shipping Lines
ruling,17 the Court fixed the applicable interest rate at 12% per annum,
computed from the time the property was taken until the full amount of
just compensation was paid, in order to eliminate the issue of the
constant fluctuation and inflation of the value of the currency over time. In
the Court’s own words:
The Bulacan trial court, in its 1979 decision, was correct in imposing
interest[s] on the zonal value of the property to be computed from the
time petitioner instituted condemnation proceedings and "took" the
property in September 1969. This allowance of interest on the amount
found to be the value of the property as of the time of the taking
computed, being an effective forbearance, at 12% per annum should help
eliminate the issue of the constant fluctuation and inflation of the value of
the currency over time.18 [Emphasis supplied.] 1avvphi1
We subsequently upheld Republic’s 12% per annum interest rate on the
unpaid expropriation compensation in the following cases: Reyes v.
National Housing Authority,19 Land Bank of the Philippines v.
Wycoco,20 Republic v. Court of Appeals,21 Land Bank of the Philippines v.
Imperial,22 Philippine Ports Authority v. Rosales-Bondoc,23 and Curata v.
Philippine Ports Authority.24
These were the established rulings that stood before this Court issued
the currently assailed Resolution of December 4, 2009. These would be
the rulings this Court shall reverse and de-establish if we maintain and
affirm our ruling deleting the 12% interest on the unpaid balance of
compensation due for properties already taken.
Under the circumstances of the present case, we see no compelling
reason to depart from the rule that Republic firmly established. Let it be
remembered that shorn of its eminent domain and social justice aspects,
what the agrarian land reform program involves is the purchase by the
government, through the LBP, of agricultural lands for sale and
distribution to farmers. As a purchase, it involves an exchange of values
– the landholdings in exchange for the LBP’s payment. In determining the
just compensation for this exchange, however, the measure to be borne
in mind is not the taker's gain but the owner's loss25 since what is involved
is the takeover of private property under the State’s coercive power. As
mentioned above, in the value-for-value exchange in an eminent domain
situation, the State must ensure that the individual whose property is
taken is not shortchanged and must hence carry the burden of showing
that the "just compensation" requirement of the Bill of Rights is satisfied.
The owner’s loss, of course, is not only his property but also its income-
generating potential. Thus, when property is taken, full compensation of
its value must immediately be paid to achieve a fair exchange for the
property and the potential income lost. The just compensation is made
available to the property owner so that he may derive income from this
compensation, in the same manner that he would have derived income
from his expropriated property. If full compensation is not paid for
property taken, then the State must make up for the shortfall in the
earning potential immediately lost due to the taking, and the absence of
replacement property from which income can be derived; interest on the
unpaid compensation becomes due as compliance with the constitutional
mandate on eminent domain and as a basic measure of fairness.
In the context of this case, when the LBP took the petitioners’
landholdings without the corresponding full payment, it became liable to
the petitioners for the income the landholdings would have earned had
they not immediately been taken from the petitioners. What is interesting
in this interplay, under the developments of this case, is that the LBP, by
taking landholdings without full payment while holding on at the same
time to the interest that it should have paid, effectively used or retained
funds that should go to the landowners and thereby took advantage of
these funds for its own account.
From this point of view, the December 19, 2007 Resolution deleting the
award of 12% interest is not only patently and legally wrong, but is also
morally unconscionable for being grossly unfair and unjust. If the interest
on the just compensation due – in reality the equivalent of the fruits or
income of the landholdings would have yielded had these lands not been
taken – would be denied, the result is effectively a confiscatory action by
this Court in favor of the LBP. We would be allowing the LBP, for twelve
long years, to have free use of the interest that should have gone to the
landowners. Otherwise stated, if we continue to deny the petitioners’
present motion for reconsideration, we would – illogically and without
much thought to the fairness that the situation demands – uphold the
interests of the LBP, not only at the expense of the landowners but also
that of substantial justice as well.
Lest this Court be a party to this monumental unfairness in a social
program aimed at fostering balance in our society, we now have to ring
the bell that we have muted in the past, and formally declare that the
LBP’s position is legally and morally wrong. To do less than this is to
leave the demands of the constitutional just compensation standard (in
terms of law) and of our own conscience (in terms of morality) wanting
and unsatisfied.
The Delay in Payment Issue
Separately from the demandability of interest because of the failure to
fully pay for property already taken, a recurring issue in the case is the
attribution of the delay.
That delay in payment occurred is not and cannot at all be disputed.
While the LBP claimed that it made initial payments of ₱411,769,168.32
(out of the principal sum due of P1,383,179,000.00), the undisputed fact
is that the petitioners were deprived of their lands on December 9, 1996
(when titles to their landholdings were cancelled and transferred to the
Republic of the Philippines), and received full payment of the principal
amount due them only on May 9, 2008.
In the interim, they received no income from their landholdings because
these landholdings had been taken. Nor did they receive adequate
income from what should replace the income potential of their
landholdings because the LBP refused to pay interest while withholding
the full amount of the principal of the just compensation due by claiming a
grossly low valuation. This sad state continued for more than a decade.
In any language and by any measure, a lengthy delay in payment
occurred.
An important starting point in considering attribution for the delay is that
the petitioners voluntarily offered to sell their landholdings to the
government’s land reform program; they themselves submitted their
Voluntary Offer to Sell applications to the DAR, and they fully cooperated
with the government’s program. The present case therefore is not one
where substantial conflict arose on the issue of whether expropriation is
proper; the petitioners voluntarily submitted to expropriation and
surrendered their landholdings, although they contested the valuation that
the government made.
Presumably, had the landholdings been properly valued, the petitioners
would have accepted the payment of just compensation and there would
have been no need for them to go to the extent of filing a valuation case.
But, as borne by the records, the petitioners’ lands were grossly
undervalued by the DAR, leaving the petitioners with no choice but to file
actions to secure what is justly due them.
The DAR’s initial gross undervaluation started the cycle of court actions
that followed, where the LBP eventually claimed that it could not be
faulted for seeking judicial recourse to defend the government’s and its
own interests in light of the petitioners’ valuation claims. This LBP claim,
of course, conveniently forgets that at the root of all these valuation
claims and counterclaims was the initial gross undervaluation by DAR
that the LBP stoutly defended. At the end, this undervaluation was proven
incorrect by no less than this Court; the petitioners were proven correct in
their claim, and the correct valuation – more than five-fold the initial DAR
valuation – was decreed and became final.
All these developments cannot now be disregarded and reduced to
insignificance. In blunter terms, the government and the LBP cannot now
be heard to claim that they were simply protecting their interests when
they stubbornly defended their undervalued positions before the courts.
The more apt and accurate statement is that they adopted a grossly
unreasonable position and the adverse developments that followed,
particularly the concomitant delay, should be directly chargeable to them.
To be sure, the petitioners were not completely correct in the legal steps
they took in their valuation claims. They initially filed their valuation claim
before the DARAB instead of immediately seeking judicial intervention.
The DARAB, however, contributed its share to the petitioners’ error when
it failed or refused to act on the valuation petitions for more than three (3)
years. Thus, on top of the DAR undervaluation was the DARAB inaction
after the petitioners’ landholdings had been taken. This Court’s Decision
of February 6, 2007 duly noted this and observed:
It is not controverted that this case started way back on 12 October 1995,
when AFC and HPI voluntarily offered to sell the properties to the DAR. In
view of the failure of the parties to agree on the valuation of the
properties, the Complaint for Determination of Just Compensation was
filed before the DARAB on 14 February 1997. Despite the lapse of more
than three years from the filing of the complaint, the DARAB failed to
render a decision on the valuation of the land. Meantime, the titles over
the properties of AFC and HPI had already been cancelled and in their
place a new certificate of title was issued in the name of the Republic of
the Philippines, even as far back as 9 December 1996. A period of almost
10 years has lapsed. For this reason, there is no dispute that this case
has truly languished for a long period of time, the delay being mainly
attributable to both official inaction and indecision, particularly on the
determination of the amount of just compensation, to the detriment of
AFC and HPI, which to date, have yet to be fully compensated for the
properties which are already in the hands of farmer-beneficiaries, who,
due to the lapse of time, may have already converted or sold the land
awarded to them.
Verily, these two cases could have been disposed with dispatch were it
not for LBP’s counsel causing unnecessary delay. At the inception of this
case, DARAB, an agency of the DAR which was commissioned by law to
determine just compensation, sat on the cases for three years, which was
the reason that AFC and HPI filed the cases before the RTC. We
underscore the pronouncement of the RTC that "the delay by DARAB in
the determination of just compensation could only mean the reluctance of
the Department of Agrarian Reform and the Land Bank of the Philippines
to pay the claim of just compensation by corporate landowners."
To allow the taking of landowners’ properties, and to leave them empty-
handed while government withholds compensation is undoubtedly
oppressive. [Emphasis supplied.]
These statements cannot but be true today as they were when we
originally decided the case and awarded 12% interest on the balance of
the just compensation due. While the petitioners were undisputedly
mistaken in initially seeking recourse through the DAR, this agency itself
– hence, the government – committed a graver transgression when it
failed to act at all on the petitioners’ complaints for determination of just
compensation.
In sum, in a balancing of the attendant delay-related circumstances of
this case, delay should be laid at the doorsteps of the government, not at
the petitioners’. We conclude, too, that the government should not be
allowed to exculpate itself from this delay and should suffer all the
consequences the delay caused.
The LBP’s arguments on the applicability of cases imposing 12% interest
The LBP claims in its Comment that our rulings in Republic v. Court of
Appeals,26 Reyes v. National Housing Authority,27 and Land Bank of the
Philippines v. Imperial,28 cannot be applied to the present case.
According to the LBP, Republic is inapplicable because, first, the
landowners in Republic remained unpaid, notwithstanding the fact that
the award for just compensation had already been fixed by final
judgment; in the present case, the Court already acknowledged that
"pertinent amounts" were deposited in favor of the landowners within 14
months from the filing of their complaint. Second, while Republic involved
an ordinary expropriation case, the present case involves expropriation
for agrarian reform. Finally, the just compensation in Republic remained
unpaid notwithstanding the finality of judgment, while the just
compensation in the present case was immediately paid in full after LBP
received a copy of the Court’s resolution
We find no merit in these assertions.
As we discussed above, the "pertinent amounts" allegedly deposited by
LBP were mere partial payments that amounted to a measly 5% of the
actual value of the properties expropriated. They could be the basis for
the immediate taking of the expropriated property but by no stretch of the
imagination can these nominal amounts be considered "pertinent"
enough to satisfy the full requirement of just compensation – i.e., the full
and fair equivalent of the expropriated property, taking into account its
income potential and the foregone income lost because of the immediate
taking.
We likewise find no basis to support the LBP’s theory that Republic and
the present case have to be treated differently because the first involves
a "regular" expropriation case, while the present case involves
expropriation pursuant to the country’s agrarian reform program. In both
cases, the power of eminent domain was used and private property was
taken for public use. Why one should be different from the other, so that
the just compensation ruling in one should not apply to the other, truly
escapes us. If there is to be a difference, the treatment of agrarian reform
expropriations should be stricter and on a higher plane because of the
government’s societal concerns and objectives. To be sure, the
government cannot attempt to remedy the ills of one sector of society by
sacrificing the interests of others within the same society.
Finally, we note that the finality of the decision (that fixed the value of just
compensation) in Republic was not a material consideration for the Court
in awarding the landowners 12% interest. The Court, in Republic, simply
affirmed the RTC ruling imposing legal interest on the amount of just
compensation due. In the process, the Court determined that the legal
interest should be 12% after recognizing that the just compensation due
was effectively a forbearance on the part of the government. Had the
finality of the judgment been the critical factor, then the 12% interest
should have been imposed from the time the RTC decision fixing just
compensation became final. Instead, the 12% interest was imposed from
the time that the Republic commenced condemnation proceedings and
"took" the property.
The LBP additionally asserts that the petitioners erroneously relied on the
ruling in Reyes v. National Housing Authority. The LBP claims that we
cannot apply Reyes because it involved just compensation that remained
unpaid despite the finality of the expropriation decision. LBP’s point of
distinction is that just compensation was immediately paid in the present
case upon the Court’s determination of the actual value of the
expropriated properties. LBP claims, too, that in Reyes, the Court
established that the refusal of the NHA to pay just compensation was
unfounded and unjustified, whereas the LBP in the present case clearly
demonstrated its willingness to pay just compensation. Lastly, in Reyes,
the records showed that there was an outstanding balance that ought to
be paid, while the element of an outstanding balance is absent in the
present case.
Contrary to the LBP’s opinion, the imposition of the 12% interest in Reyes
did not depend on either the finality of the decision of the expropriation
court, or on the finding that the NHA’s refusal to pay just compensation
was unfounded and unjustified. Quite clearly, the Court imposed 12%
interest based on the ruling in Republic v. Court of Appeals that "x x x if
property is taken for public use before compensation is deposited with the
court having jurisdiction over the case, the final compensation must
include interest[s] on its just value to be computed from the time the
property is taken to the time when compensation is actually paid or
deposited with the court. In fine, between the taking of the property and
the actual payment, legal interest[s] accrue in order to place the owner in
a position as good as (but not better than) the position he was in before
the taking occurred."29 This is the same legal principle applicable to the
present case, as discussed above.
While the LBP immediately paid the remaining balance on the just
compensation due to the petitioners after this Court had fixed the value of
the expropriated properties, it overlooks one essential fact – from the time
that the State took the petitioners’ properties until the time that the
petitioners were fully paid, almost 12 long years passed. This is the
rationale for imposing the 12% interest – in order to compensate the
petitioners for the income they would have made had they been properly
compensated for their properties at the time of the taking.
Finally, the LBP insists that the petitioners quoted our ruling in Land Bank
of the Philippines v. Imperial out of context. According to the LBP, the
Court imposed legal interest of 12% per annum only after December 31,
2006, the date when the decision on just compensation became final.
The LBP is again mistaken. The Imperial case involved land that was
expropriated pursuant to Presidential Decree No. 27,30 and fell under the
coverage of DAR Administrative Order (AO) No. 13.31 This AO provided
for the payment of a 6% annual interest if there is any delay in payment
of just compensation. However, Imperial was decided in 2007 and AO
No. 13 was only effective up to December 2006. Thus, the Court, relying
on our ruling in the Republic case, applied the prevailing 12% interest
ruling to the period when the just compensation remained unpaid after
December 2006. It is for this reason that December 31, 2006 was
important, not because it was the date of finality of the decision on just
compensation.
The 12% Interest Rate and the Chico-Nazario Dissent
To fully reflect the concerns raised in this Court’s deliberations on the
present case, we feel it appropriate to discuss the Justice Minita Chico-
Nazario’s dissent from the Court’s December 4, 2009 Resolution.
While Justice Chico-Nazario admitted that the petitioners were entitled to
the 12% interest, she saw it appropriate to equitably reduce the interest
charges from ₱1,331,124,223.05 to ₱400,000,000.00. In support of this
proposal, she enumerated various cases where the Court, pursuant to
Article 1229 of the Civil Code,32 equitably reduced interest charges.
We differ with our esteemed colleague’s views on the application of
equity.
While we have equitably reduced the amount of interest awarded in
numerous cases in the past, those cases involved interest that was
essentially consensual in nature, i.e., interest stipulated in signed
agreements between the contracting parties. In contrast, the interest
involved in the present case "runs as a matter of law and follows as a
matter of course from the right of the landowner to be placed in as good a
position as money can accomplish, as of the date of taking."33
Furthermore, the allegedly considerable payments made by the LBP to
the petitioners cannot be a proper premise in denying the landowners the
interest due them under the law and established jurisprudence. If the just
compensation for the landholdings is considerable, this compensation is
not undue because the landholdings the owners gave up in exchange are
also similarly considerable – AFC gave up an aggregate landholding of
640.3483 hectares, while HPI’s gave up 805.5308 hectares. When the
petitioners surrendered these sizeable landholdings to the government,
the incomes they gave up were likewise sizeable and cannot in any way
be considered miniscule. The incomes due from these properties,
expressed as interest, are what the government should return to the
petitioners after the government took over their lands without full payment
of just compensation. In other words, the value of the landholdings
themselves should be equivalent to the principal sum of the just
compensation due; interest is due and should be paid to compensate for
the unpaid balance of this principal sum after taking has been completed.
This is the compensation arrangement that should prevail if such
compensation is to satisfy the constitutional standard of being "just."
Neither can LBP’s payment of the full compensation due before the
finality of the judgment of this Court justify the reduction of the interest
due them. To rule otherwise would be to forget that the petitioners had to
wait twelve years from the time they gave up their lands before the
government fully paid the principal of the just compensation due them.
These were twelve years when they had no income from their
landholdings because these landholdings have immediately been taken;
no income, or inadequate income, accrued to them from the proceeds of
compensation payment due them because full payment has been
withheld by government.
If the full payment of the principal sum of the just compensation is legally
significant at all under the circumstances of this case, the significance is
only in putting a stop to the running of the interest due because the
principal of the just compensation due has been paid. To close our eyes
to these realities is to condone what is effectively a confiscatory action in
favor of the LBP.
That the legal interest due is now almost equivalent to the principal to be
paid is not per se an inequitable or unconscionable situation, considering
the length of time the interest has remained unpaid – almost twelve long
years. From the perspective of interest income, twelve years would have
been sufficient for the petitioners to double the principal, even if invested
conservatively, had they been promptly paid the principal of the just
compensation due them. Moreover, the interest, however enormous it
may be, cannot be inequitable and unconscionable because it resulted
directly from the application of law and jurisprudence – standards that
have taken into account fairness and equity in setting the interest rates
due for the use or forebearance of money.
If the LBP sees the total interest due to be immense, it only has itself to
blame, as this interest piled up because it unreasonably acted in its
valuation of the landholdings and consequently failed to promptly pay the
petitioners. To be sure, the consequences of this failure – i.e., the
enormity of the total interest due and the alleged financial hemorrhage
the LBP may suffer – should not be the very reason that would excuse it
from full compliance. To so rule is to use extremely flawed logic. To so
rule is to disregard the question of how the LBP, a government financial
institution that now professes difficulty in paying interest at 12% per
annum, managed the funds that it failed to pay the petitioners for twelve
long years.
It would be utterly fallacious, too, to argue that this Court should tread
lightly in imposing liabilities on the LBP because this bank represents the
government and, ultimately, the public interest. Suffice it to say that public
interest refers to what will benefit the public, not necessarily the
government and its agencies whose task is to contribute to the benefit of
the public. Greater public benefit will result if government agencies like
the LBP are conscientious in undertaking its tasks in order to avoid the
situation facing it in this case. Greater public interest would be served if it
can contribute to the credibility of the government’s land reform program
through the conscientious handling of its part of this program.
As our last point, equity and equitable principles only come into full play
when a gap exists in the law and jurisprudence.34 As we have shown
above, established rulings of this Court are in place for full application to
the present case. There is thus no occasion for the equitable
consideration that Justice Chico-Nazario suggested.
The Amount Due the Petitioners as Just Compensation
As borne by the records, the 12% interest claimed is only on the
difference between the price of the expropriated lands (determined with
finality to be ₱1,383,179,000.00) and the amount of ₱411,769,168.32
already paid to the petitioners. The difference between these figures
amounts to the remaining balance of ₱971,409,831.68 that was only paid
on May 9, 2008.
As above discussed, this amount should bear interest at the rate of 12%
per annum from the time the petitioners’ properties were taken on
December 9, 1996 up to the time of payment. At this rate, the LBP now
owes the petitioners the total amount of One Billion Three Hundred
Thirty-One Million One Hundred Twenty-Four Thousand Two Hundred
Twenty-Three and 05/100 Pesos (₱1,331,124,223.05), computed as
follows:
Just Compensation ₱971,409,831.68
Legal Interest from 12/09/1996
To 05/09/2008 @ 12%/annum
12/09/1996 to 12/31/1996 23 days 7,345,455.17
01/01/1997 to 12/31/2007 11 years 1,282,260,977.82
01/01/2008 to 05/09/2008 130 days 41,517,790.07
₱1,331,124,223.0535
The Immutability of Judgment Issue
As a rule, a final judgment may no longer be altered, amended or
modified, even if the alteration, amendment or modification is meant to
correct what is perceived to be an erroneous conclusion of fact or law
and regardless of what court, be it the highest Court of the land, rendered
it.36 In the past, however, we have recognized exceptions to this rule by
reversing judgments and recalling their entries in the interest of
substantial justice and where special and compelling reasons called for
such actions.
Notably, in San Miguel Corporation v. National Labor Relations
Commission,37 Galman v. Sandiganbayan,38Philippine Consumers
Foundation v. National Telecommunications Commission,39 and Republic
v. de los Angeles,40 we reversed our judgment on the second motion for
reconsideration, while in Vir-Jen Shipping and Marine Services v.
National Labor Relations Commission,41 we did so on a third motion for
reconsideration. In Cathay Pacific v. Romillo42 and Cosio v. de
Rama,43 we modified or amended our ruling on the second motion for
reconsideration. More recently, in the cases of Munoz v. Court of
Appeals,44 Tan Tiac Chiong v. Hon. Cosico,45Manotok IV v. Barque,46 and
Barnes v. Padilla,47 we recalled entries of judgment after finding that
doing so was in the interest of substantial justice. In Barnes, we said:
x x x Phrased elsewise, a final and executory judgment can no longer be
attacked by any of the parties or be modified, directly or indirectly, even
by the highest court of the land.
However, this Court has relaxed this rule in order to serve substantial
justice considering (a) matters of life, liberty, honor or property, (b) the
existence of special or compelling circumstances, (c) the merits of the
case, (d) a cause not entirely attributable to the fault or negligence of the
party favored by the suspension of the rules, (e) a lack of any showing
that the review sought is merely frivolous and dilatory, and (f) the other
party will not be unjustly prejudiced thereby.
Invariably, rules of procedure should be viewed as mere tools designed
to facilitate the attainment of justice. Their strict and rigid application,
which would result in technicalities that tend to frustrate rather than
promote substantial justice, must always be eschewed. Even the Rules of
Court reflects this principle. The power to suspend or even disregard
rules can be so pervasive and compelling as to alter even that which this
Court itself had already declared to be final.48 [Emphasis supplied.]
That the issues posed by this case are of transcendental importance is
not hard to discern from these discussions. A constitutional limitation,
guaranteed under no less than the all-important Bill of Rights, is at stake
in this case: how can compensation in an eminent domain be "just" when
the payment for the compensation for property already taken has been
unreasonably delayed? To claim, as the assailed Resolution does, that
only private interest is involved in this case is to forget that an
expropriation involves the government as a necessary actor. It forgets,
too, that under eminent domain, the constitutional limits or standards
apply to government who carries the burden of showing that these
standards have been met. Thus, to simply dismiss this case as a private
interest matter is an extremely shortsighted view that this Court should
not leave uncorrected.
As duly noted in the above discussions, this issue is not one of first
impression in our jurisdiction; the consequences of delay in the payment
of just compensation have been settled by this Court in past rulings. Our
settled jurisprudence on the issue alone accords this case primary
importance as a contrary ruling would unsettle, on the flimsiest of
grounds, all the rulings we have established in the past.
More than the stability of our jurisprudence, the matter before us is of
transcendental importance to the nation because of the subject matter
involved – agrarian reform, a societal objective that the government has
unceasingly sought to achieve in the past half century. This reform
program and its objectives would suffer a major setback if the
government falters or is seen to be faltering, wittingly or unwittingly,
through lack of good faith in implementing the needed reforms. Truly,
agrarian reform is so important to the national agenda that the Solicitor
General, no less, pointedly linked agricultural lands, its ownership and
abuse, to the idea of revolution.49 This linkage, to our mind, remains valid
even if the landowner, not the landless farmer, is at the receiving end of
the distortion of the agrarian reform program.
As we have ruled often enough, rules of procedure should not be applied
in a very rigid, technical sense; rules of procedure are used only to help
secure, not override, substantial justice.50 As we explained in Ginete v.
Court of Appeals:51
Let it be emphasized that the rules of procedure should be viewed as
mere tools designed to facilitate the attainment of justice. Their strict and
rigid application, which would result in technicalities that tend to frustrate
rather than promote substantial justice, must always be eschewed. Even
the Rules of Court reflect this principle. The power to suspend or even
disregard rules can be so pervasive and compelling as to alter even that
which this Court itself has already declared to be final, as we are now
constrained to do in the instant case.
xxxx
The emerging trend in the rulings of this Court is to afford every party
litigant the amplest opportunity for the proper and just determination of
his cause, free from the constraints of technicalities. Time and again, this
Court has consistently held that rules must not be applied rigidly so as
not to override substantial justice.52 [Emphasis supplied.]
Similarly, in de Guzman v. Sandiganbayan,53 we had occasion to state:
The Rules of Court was conceived and promulgated to set forth
guidelines in the dispensation of justice but not to bind and chain the
hand that dispenses it, for otherwise, courts will be mere slaves to or
robots of technical rules, shorn of judicial discretion. That is precisely why
courts in rendering justice have always been, as they ought to be,
conscientiously guided by the norm that when on the balance,
technicalities take a backseat against substantive rights, and not the
other way around. Truly then, technicalities, in the appropriate language
of Justice Makalintal, "should give way to the realities of the
situation.54 [Emphasis supplied.]
We made the same recognition in Barnes,55 on the underlying premise
that a court’s primordial and most important duty is to render justice; in
discharging the duty to render substantial justice, it is permitted to re-
examine even a final and executory judgment.
Based on all these considerations, particularly the patently illegal and
erroneous conclusion that the petitioners are not entitled to 12% interest,
we find that we are duty-bound to re-examine and overturn the assailed
Resolution. We shall completely and inexcusably be remiss in our duty as
defenders of justice if, given the chance to make the rectification, we shall
let the opportunity pass.
Attorney’s Fees
We are fully aware that the RTC has awarded the petitioners attorney’s
fees when it fixed the just compensation due and decreed that interest of
12% should be paid on the balance outstanding after the taking of the
petitioners’ landholdings took place. The petitioners, however, have not
raised the award of attorney’s fees as an issue in the present motion for
reconsideration. For this reason, we shall not touch on this issue at all in
this Resolution.
WHEREFORE, premises considered, we GRANT the petitioners’ motion
for reconsideration. The Court En Banc’s Resolution dated December 4,
2009, as well as the Third Division’s Resolutions dated April 30, 2008 and
December 19, 2007, are hereby REVERSED and SET ASIDE.

The respondent Land Bank of the Philippines is hereby ORDERED to pay

petitioners Apo Fruits Corporation and Hijo Plantation, Inc. interest at the
rate of 12% per annum on the unpaid balance of the just compensation,
computed from the date the Government took the properties on
December 9, 1996, until the respondent Land Bank of the Philippines
paid on May 9, 2008 the balance on the principal amount.

Unless the parties agree to a shorter payment period, payment shall be in

monthly installments at the rate of ₱60,000,000.00 per month until the
whole amount owing, including interest on the outstanding balance, is
fully paid.

Costs against the respondent Land Bank of the Philippines.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 165354 January 12, 2015
REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL
POWER CORPORATION, Petitioner,
vs.
HEIRS OF SATURNINO Q. BORBON, AND COURT OF
APPEALS, Respondents.
DECISION
BERSAMIN, J.:
The expropriator who has taken possession of the property subject of
expropriation is obliged to pay reasonable compensation to the
landowner for the period of such possession although the proceedings
had been discontinued on the ground that the public purpose for the
expropriation had meanwhile ceased.
Antecedents
The National Power Corporation (NAPOCOR) is a government-owned
and -controlled corporation vested with authority under Republic Act No.
6395, as amended, to undertake the development of hydro-electric
generation of power, production of electricity from any and all sources,
construction, operation and maintenance of power plants, auxiliary plants,
dams, reservoirs, pipes, main transmission lines, power stations and
substations, and other works for the purpose of developing hydraulic
power from any river, lake, creek, spring and waterfalls in the Philippines
and to supply such power to the inhabitants thereof.1
In February 1993, NAPOCOR entered a property located in Barangay
San Isidro, Batangas City in order to construct and maintain transmission
lines for the 230 KV Mahabang Parang-Pinamucan Power Transmission
Project.2 Respondents heirs of Saturnino Q. Borbon owned the property,
with a total area of 14,257 square meters, which was registered under
Transfer Certificate of Title No. T-9696 of the Registry of Deeds of
Batangas.3
On May 26, 1995, NAPOCOR filed a complaint for expropriation in the
Regional Trial Court in Batangas City (RTC),4seeking the acquisition of an
easement of right of way over a portion of the property involving an area
of only 6,326 square meters, more or less,5 alleging that it had negotiated
with the respondents for the acquisition of the easement but they had
failed to reach any agreement; and that, nonetheless, it was willing to
deposit the amount of ₱9,790.00 representing the assessed value of the
portion sought to be expropriated.6 It prayed for the issuance of a writ of
possession upon deposit to enable it to enter and take possession and
control of the affected portion of the property; to demolish all
improvements existing thereon; and to commence construction of the
transmission line project. It likewise prayed for the appointment of three
commissioners to determine the just compensation to be paid.7
In their answer with motion to dismiss,8 the respondents staunchly
maintained that NAPOCOR had not negotiated with them before entering
the property and that the entry was done without their consent in the
process, destroying some fruit trees without payment, and installing five
transmission line posts and five woodpoles for its project;9 that the area
being expropriated only covered the portion directly affected by the
transmission lines; that the remaining portion of the property was also
affected because the transmission line passed through the center of the
land, thereby dividing the land into three lots; that the presence of the
high tension transmission line had rendered the entire property inutile for
any future use and capabilities;10 that, nonetheless, they tendered no
objection to NAPOCOR’s entry provided it would pay just compensation
not only for the portion sought to be expropriated but for the entire
property whose potential was greatly diminished, if not totally lost, due to
the project;11 and that their property was classified as industrial land.
Thus, they sought the dismissal of the complaint, the payment of just
compensation of ₱1,000.00/square meter, and attorney’s fees;12 and to be
allowed to nominate their representative to the panel of commissioners to
be appointed by the trial court.13
In the pre-trial conference conducted on December 20, 1995, the parties
stipulated on: (1) the location of the property; (2) the number of the heirs
of the late Saturnino Q. Borbon; (3) the names of the persons upon whom
title to the property was issued; and (4) the ownership and possession of
the property.14 In its order of that date, the RTC directed the parties to
submit the names of their nominees to sit in the panel of commissioners
within 10 days from the date of the pre-trial.15
The RTC constituted the panel of three commissioners. Two
commissioners submitted a joint report on April 8, 1999,16 in which they
found that the property was classified as industrial land located within the
Industrial 2 Zone;17that although the property used to be classified as
agricultural (i.e., horticultural and pasture land), it was reclassified to
industrial land for appraisal or taxation purposes on June 30, 1994; and
that the reclassification was made on the basis of a certification issued by
the Zoning Administrator pursuant to Section 3.10 (d) of the Amended
Zoning Ordinance (1989) of the City of Batangas.18 The two
commissioners appraised the value at ₱550.00/square meter.19However,
the third commissioner filed a separate report dated March 16,
1999,20 whereby he recommended the payment of "an easement fee of at
least ten percent (10%) of the assessed value indicated in the tax
declaration21plus cost of damages in the course of the construction,
improvements affected and tower occupancy fee."22
The parties then submitted their respective objections to the reports. On
their part, the respondents maintained that NAPOCOR should
compensate them for the entire property at the rate of ₱550.00/square
meter because the property was already classified as industrial land at
the time NAPOCOR entered it.23 In contrast, NAPOCOR objected to the
joint report, insisting that the property was classified as agricultural land
at the time of its taking in March 1993; and clarifying that it was only
seeking an easement of right of way over a portion of the property, not
the entire area thereof, so that it should pay only 10% of the assessed
value of the portion thus occupied.24
In the judgment dated November 27, 2000,25 the RTC adopted the
recommendation contained in the joint report, and ruled thusly:
The price to be paid for an expropriated land is its value at the time of
taking, which is the date when the plaintiff actually entered the property or
the date of the filing of the complaint for expropriation. In this case, there
is no evidence as to when the plaintiff actually entered the property in
question, so the reference point should be the date of filing of the
complaint, which is May 5, 1995.
On this date, the property in question was already classified as industrial.
So, the Joint Report (Exhibit "1") is credible on this point. The two
Commissioners who submitted the Joint Report are government officials
who were not shown to be biased. So, that their report should be given
more weight than the minority report submitted by a private lawyer
representing the plaintiff. In view of these, the Court adopts the Joint
Report and rejects the minority report. The former fixed the just
compensation at ₱550.00 per square meter for the whole lot of 14,257
square meters.26
Accordingly, the RTC ordered NAPOCOR to pay the respondents: (1) just
compensation for the whole area of 14,257 square meters at the rate of
₱550.00/square meter; (2) legal rate of interest from May 5, 1995 until full
payment; and (3) the costs of suit.27
NAPOCOR appealed (CA-G.R. No. 72069).
On April 29, 2004,28 the CA promulgated its decision, viz:
WHEREFORE, premises considered, the Decision dated November 27,
2000 of Branch I of the Regional Trial Court of Batangas City, is hereby
AFFIRMED with the MODIFICATION that plaintiff-appellant shall pay only
for the occupied 6,326 square meters of the subject real property at the
rate of ₱550.00 per square meter and to pay legal interest therefrom until
fully paid.
SO ORDERED.29
Hence, this appeal by NAPOCOR.
Issue
On December 3, 2012, during the pendency of the appeal, NAPOCOR
filed a Motion to Defer Proceedings stating that negotiations between the
parties were going on with a view to the amicable settlement of the
case.30
On January 3, 2014, NAPOCOR filed a Manifestation and Motion to
Discontinue Expropriation Proceedings,31informing that the parties failed
to reach an amicable agreement; that the property sought to be
expropriated was no longer necessary for public purpose because of the
intervening retirement of the transmission lines installed on the
respondents’ property;32 that because the public purpose for which such
property would be used thereby ceased to exist, the proceedings for
expropriation should no longer continue, and the State was now duty-
bound to return the property to its owners; and that the dismissal or
discontinuance of the expropriation proceedings was in accordance with
Section 4, Rule 67 of the Rules of Court. Hence, NAPOCOR prayed that
the proceedings be discontinued "under such terms as the court deems
just and equitable,"33 and that the compensation to be awarded the
respondents be reduced by the equivalent of the benefit they received
from the land during the time of its occupation, for which purpose the
case could be remanded to the trial court for the determination of
reasonable compensation to be paid to them.34
In light of its Manifestation and Motion to Discontinue Expropriation
Proceedings, NAPOCOR contends that the expropriation has become
without basis for lack of public purpose as a result of the retirement of the
transmission lines; that if expropriation still proceeds, the Government will
be unduly burdened by payment of just compensation for property it no
longer requires; and that there is legal basis in dismissing the
proceedings, citing Metropolitan Water District v. De los Angeles35 where
the Court granted petitioner’s prayer for the quashal of expropriation
proceedings and the eventual dismissal of the proceedings on the ground
that the land sought to be expropriated was no longer "indispensably
necessary" in the maintenance and operation of petitioner's waterworks
system.
The issue to be considered and resolved is whether or not the
expropriation proceedings should be discontinued or dismissed pending
appeal.
Ruling of the Court
The dismissal of the proceedings for expropriation at the instance of
NAPOCOR is proper, but, conformably with Section 4,36 Rule 67 of the
Rules of Court, the dismissal or discontinuance of the proceedings must
be upon such terms as the court deems just and equitable.
Before anything more, we remind the parties about the nature of the
power of eminent domain. The right of eminent domain is "the ultimate
right of the sovereign power to appropriate, not only the public but the
private property of all citizens within the territorial sovereignty, to public
purpose."37 But the exercise of such right is not unlimited, for two
mandatory requirements should underlie the Government’s exercise of
the power of eminent domain, namely: (1) that it is for a particular public
purpose; and (2) that just compensation be paid to the property
owner.38 These requirements partake the nature of implied conditions that
should be complied with to enable the condemnor to keep the property
expropriated.39
Public use, in common acceptation, means "use by the public." However,
the concept has expanded to include utility, advantage or productivity for
the benefit of the public.40 In Asia's Emerging Dragon Corporation v.
Department of Transportation and Communications,41 Justice Corona, in
his dissenting opinion said that:
To be valid, the taking must be for public use. The meaning of the term
"public use" has evolved over time in response to changing public needs
and exigencies. Public use which was traditionally understood as strictly
limited to actual "use by the public" has already been abandoned. "Public
use" has now been held to be synonymous with "public interest," "public
benefit," and "public convenience."
It is essential that the element of public use of the property be maintained
throughout the proceedings for expropriation. The effects of abandoning
the public purpose were explained in Mactan-Cebu International Airport
Authority v. Lozada, Sr.,42 to wit:
More particularly, with respect to the element of public use, the
expropriator should commit to use the property pursuant to the purpose
stated in the petition for expropriation filed, failing which, it should file
another petition for the new purpose. If not, it is then incumbent upon the
expropriator to return the said property to its private owner, if the latter
desires to reacquire the same. Otherwise, the judgment of expropriation
suffers an intrinsic flaw, as it would lack one indispensable element for
the proper exercise of the power of eminent domain, namely, the
particular public purpose for which the property will be devoted.
Accordingly, the private property owner would be denied due process of
law, and the judgment would violate the property owner's right to justice,
fairness and equity.43
A review reveals that Metropolitan Water District v. De los Angeles44 is an
appropriate precedent herein. There, the Metropolitan Water District
passed a board resolution requesting the Attorney-General to file a
petition in the Court of First Instance of the Province of Rizal praying that
it be permitted to discontinue the condemnation proceedings it had
initiated for the expropriation of a parcel of land in Montalban, Rizal to be
used in the construction of the Angat Waterworks System. It claimed that
the land was no longer indispensably necessary in the maintenance and
operation of its waterworks system, and that the expropriation complaint
should then be dismissed. The Court, expounding on the power of the
State to exercise the right of eminent domain, then pronounced:
There is no question raised concerning the right of the plaintiff here to
acquire the land under the power of eminent domain. That power was
1âwphi1
expressly granted it by its charter. The power of eminent domain is a right
reserved to the people or Government to take property for public use. It is
the right of the state, through its regular organization, to reassert either
temporarily or permanently its dominion over any portion of the soil of the
state on account of public necessity and for the public good. The right of
eminent domain is the right which the Government or the people retains
over the estates of individuals to resume them for public use. It is the
right of the people, or the sovereign, to dispose, in case of public
necessity and for the public safety, of all the wealth contained in the
state.45
Indeed, public use is the fundamental basis for the action for
expropriation; hence, NAPOCOR’s motion to discontinue the proceedings
is warranted and should be granted. The Court has observed in
Metropolitan Water District v. De los Angeles:
It is not denied that the purpose of the plaintiff was to acquire the land in
question for public use. The fundamental basis then of all actions brought
for the expropriation of lands, under the power of eminent domain, is
public use. That being true, the very moment that it appears at any stage
of the proceedings that the expropriation is not for a public use, the action
must necessarily fail and should be dismissed, for the reason that the
action cannot be maintained at all except when the expropriation is for
some public use. That must be true even during the pendency of the
appeal or at any other stage of the proceedings. If, for example, during
the trial in the lower court, it should be made to appear to the satisfaction
of the court that the expropriation is not for some public use, it would be
the duty and the obligation of the trial court to dismiss the action. And
even during the pendency of the appeal, if it should be made to appear to
the satisfaction of the appellate court that the expropriation is not for
public use, then it would become the duty and the obligation of the
appellate court to dismiss it.
In the present case the petitioner admits that the expropriation of the land
in question is no longer necessary for public use. Had that admission
been made in the trial court the case should have been dismissed there.
It now appearing positively, by resolution of the plaintiff, that the
expropriation is not necessary for public use, the action should be
dismissed even without a motion on the part of the plaintiff. The moment
it appears in whatever stage of the proceedings that the expropriation is
not for a public use the complaint should be dismissed and all the parties
thereto should be relieved from further annoyance or
litigation.46 (underscoring and emphasis supplied)
It is notable that the dismissal of the expropriation proceedings in
Metropolitan Water District v. De los Angeles was made subject to
several conditions in order to address the dispossession of the
defendants of their land, and the inconvenience, annoyance and
damages suffered by the defendants on account of the proceedings.
Accordingly, the Court remanded the case to the trial court for the
issuance of a writ of possession ordering Metropolitan Water District to
immediately return possession of the land to the defendants, and for the
determination of damages in favor of the defendants, the claims for which
must be presented within 30 days from the return of the record to the
court of origin and notice thereof.47
Here, NAPOCOR seeks to discontinue the expropriation proceedings on
the ground that the transmission lines constructed on the respondents’
property had already been retired. Considering that the Court has
consistently upheld the primordial importance of public use in
expropriation proceedings, NAPOCOR’s reliance on Metropolitan Water
District v. De los Angeles was apt and correct. Verily, the retirement of
the transmission lines necessarily stripped the expropriation proceedings
of the element of public use. To continue with the expropriation
proceedings despite the definite cessation of the public purpose of the
project would result in the rendition of an invalid judgment in favor of the
expropriator due to the absence of the essential element of public use.
Unlike in Metropolitan Water District v. De los Angeles where the request
to discontinue the expropriation proceedings was made upon the
authority appearing in the board resolution issued on July 14,
1930,48 counsel for NAPOCOR has not presented herein any document to
show that NAPOCOR had decided, as a corporate body, to discontinue
the expropriation proceedings. Nonetheless, the Court points to the
Memorandum dated December 13, 201249 and the Certificate of
Inspection/Accomplishment dated February 5, 200550 attached to
NAPOCOR’s motion attesting to the retirement of the transmission lines.
Also, Metropolitan Water District v. De los Angeles emphasized that it
became the duty and the obligation of the court, regardless of the stage
of the proceedings, to dismiss the action "if it should be made to appear
to the satisfaction of the court that the expropriation is not for some public
use."51 Despite the lack of the board resolution, therefore, the Court now
considers the documents attached to NAPOCOR’s Manifestation and
Motion to Discontinue Expropriation Proceedings to be sufficient to
establish that the expropriation sought is no longer for some public
purpose.
Accordingly, the Court grants the motion to discontinue the proceedings
subject to the conditions to be shortly mentioned hereunder, and requires
the return of the property to the respondents. Having said that, we must
point out that NAPOCOR entered the property without the owners’
consent and without paying just compensation to the respondents.
Neither did it deposit any amount as required by law prior to its entry. The
Constitution is explicit in obliging the Government and its entities to pay
just compensation before depriving any person of his or her property for
public use.52 Considering that in the process of installing transmission
lines, NAPOCOR destroyed some fruit trees and plants without payment,
and the installation of the transmission lines went through the middle of
the land as to divide the property into three lots, thereby effectively
rendering the entire property inutile for any future use, it would be unfair
for NAPOCOR not to be made liable to the respondents for the
disturbance of their property rights from the time of entry until the time of
restoration of the possession of the property. There should be no
question about the taking. In several rulings, notably National Power
Corporation v. Zabala,53 Republic v. Libunao,54 National Power
Corporation v. Tuazon,55 and National Power Corporation v.
Saludares,56 this Court has already declared that "since the high-tension
electric current passing through the transmission lines will perpetually
deprive the property owners of the normal use of their land, it is only just
and proper to require Napocor to recompense them for the full market
value of their property."
There is a sufficient showing that NAPOCOR entered into and took
possession of the respondents’ property as early as in March 1993
without the benefit of first filing a petition for eminent domain. For all
intents and purposes, therefore, March 1993 is the reckoning point of
NAPOCOR’s taking of the property, instead of May 5, 1995, the time
NAPOCOR filed the petition for expropriation. The reckoning conforms to
the pronouncement in Ansaldo v. Tantuico, Jr.,57 to wit:
Normally, of course, where the institution of an expropriation action
precedes the taking of the property subject thereof, the just compensation
is fixed as of the time of the filing of the complaint. This is so provided by
the Rules of Court, the assumption of possession by the expropriator
ordinarily being conditioned on its deposits with the National or Provincial
Treasurer of the value of the property as provisionally ascertained by the
court having jurisdiction of the proceedings.
There are instances, however, where the expropriating agency takes over
the property prior to the expropriation suit, as in this case although, to
repeat, the case at bar is quite extraordinary in that possession was
taken by the expropriator more than 40 years prior to suit. In these
instances, this Court has ruled that the just compensation shall be
determined as of the time of taking, not as of the time of filing of the
action of eminent domain.
In the context of the State's inherent power of eminent domain, there is a
"taking" when the owner is actually deprived or dispossessed of his
property; when there is a practical destruction or a material impairment of
the value of his property or when he is deprived of the ordinary use
thereof. There is a "taking" in this sense when the expropriator enters
private property not only for a momentary period but for a more
permanent duration, for the purpose of devoting the property to a public
use in such a manner as to oust the owner and deprive him of all
beneficial enjoyment thereof. For ownership, after all, "is nothing without
the inherent rights of possession, control and enjoyment. Where the
owner is deprived of the ordinary and beneficial use of his property or of
its value by its being diverted to public use, there is taking within the
Constitutional sense." x x x.58
In view of the discontinuance of the proceedings and the eventual return
of the property to the respondents, there is no need to pay "just
compensation" to them because their property would not be taken by
NAPOCOR. Instead of full market value of the property, therefore,
NAPOCOR should compensate the respondents for the disturbance of
their property rights from the time of entry in March 1993 until the time of
restoration of the possession by paying to them actual or other
compensatory damages. This conforms with the following
pronouncement in Mactan-Cebu International Airport Authority v. Lozada,
Sr.:59
In light of these premises, we now expressly hold that the taking of
private property, consequent to the Government’s exercise of its power of
eminent domain, is always subject to the condition that the property be
devoted to the specific public purpose for which it was taken. Corollarily,
if this particular purpose or intent is not initiated or not at all pursued, and
is peremptorily abandoned, then the former owners, if they so desire,
may seek the reversion of the property, subject to the return of the
amount of just compensation received. In such a case, the exercise of the
power of eminent domain has become improper for lack of the required
factual justification.60
This should mean that the compensation must be based on what they
actually lost as a result and by reason of their dispossession of the
property and of its use, including the value of the fruit trees, plants and
crops destroyed by NAPOCOR’s construction of the transmission lines.
Considering that the dismissal of the expropriation proceedings is a
development occurring during the appeal, the Court now treats the
dismissal of the expropriation proceedings as producing the effect of
converting the case into an action for damages. For that purpose, the
Court remands the case to the court of origin for further proceedings, with
instruction to the court of origin to enable the parties to fully litigate the
action for damages by giving them the opportunity to re-define the factual
and legal issues by the submission of the proper pleadings on the extent
of the taking, the value of the compensation to be paid to the respondents
by NAPOCOR, and other relevant matters as they deem fit. Trial shall be
limited to matters the evidence upon which had not been heretofore
heard or adduced. The assessment and payment of the correct amount
of filing fees due from the respondents shall be made in the judgment,
and such amount shall constitute a first lien on the recovery. Subject to
these conditions, the court of origin shall treat the case as if originally
filed as an action for damages.

WHEREFORE, the Court DISMISSES the expropriation proceedings due

to the intervening cessation of the need for public use; REMANDS the
records to the Regional Trial Court, Branch 1, in Batangas City as the
court of origin for further proceedings to be conducted in accordance with
the foregoing instructions; and ORDERS said trial court to try and decide
the issues with dispatch.

SO ORDERED.
 SECOND DIVISION
August 17, 2016
G.R. No. 210218
NATIONAL POWER CORPORATION, Petitioner
vs.
HEIRS OF ANTONINA RABIE, represented by ABRAHAM R. DELA
CRUZ, Respondents
DECISION
CARPIO, J.:
The Case
This petition for review on certiorari1 assails the 28 November 2013
Decision2 of the Court of Appeals in CA-G.R. SP No. 131335, dismissing
the petition for certiorari filed by petitioner National Power Corporation
(NAPOCOR).
The Facts
NAPOCOR is a government-owned and controlled corporation created
pursuant to Republic Act No. 6395,3 as amended. Under the
EPIRA, 4 NAPOCOR was tasked to perform the missionary electrification
function and to provide power generation and its associated power
delivery systems in areas that are not connected to the transmission
system.
On 1 December 2009, NAPOCOR filed a complaint for
expropriation5 against respondents Heirs of Antonina Rabie (respondents)
for the acquisition of the 822-square meter portion of Lot No. 1439, a
residential lot located in Barangay Lewin, Lumban, Laguna consisting of
12,657 square meters and covered by Original Certificate of Title No. P-
9196, to be used as access road for the Caliraya Hydro Electric Power
Plant of the Caliraya Botocan-Kalayaan Build Rehabilitate and Operate
Transfer Project of the NAPOCOR. The case was raffled to Regional Trial
Court, Branch 91, Sta. Cruz, Laguna (trial court) and docketed as Civil
Case No. SC-4842.
On 25 February 2010, respondents filed a Verified Answer,6 claiming that
the then current market value of the property was ₱10,000 per square
meter on the inner portion and ₱12,000 per square meter near the
highway. Respondents prayed, among others, for a just compensation in
the amount of ₱1,250,700, representing the Bureau of Internal Revenue
(BIR) zonal valuation for the "actual area to be occupied" by NAPOCOR
which is 2,274 square meters, instead of 822 square meters only. In
addition, respondents sought payment for NAPOCOR’s alleged
unauthorized entry and use of the property from 1940 to date.
On 5 July 2010, NAPOCOR deposited with the Land Bank of the
Philippines (Land Bank) the amount of ₱411,000 representing the BIR
zonal valuation of the affected portion of the subject property, which was
₱500 per square meter.
Respondents filed a Motion to Withdraw Deposit dated 15 November
2010,7 which the trial court granted in an Order dated 17 November
2010.8
NAPOCOR filed a Motion to Issue Order of Expropriation dated 18 March
2011.9 NAPOCOR also filed a Motion for Annotation/Registration of
Partial Payment dated 7 June 2011.10
In an Order dated 5 October 2011,11 the trial court granted the motions
and constituted the Board of Commissioners to assist the trial court in the
determination of just compensation for the affected portion of the subject
property.
On 8 February 2012, the Board of Commissioners submitted its Report.
On 17 May 2012, NAPOCOR filed its Comment/Opposition to the
Commissioners’ Report objecting to the recommendation that the
affected portion of the subject property consists of 2,274 square meters
and that the value per square meter is ₱11,000. NAPOCOR also
questioned the Commissioners’ recommendation on the payment of
rentals and the fact that NAPOCOR was not given the opportunity to be
heard and to argue as to the amount of just compensation.
On 29 January 2013, the trial court issued an Order, the dispositive
portion of which reads:
WHEREFORE, the Eight Hundred Twenty Two (822) square meters of
the land owned by the defendants is hereby expropriated in favor of the
National Power Corporation effective December 2009 upon payment of
the fair market value of the property at Eleven Thousand (₱11,000.00)
Pesos per square meter or a total of Nine Million Forty-Two Thousand
(₱9,042,000.00) Pesos. Defendants’ claim that said property was
occupied by plaintiff since 1940 is unrebutted, hence, reasonable rentals
of Twelve Thousand Pesos (₱12,000.00) yearly is hereby awarded to
defendants from the year 1940 to the present at a twelve percent (12%)
annual interest rate, until fully paid.
SO ORDERED.12
On 8 March 2013, NAPOCOR filed a Motion for Reconsideration of the
Order. However, the trial court denied the motion in an Order dated 30
April 201313 which was received by NAPOCOR on 23 May 2013 and by
respondents on 15 May 2013.
On 22 May 2013, respondents filed a Motion for Execution Pending
Appeal.14 NAPOCOR filed its Comment/Opposition thereto on 4 June
2013.
On 6 June 2013, NAPOCOR filed its Notice of Appeal and Record on
Appeal.15
In an Order dated 18 June 2013,16 the trial court gave due course to
NAPOCOR’s Notice of Appeal and directed the transmittal of the records
of the case to the Court of Appeals.
The trial court set for hearing respondents’ Motion for Execution Pending
Appeal on 10 July 2013.
On 11 July 2013, the trial court issued an Order granting respondents’
Motion for Execution Pending Appeal.17 The trial court held:
In determining the propriety of execution of its Order dated January 29,
2013, pending appeal, showing good reasons as stated in the motion and
while the Court has its jurisdiction over the case and still in possession of
original record thereof or the record on appeal, the Court
grants the "Motion for Execution Pending Appeal."18
On 12 July 2013, the trial court’s Officer-in-Charge issued a Writ of
Execution.19 Sheriff Raymundo P. Claveria issued a Notice20 addressed to
the President of NAPOCOR demanding payment of ₱9,042,000 and
₱12,000 yearly rentals plus 12% interest from 1940 up to the present until
fully paid within ten days from receipt thereof.
On 30 July 2013, NAPOCOR received a letter from the LBPNAPOCOR
Extension Office informing NAPOCOR of its receipt of a Notice of
Garnishment in the amount of ₱14,873,999.28 issued by Sheriff Claveria.
Aggrieved, NAPOCOR filed with the Court of Appeals a petition
for certiorari under Rule 65, with prayer for the issuance of a temporary
restraining order and/or writ of preliminary injunction.
On 28 November 2013, the Court of Appeals rendered a Decision
dismissing the petition.
Hence, this petition filed on 23 January 2014.
On 22 October 2014, respondents filed an Omnibus Motion (to Dismiss
and to Cite Petitioner in Contempt), contending that NAPOCOR is guilty
of forum-shopping considering that there is another petition21 filed by
NAPOCOR before this Court (docketed as G.R. No. 214070).
Respondents alleged that G.R. No. 214070 involves the same parties
and the same facts and seeks the same relief of preventing the
implementation of the trial court’s Order dated 11 July 2013 granting
execution pending appeal and the Order dated 29 January 2013 ordering
NAPOCOR to pay just compensation to respondents.
In its 19 November 2014 Resolution, the Court noted the motion.
In its 29 September 2014 Resolution, the Court dismissed the petition in
G.R. No. 214070 for NAPOCOR’s failure to sufficiently show that the
assailed resolutions of the Court of Appeals, dated 15 April 2014 and 8
August 2014, are tainted with grave abuse of discretion. The 15 April
2014 Resolution of the Court of Appeals assailed in G.R. No. 214070
ordered NAPOCOR to submit an affidavit containing a list of its assets
and ordered Land Bank to submit a bank certification containing a list of
NAPOCOR’s bank deposits with Land Bank.
The Court of Appeals’ Ruling
The Court of Appeals held that the trial court still had jurisdiction when
respondents filed their motion for execution pending appeal on 22 May
2013, or seven days after their receipt of the trial court’s order denying
their Motion for Partial Reconsideration. Hence, respondents’ motion for
execution pending appeal was timely filed.
The Court of Appeals ruled that there exists good reasons for the trial
court’s order granting execution pending appeal. The Court of Appeals
agreed with respondents’ invocation of Borja v. Court of Appeals, 22 where
petitioner’s advanced age, together with the posting of a supersedeas
bond, justified the execution pending appeal.
The Court of Appeals rejected NAPOCOR’s argument that the alleged
physical and financial conditions of respondents do not outweigh the
damages that it would suffer in the event that the Order subject of the writ
of execution is later reversed, and that such conditions increase the risk
that respondents would not be able to reimburse the amounts fixed in the
Order. The CA held that "where the executed judgment is reversed, x x x
the trial court may, on motion, issue such orders of restitution or
reparation of damages x x x."23
The Court of Appeals also held that NAPOCOR’s funds may be
garnished as "it would be absurd to rule that petitioner’s funds may not be
garnished x x x considering that the winning party would not enjoy the
fruits of his victory, x x x."24 The Court of Appeals cited Cosculluela v.
Court of Appeals,25 where the Court held that "[i]t is arbitrary and
capricious for a government agency to initiate expropriation proceedings
x x x and then refuse to pay on the ground that there are no
appropriations for the property earlier taken x x x x."26
The Issues
The issues in this case are: (1) whether the trial court still had jurisdiction
when it ruled on the Motion for Execution Pending Appeal; (2) whether
there exists good reasons for the execution of the trial court’s decision
pending appeal; and (3) whether the NAPOCOR’s funds may be
garnished or be the subject of execution.
The Court’s Ruling
We grant the petition.
Trial court had jurisdiction to resolve
motion for discretionary execution
Execution pending appeal, also called discretionary execution under
Section 2(a), Rule 39 of the Rules of Court, is allowed upon good
reasons to be stated in a special order after due hearing. Section 2(a),
Rule 39 provides:
SEC. 2. Discretionary execution. –
(a) Execution of a judgment or a final order pending appeal. – On motion
of the prevailing party with notice to the adverse party filed in the trial
court while it has jurisdiction over the case and is in possession of either
the original record or the record on appeal, as the case may be, at the
time of the filing of such motion, said court may, in its discretion, order
execution of a judgment or final order even before the expiration of the
period to appeal.
After the trial court has lost jurisdiction, the motion for execution pending
appeal may be filed in the appellate court.
Discretionary execution may only issue upon good reasons to be stated
in a special order after due hearing.
In this case, the motion for execution pending appeal was filed by
respondents seven days after their receipt of the trial court’s order
denying the motions for reconsideration filed by both parties. Clearly,
respondents filed the motion for execution pending appeal before the
lapse of the period to file an appeal, which is fifteen days from notice of
the order denying the motion for reconsideration.27 Therefore, the trial
court still had jurisdiction when respondents filed their motion for
execution pending appeal.
Further, prior to transmittal of the records of the case, the trial court does
not lose jurisdiction over the case and in fact, may issue an order for
execution pending appeal. Section 9, Rule 41 of the Rules of Court
provides:
SEC. 9. Perfection of appeal; effect thereof. A party’s appeal by notice of
appeal is deemed perfected as to him upon the filing of the notice of
appeal in due time.
A party’s appeal by record on appeal is deemed perfected as to him with
respect to the subject matter thereof upon the approval of the record on
appeal filed in due time.
In appeals by notice of appeal, the court loses jurisdiction over the case
upon the perfection of the appeals filed in due time and the expiration of
the time to appeal of the other parties.
In appeals by record on appeal, the court loses jurisdiction only over the
subject matter thereof upon the approval of the records on appeal filed in
due time and the expiration of the time to appeal of the other parties.
In either case, prior to the transmittal of the original record or the
record on appeal, the court may issue orders for the protection and
preservation of the rights of the parties which do not involve any
matter litigated by the appeal, approve compromises, permit
appeals of indigent litigants, order execution pending appeal in
accordance with Section 2 of Rule 39, and allow withdrawal of the
appeal. (Emphasis supplied)
In this case, the trial court issued its Order granting the motion for
execution pending appeal on 11 July 2013. That Order expressly stated
that the trial court was still in possession of the original record of the case
at the time. In fact, the records were transmitted to the Court of Appeals
on 19 July 2013.28 In other words, the trial court issued the Order granting
the motion for execution pending appeal before the transmittal of the
records to the Court of Appeals. Hence, contrary to NAPOCOR’s
contention, the Court of Appeals correctly ruled that the trial court still had
jurisdiction when the motion for execution pending appeal was filed and
when the trial court resolved such motion.
Discretionary execution does not apply
to eminent domain proceedings
While the trial court still had jurisdiction when it issued the order granting
execution pending appeal, the Court holds that discretionary execution
does not apply to eminent domain proceedings. In Spouses Curata v.
Philippine Ports Authority, 29 where movants alleged advanced age as
ground for their motion for discretionary execution, the Court found the
trial court to have committed grave abuse of discretion in issuing the
order granting execution pending appeal. The Court held that
discretionary execution is not applicable to expropriation proceedings,
thus:
The Court rules that discretionary execution of judgments pending appeal
under Sec. 2(a) of Rule 39 does not apply to eminent domain
proceedings. 1awp++i1
As early as 1919 in Visayan Refining Co. v. Camus and Paredes, the
Court held:
When the Government is plaintiff the judgment will naturally take the form
of an order merely requiring the payment of the award as a condition
precedent to the transfer of the title, as a personal judgment against the
Government could not be realized upon execution.
In Commissioner of Public Highways v. San Diego, no less than the
eminent Chief Justice Claudio Teehankee explained the rationale behind
the doctrine that government funds and properties cannot be seized
under a writ of execution, thus:
The universal rule that where the State gives its consent to be sued by
private parties either by general or special law, it may limit claimants
action only up to the completion of proceedings anterior to the stage of
execution and that the power of the Courts ends when the judgment is
rendered, since government funds and properties may not be seized
under writs of execution or garnishment to satisfy such judgments, is
based on obvious considerations of public policy. Disbursements of
public funds must be covered by the corresponding appropriation as
required by law. The functions and public services rendered by the State
cannot be allowed to be paralyzed or disrupted by the diversion of public
funds from their legitimate and specific objects, as appropriated by law.
PPA’s monies, facilities and assets are government properties. Ergo, they
are exempt from execution whether by virtue of a final judgment or
pending appeal.
PPA is a government instrumentality charged with carrying out
governmental functions through the management, supervision, control
and
regulation of major ports of the country. It is an attached agency of the
Department of Transportation and Communication pursuant to PD 505.
xxxx
Therefore, an undeniable conclusion is that the funds of PPA partake of
government funds, and such may not be garnished absent an allocation
by its Board or by statutory grant. If the PPA funds cannot be
garnished and its properties, being government properties, cannot
be levied via a writ of execution pursuant to a final judgment, then
the trial court likewise cannot grant discretionary execution pending
appeal, as it would run afoul of the established jurisprudence that
government properties are exempt from execution. What cannot be
done directly cannot be done indirectly.
From the above discussion, we find that the RTC committed grave abuse
of discretion in its July 24, 2000 Order directing the execution of the First
Compensation Order (July 10, 2000 Order) pending appeal.30 (Emphasis
supplied)
The Court of Appeals’ reliance on the case of Borja v. Court of
Appeals31 is misplaced. Borja involved a complaint for sum of money
totalling ₱78,325 representing unpaid commissions and damages. On the
other hand, this case involves expropriation proceedings, where the trial
court fixed the just compensation for the subject property at ₱9,042,000
and yearly rentals at ₱12,000 since 1940 plus 12% interest per annum for
a total award of ₱14,873,999.28. The difference in the nature of the
actions and the amounts involved in Borja and in this case justifies the
non-application of the rule on discretionary execution.
Non-existence of good reasons for the execution pending appeal
The trial court also committed grave abuse of discretion when it failed to
specify and discuss any good reason required for granting execution
pending appeal.
In Villamor v. NAPOCOR, 32 the Court discussed the requisites for
execution pending appeal, thus:
Execution pending appeal requires the observance of the following
requisites: (a) there must be a motion therefor by the prevailing party; (b)
there must be a good reason for issuing the writ of execution; and (c) the
good reason must be stated in a special order.
The prevailing doctrine as provided for in Section 2, paragraph 3 of Rule
39 of the Rules of Civil Procedure is that discretionary execution is
permissible only when good reasons exist for immediately executing the
judgment before finality or pending appeal or even before the expiration
of the period to appeal. Good reasons consist of compelling
circumstances justifying immediate execution lest judgment becomes
illusory, or the prevailing party after the lapse of time be unable to enjoy
it, considering the tactics of the adverse party who may have apparently
no cause but to delay. Such reasons must constitute superior
circumstances demanding urgency which will outweigh the injury or
damages should the losing party secure a reversal of the judgment. Were
it otherwise, execution pending appeal may well become a tool of
oppression and inequity instead of an instrument of solicitude and justice.
The execution of judgment pending appeal is an exception to the
general rule and must, therefore, be strictly construed. So, too, it is
1âwphi1
not to be availed of and applied routinely, but only in extraordinary
circumstances.
This rule is strictly construed against the movant, for courts look
with disfavor upon any attempt to execute a judgment which has not
acquired a final character. In the same vein, the Court has held that
such execution is "usually not favored because it affects the rights
of the parties which are yet to be ascertained on appeal."
The exercise of the power to grant or deny immediate or advance
execution is addressed to the sound discretion of the trial court. However,
the existence of good reasons is indispensable to the grant of execution
pending appeal. Absent any such good reason, the special order of
execution must be struck down for having been issued with grave abuse
of discretion. (Emphasis supplied)
In this case, the trial court granted the motion for execution pending
appeal based on "good reasons as stated in the motion," without
identifying and discussing any of these alleged good reasons. A mere
statement of"good reasons as stated in the motion" does not suffice to
justify execution pending appeal. It is basic that the trial court should
make a finding on whether the allegations in the motion for execution
pending appeal constitute good reasons as required in Section 2 of Rule
39. The trial court should have expressed clearly and distinctly the facts
and law on which the order granting the motion for execution pending
appeal was based, but it did not. Without such finding, the allegations in
the motion for execution pending appeal remain as allegations.
Consequently, the trial court committed grave abuse of discretion in
granting discretionary execution without stating and explaining clearly the
basis therefor.
In view of the foregoing, the Court deems it unnecessary to discuss the
issue of garnishment ofNAPOCOR's funds.

WHEREFORE, the petition is GRANTED. The 28 November 2013

Decision of the Court of Appeals in CA-G.R. SP No. 131335 is SET
ASIDE.

SO ORDERED.
 FIRST DIVISION
January 11, 2017
G.R. No. 170506
LAND BANK OF THE PHILIPPINES, Petitioner,
vs.
HEIRS OF LORENZO TAÑADA AND EXPEDITA EBARLE,
Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a petition for review under Rule 45 of the 1997 Rules
of Civil Procedure assailing the Decision 1dated April 8, 2005 as well as
the Resolution2 dated November 22, 2005 of the Court of Appeals in CA-
G.R. SP No. 79245, entitled "Land Bank of the Philippines v. Heirs of
Lorenzo Tañada and Expedita Ebarle." The assailed April 8, 2005
appellate court ruling was an affirmance of the Decision3 dated July 13,
1999 of Branch 1 of the Regional Trial Court of Bataan in Civil Case Nos.
6328 and 6333. On the other hand, the assailed November 22, 2005
Resolution denied for lack of merit the motion for reconsideration filed by
petitioner.
In the aforementioned April 8, 2005 Decision of the Court of Appeals, the
factual antecedents of this case were synthesized as follows:
Respondents, the Heirs of Lorenzo Tañada and Expedita Ebarle, are the
owners of several parcels of land situated in Gabon, Abucay, Bataan,
covered by TCT Nos. T-8483 and T-12610, with respective land areas of
56.8564 and 16.9268 hectares. The record shows that sometime in 1988,
the aforesaid parcels of land were placed under the land reform program
of the government. It was determined that 16.7692 hectares from TCT
No. T-8483 and 13 hectares from TCT No. T-12610 would be included in
the program.
Pursuant to its mandate under Executive Order No. 405, petitioner Land
Bank of the Philippines (LBP) valued the properties to be taken at
₱223,837.29 for 16.7692 hectares and ₱192,610.16 for 13 hectares or a
total of ₱416,447.43. Dissatisfied with this valuation for being
unreasonably and unconscionably low, respondents instituted the
summary administrative proceedings for the preliminary determination of
just compensation in 1992 and 1993. Said cases were docketed as
DARAB Case Nos. 068-B'92 for TCT No. 12610 and 103-BT'93 for TCT
No. T-8483 with the Department of Agrarian Reform Adjudication Board
(DARAB) in Region III.
With the DARAB's affirmation of the acquisition cost fixed by petitioner for
the subject properties, respondents instituted separate petitions for the
determination and payment of just compensation, viz.: Civil Case No.
6328 for the 16.7692 hectares covered by TCT No. T-8483 and Civil
Case No. 6353 for the 13 hectares under TCT No. T-12610, both with the
RTC of Bataan, Branch I. Contending that the price fixed by petitioner
was unconscionably low, respondents prayed that their properties be
revalued at ₱150,000.00 per hectare. Since they raised similar issues,
the two (2) cases were eventually consolidated.
To establish their claim for just compensation, respondents presented
Jose Dela Cruz, a vault keeper from the Office of the Bataan Register of
Deeds, who testified that he is the custodian of documents and titles in
the said office. Said witness identified a Deed of Sale dated 05 April 1997
executed by Horacio Limcangco who sold 6,158 square meters of land in
Abucay, Bataan for ₱20,000.00 or for ₱3.24 per square meter. He also
identified a Deed of Absolute Sale dated 27 August 1996 executed by
Franklin and Benigno Morales whereby 53,102 square meters of land in
Abucay, Bataan was sold for ₱830,000.00 or for ₱15.91 per square
meter.
On the other hand, neither the Department of Agrarian Reform (DAR) nor
petitioner presented any witness to refute the evidence presented by
respondents. Instead, they offered documentary exhibits to show how, in
adherence to DAR Administrative Order No. 6, Series of 1992, they
arrived at the valuation of the just compensation for the subject
parcels. 4 (Citations omitted.)
Upon termination of the proceedings, the trial court acting as a Special
Agrarian Court (SAC) rendered the assailed July 13, 1999 Decision which
favored the respondents in this case and pegged the value of the lots in
question at fifteen pesos per square meter or P-150,000.00 per hectare.
The dispositive portion of the trial court's judgment is reproduced here:
WHEREFORE, judgment is hereby rendered:
1. Declaring that the petitioners are entitled to just compensation; and
2. That ₱150,000.00 per hectare is just compensation for the land of the
petitioners to be paid by the Land Bank of the Philippines for the areas
selected by the Department of Agrarian Reform namely: 16.7692
hectares under Transfer Certificate of Title No. T-8483 and 13 hectares
under Transfer Certificate of Title No. T-12610 both of the Office of the
Register of Deeds of Bataan. 5
In arriving at the said ruling, the trial court reasoned, thus:
The issue to be resolved is whether or not the valuation made by the
Land Bank of the Philippines and DARAB [is] just compensation for the
said properties to be acquired by the Department of Agrarian Reform.
In the case of Association of Small Landowners in the Philippines, Inc. vs.
Secretary of Agrarian Reform, 175 SCRA 343, the Supreme Court held
that:
Just compensation is defined as the full and fair equivalent of the
property taken from its owner by the expropriator. It has been repeatedly
1âw phi 1
stressed by this Court that the measure is not the taker's gain but the
owner's loss. The word just is used to intensify the meaning of the word
"compensation" to convey the idea that the equivalent to be rendered for
the property to be taken shall be real, substantial, full, ample. Manila
Railroad Co. vs. Velasquez, 32 Phil. 286; Manotok vs. National Housing
Authority, 150 SCRA 89.
Based on said definition of what is just compensation, this Court believes
that the price of ₱150,000.00 per hectare or ₱15.00 per square meter
which the petitioners are asking is just and reasonable. This is the same
price for which the owner of adjoining land was sold in Abucay, Bataan in
1996.
This Court cannot close its eyes to the prevalent practice of tenants that
once they are awarded lots under the Comprehensive Agrarian Reform
Program, they immediately look for prospective buyers, selling the
property from ₱500,000.00 to ₱1,000,000.00 per hectare which they only
acquired at a very low price to the point of being confiscatory to the
prejudice of the real owners.6
A motion for reconsideration was subsequently filed by petitioner but this
was denied by the trial court in its Order dated August 7, 2003. 7
Dissatisfied with the adverse judgment, petitioner elevated the case to
the Court of Appeals. However, the appellate court merely denied
petitioner's appeal and affirmed the appealed decision of the trial court in
the now assailed April 8, 2005 Decision, which dispositively states:
WHEREFORE, the petition is DENIED for lack of merit and the appealed
Decision dated 13 July 1999 is AFFIRMED in toto.8
When the appellate court refused to reconsider the foregoing decision,
petitioner sought our review of the case and our ruling on the following
issue:
WHETHER OR NOT THE SPECIAL AGRARIAN COURT CAN
DISREGARD THE VALUATION GUIDELINES OR FORMULA
PRESCRIBED UNDER DAR AO NO. 6, SERIES OF 1992, AND AS
HELD IN THE CASE OF SPS. BANAL, SUPRA, IN FIXING THE JUST
COMPENSATION OF THE SUBJECT PROPERTIES.9
Respondents, in turn, opposed the petition on the ground that petitioner's
valuation based on the formula in DAR Administrative Order No. 06,
series of 1992, may not supplant the valuation of the SAC, which was
affirmed by the Court of Appeals. 10 They further argued that the
petitioner's valuation of the lots (at an average of a little over one peso
per square meter) was grossly unjust and unsupported by proof.
Essentially, the sole issue to be resolved by this Court is whether or not
the trial court utilized the correct method in fixing the just compensation
due to respondents' parcels of land which have been subjected to land
reform proceedings under Republic Act No. 6657 or the Comprehensive
Agrarian Reform Law of 1988.
After carefully weighing the issues and arguments presented by the
parties in this case, we find the petition meritorious.
In Land Bank of the Philippines v. American Rubber Corporation, 11 we
elaborated on the concept of just compensation in this wise:
This Court has defined "just compensation" for parcels of land taken
pursuant to the agrarian reform program as "the full and fair equivalent
of the property taken from its owner by the expropriator." The measure of
compensation is not the taker's gain but the owner's loss. Just
compensation means the equivalent for the value of the property at the
time of its taking. It means a fair and full equivalent value for the loss
sustained. All the facts as to the condition of the property and its
surroundings, its improvements and capabilities should be considered. x
x x. (Citations omitted.)
Since there is no dispute that the subject properties are qualified for
coverage under the agrarian reform law, the just compensation for the
said properties must be governed by the valuation factors under Section
17 of Republic Act No. 6657 which provides:
SEC. 17. Determination of Just Compensation. - In determining just
compensation, the cost of acquisition of the land, the current value of like
properties, its nature, actual use and income, the sworn valuation by the
owner, the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic benefits
contributed by the farmers and the farmworkers and by the Government
to the property as well as the nonpayment of taxes or loans secured from
any government financing institution on the said land shall be considered
as additional factors to determine its valuation.
Thus, we have held that when handling just compensation cases, the trial
court acting as a SAC should be guided by the following factors: (1) the
acquisition cost of the land; (2) the current value of the properties; (3) its
nature, actual use, and income; (4) the sworn valuation by the owner; (5)
the tax declarations; (6) the assessment made by government assessors;
(7) the social and economic benefits contributed by the farmers and the
farmworkers, and by the government to the property; and (8) the
nonpayment of taxes or loans secured from any government financing
institution on the said land, if any. 12
Pursuant to the rule-making power of the Department of Agrarian Reform
(DAR) under Section 49 of Republic Act No. 6657, 13 the enumerated
factors were translated into a formula that was outlined in DAR
Administrative Order No. 17, series of 1989, as amended by DAR
Administrative Order No. 03, series of 1991, and as further amended by
DAR Administrative Order No. 06, series of 1992, entitled "RULES AND
REGULATIONS AMENDING THE VALUATION OF LANDS
VOLUNTARILY OFFERED AND COMPULSORILY ACQUIRED AS
PROVIDED FOR UNDER ADIVHNISTRATIVE ORDER NO. 17, SERIES
OF 1989, AS AMENDED, ISSUED PURSUANT TO REPUBLIC ACT NO.
6657. 14
In determining the just compensation to be paid to respondents, petitioner
utilized the formula indicated in DAR Administrative Order No. 06, series
of 1992, which was in effect at the time the lots of respondents were
subjected to coverage by the government's land reform program. The
said formula is reproduced as follows:
II. THE FOLLOWING RULES AND REGULATIONS ARE HEREBY
PROMULGATED TO AMEND CERTAIN PROVISIONS OF
ADMINISTRATIVE ORDER NO. 17, SERIES OF 1989, AS AMENDED
BY ADMINISTRATIVE ORDER NO. 3, SERIES OF 1991 WHICH
GOVERN THE VALUATION OF LANDS SUBJECT OF ACQUISITION
WHETHER UNDER VOLUNTARY OFFER TO SELL (VOS) OR
COMPULSORY ACQUISITION (CA)
A. There shall be one basic formula for the valuation of land covered by
VOS or CA regardless of the date of offer or coverage of the claim:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI =Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three factors are present,
relevant, and applicable.
Al. When the CS factor is not present and CNI and MV are applicable, the
formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A2. When the CNI factor is not present, and CS and MV are applicable,
the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A3. When both the CS and CNI are not present and only MV is
applicable, the formula shall be:
LV = MV x 215
It is settled in jurisprudence that, in order to determine just compensation,
the trial court acting as a SAC must take into consideration the factors
prescribed by Section 17 of Republic Act No. 6657 and is obliged to apply
the formula crafted by the DAR. We discussed the long line of cases
calling for the mandatory application of the DAR formula in Land Bank of
the Philippines v. Honeycomb Farms Corporation, 16 to wit:
In Land Bank of the Philippines v. Sps. Banal, we recognized that the
DAR, as the administrative agency tasked with the implementation of the
agrarian reform program, already came up with a formula to determine
just compensation which incorporated the factors enumerated in Section
17 of RA 6657. We said:
These factors [enumerated in Section 17] have been translated into a
basic formula in DAR Administrative Order No. 6, Series of 1992, as
amended by DAR Administrative Order No. 11, Series of 1994, issued
pursuant to the DAR's rule-making power to carry out the object and
purposes of R.A. 6657, as amended.
In Landbank of the Philippines v. Celada, we emphasized the duty of the
RTC to apply the formula provided in the applicable DAR AO to
determine just compensation, stating that:
While [the RTC] is required to consider the acquisition cost of the land,
the current value of like properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declaration and the assessments
made by the government assessors to determine just compensation, it is
equally true that these factors have been translated into a basic formula
by the DAR pursuant to its rule-making power under Section 49 of R.A.
No. 6657. As the government agency principally tasked to implement the
agrarian reform program, it is the DAR's duty to issue rules and
regulations to carry out the object of the law. [The] DAR [Administrative
Order] precisely "filled in the details" of Section 17, R.A. No. 6657 by
providing a basic formula by which the factors mentioned therein may be
taken into account. The [RTC] was at no liberty to disregard the formula
which was devised to implement the said provision.
It is elementary that rules and regulations issued by administrative bodies
to interpret the law which they are entrusted to enforce, have the force of
law, and are entitled to great respect. Administrative issuances partake of
the nature of a statute and have in their favor a presumption of legality.
As such, courts cannot ignore administrative issuances especially when,
as in this case, its validity was not put in issue. Unless an administrative
order is declared invalid, courts have no option but to apply the same.
We reiterated the mandatory application of the formula in the applicable
DAR administrative regulations in Land Bank of the Philippines v. Lim,
Land Bank of the Philippines v. Heirs of Eleuterio Cruz, and Land Bank of
the Philippines v. Barrido. x x x.
In Land Bank of the Philippines v. Gonzalez, 17 we reiterated this doctrine:
While the determination of just compensation is essentially a judicial
function vested in the R TC acting as a SAC, the judge cannot abuse his
discretion by not taking into full consideration the factors specifically
identified by law and implementing rules. SACs are not at liberty to
disregard the formula laid down in DAR A.O. No. 5, series of 1998,
because unless an administrative order is declared invalid, courts have
no option but to apply it. Simply put, courts cannot ignore, without
violating the agrarian reform law, the formula provided by the DAR for the
determination of just compensation. (Citation omitted.)
To settle the lingering legal objections to the use of Section 17 of
Republic Act No. 6657 and the implementing formulas of the DAR in the
valuation of properties covered by the government's agrarian reform
program, the Court En Banc held in the recent case of Alfonso v. Land
Bank of the Philippines18:
For clarity, we restate the body of rules as follows: The factors listed
under Section 17 of RA 6657 and its resulting formulas provide a
uniform framework or structure for the computation of just
compensation which ensures that the amounts to be paid to
affected landowners are not arbitrary, absurd or even contradictory
to the objectives of agrarian reform. Until and unless declared
invalid in a proper case, the DAR formulas partake of the nature of
statutes, which under the 2009 amendment became law itself, and
thus have in their favor the presumption of legality, such that courts
shall consider, and not disregard, these formulas in the
determination of just compensation for properties covered by the
CARP. When faced with situations which do not warrant the
formula's strict application, courts may, in the exercise of their
judicial discretion, relax the formula's application to fit the factual
situations before them, subject only to the condition that they
clearly explain in their Decision their reasons (as borne by the
evidence on record) for the deviation undertaken. It is thus entirely
allowable for a court to allow a landowner's claim for an amount
higher than what would otherwise have been offered (based on an
application of the formula) for as long as there is evidence on
record sufficient to support the award.
In the case at bar, the trial court, in arriving at the amount of just
compensation to be paid to respondents, solely based its conclusion on
the alleged selling price or market value of the land adjoining
respondents' properties.
Likewise, the Court of Appeals merely sustained the trial court's method
of valuation which was chiefly based on the market value of adjoining
properties. The appellate court held:
In the case at bench, it cannot be gainsaid that the valuation of
respondents' properties was based mainly on the market value of
properties within the surrounding area. To our mind, the trial court's fixing
of the just compensation for respondents' properties at ₱150,000.00 per
hectare or at ₱l5.00 per square meter is a fair valuation considering their
suitability for agriculture, accessibility to both provincial and municipal
roads and close proximity to the barangay road in the locality. Aside from
the income-yielding crops and fruit bearing trees to which the subject
realties are already planted, we find that the trial court also correctly took
appropriate note of the fact that properties within the area commanded
the price of ₱3.24 per square meter in 1977 and ₱l5.91 per square meter
in 1996. 19(Citations omitted.)
Notably, in Alfonso, we recognized that comparable sales is one of the
factors that may be considered in determining the just compensation that
may be paid to the landowner. However, there must still be proof that
such comparable sales met the guidelines set forth in DAR AO No. 5
(1998), which included among others, that such sales should have been
executed within the period January 1, 1985 to June 15, 1988 and
registered within the period January 1, 1985 to September 13, 1988.
It is apparent from the foregoing that both the trial court and the Court of
Appeals did not observe the valuation factors under Section 17 of
Republic Act No. 6657 as translated into a basic formula in DAR
Administrative Order No. 06, series of 1992, without a well-reasoned
justification for the deviation as supported by the evidence on record.
This is in clear violation of the express mandate of both the law and
jurisprudence concerning the determination of just compensation of land
subjected to coverage by the agrarian reform law. For this reason, the
valuation made by the trial court cannot be upheld and must be struck
down as illegal.
However, despite the necessity of setting aside the computation of just
compensation of the trial court, the Court cannot automatically adopt
petitioner's own calculation as prayed for in the instant petition. As we
decreed in Heirs of Lorenzo and Carmen Vidad v. Land Bank of the
Philippines,20the "LBP's valuation has to be substantiated during an
appropriate hearing before it could be considered sufficient in accordance
with Section 17 of Republic Act No. 6657 and the DAR regulations."
The veracity of the facts and figures which petitioner used in arriving at
the amount of just compensation under the circumstances involves the
resolution of questions of fact which is, as a rule, improper in a petition for
review on certiorari. We have likewise consistently taken the position that
the Court is not a trier of facts. 21 Thus, a remand of this case for
reception of further evidence is necessary in order for the trial court
acting as a SAC to determine just compensation in accordance with
Section 17 of Republic Act No. 6657 and the applicable DAR regulations.
WHEREFORE, premises considered, the petition is PARTIALLY
GRANTED. The Decision dated April 8, 2005 and the Resolution dated
November 22, 2005 of the Court of Appeals in CA-G.R. SP No. 79245
are REVERSED and SET ASIDE. Civil Case Nos. 6328 and 6333
are REMANDED to the Regional Trial Court of Bataan, Branch 1 for the
determination of just compensation, based on Section 17 of Republic Act
No. 6657 and the applicable administrative orders of the Department of
Agrarian Reform, and in consonance with prevailing jurisprudence.
SO ORDERED.
 SECOND DIVISION
G.R. No. 214803, April 23, 2018
ALONA G. ROLDAN, Petitioner, v. SPOUSES CLARENCE I. BARRIOS AND
ANNA LEE T. BARRIOS, ROMMEL MATORRES, AND HON. JEMENA
ABELLAR ARBIS, IN HER CAPACITY AS PRESIDING JUDGE, BRANCH 6,
REGIONAL TRIAL COURT, AKLAN, Respondents.
DECISION
PERALTA, J.:
Before us is a petition for certiorari assailing the Order1 dated July 22, 2014
issued by the Regional Trial Court (RTC), Branch 6, Kalibo, Aklan as well as the
Order2 dated August 18, 2014 denying reconsideration thereof.
The antecedent facts are as follows:
On February 3, 2014, petitioner Alona G. Roldan filed an action3 for foreclosure
of real estate mortgage against respondents spouses Clarence I. Barrios and
Anna Lee T. Barrios and respondent Romel D. Matorres, docketed as Civil Case
No. 9811. She alleged the following:
xxxx
2. That on October 13, 2008, defendants borrowed from plaintiff the sum of
Two Hundred Fifty Thousand Pesos (P250,000.00), Philippine Currency,
payable within the period of one (1) year from said date, with an interest
thereon at the rate of 5% per month; and to secure the prompt and full
payment of the principal and interest, defendants made and executed on
October 13, 2008 a Deed of Real Estate Mortgage in favor of plaintiff upon a
parcel of land and improvements thereon described as follows:
A parcel of land (Lot 5891-A-4) situated in Baybay, Makato, Aklan, containing
an area of four hundred seventy-eight (478) square meters, more or less x x x
declared in the name of Spouses Clarence Barrios and Anna Lee T. Barrios,
assessed in the sum of P13,380.00, tax effectivity for the year 2008. Said land
is covered by OCT No. P-5561 pt.
xxx
3. That the condition of said mortgage, as stated therein, is such, that if within
the period of one year from October 13, 2008, the defendants shall pay or
cause to be paid to the plaintiff, her heirs and assigns, the said sum of
P250,000.00 together with the agreed interest, then the said mortgage shall be
discharged; otherwise, it shall remain in full force and effect, to be enforceable
in the manner provided by law.
4. That the time for payment of said loan is overdue and defendants failed and
refused to pay both the principal obligation and the interest due starting from
February 2011 to the present notwithstanding repeated demands;
5. That there are no other persons having or claiming interest in the
mortgaged property except Romel D. Matorres whom plaintiff recently
discovered that the defendants mortgaged again to the said person the same
property subject of this suit for One Hundred Fifty Thousand Pesos,
(P150,000.00) on June 11, 2012 x x x The said Romel D. Matorres is however
a mortgagee in bad faith.
WHEREFORE, it is respectfully prayed that upon due notice and hearing,
judgment be rendered ordering defendants SPS. CLARENCE I. BARRIOS and
ANNA LEE T. BARRIOS:
1. To pay unto the court within the reglementary period of ninety days the sum
of P250,000.00 together with the stipulated interest at five percent (5%) per
month starting from February 2011 to the present, plus the additional sum of
P25,000.00 the total amount due for attorney's fees; litigation expenses and
costs; and that in default of such payment, the above-mentioned property be
ordered sold to pay off the mortgage debt and its accumulated interest;
2. To teach the defendants a lesson for having mortgaged the property subject
of this suit without plaintiffs consent or knowledge, the defendants be ordered
to pay the plaintiff the sum of P50,000.00 as exemplary damages.
3. That plaintiff be granted such other relief in law and equity.4
Respondents spouses Barrios filed their Answer5 with Special and Affirmative
Defenses contending that the computation of their alleged loan obligation was
not accurate; that they had filed with the RTC a petition for rehabilitation of a
financially distressed individuals under Special Proceeding No. 9845, thus there
is a need to suspend the foreclosure proceedings. On the other hand,
respondent Matorres filed his Answer6 with Special and Affirmative Defenses
admitting that the subject land was mortgaged to him; that he had also filed a
judicial foreclosure case against respondents spouses Barrios pending with the
RTC of Kalibo Aklan, Branch 6, docketed as Civil Case No. 9642; that petitioner
had no cause of action against him as they did not have any transaction with
each other; and prayed for damages and attorney's fees, and cross-claim
against respondent spouses for moral damages.
On July 22, 2014, the RTC issued the assailed Order as follows:
Civil Cases Nos. 9642 and 9811 are complaints for Foreclosure of Real Estate
Mortgage that involved the same property, Lot 5891-A-4, situated in Baybay,
Makato, Aklan, owned by Spouses Clarence Barrios and Anna Lee Barrios.
It appearing from the complaint that the assessed value of the property
mortgaged is only P13,380.00 and the instant cases being a real action, the
assessed value of the property determines the jurisdiction.
The assessed value of the property involved being below P20,000.00, it is the
first level court that has jurisdiction over the cases.
Premises considered, for lack of jurisdiction, Civil Cases Nos. 9642 and 9811
are ordered DISMISSED without prejudice.
SO ORDERED.7
Petitioner and respondent Matorres filed their respective motions for
reconsideration.
In an Order dated August 18, 2014, the RTC denied petitioner's motion as
follows:
xxxx
Petitioner in her Motion argued that foreclosure of real estate mortgage is an
action incapable of pecuniary estimation and jurisdiction lies with the Regional
Trial Court.
Petitioner's argument is devoid of merit.
A petition for foreclosure of real estate mortgage is a real action and the
assessed value of the property determines jurisdiction while location of the
property determines the venue.
Premises considered, the Motion for Reconsideration is DENIED for lack of
merit.
SO ORDERED.8
Respondent Matorres' motion for reconsideration was also denied in an
Order9 dated September 1, 2014.
Petitioner filed the instant petition for certiorari alleging grave abuse of
discretion committed by the RTC when it ordered the dismissal of her
foreclosure case without prejudice and denying her motion for reconsideration.
She argues that foreclosure of mortgage is an action incapable of pecuniary
estimation which is within the exclusive jurisdiction of the RTC.
In his Comment, respondent Matorres joins the position and arguments of
petitioner that the cause of action of the foreclosure cases is incapable of
pecuniary estimation, hence, falling within the jurisdiction of the RTC.
Respondents spouses Barrios filed their Explanation and Comment alleging that
petitioner violated the Tax Reform Act of 1997 for her failure to issue official
receipts on the payments made by them; that she failed to show any proof of
authority from the Bangko Sentral ng Pilipinas relative to her money-lending
activities.
The issue for resolution is whether the RTC committed grave abuse of
discretion in dismissing the foreclosure cases filed with it on the ground of lack
of jurisdiction.
Preliminarily, we need to point out that generally a direct recourse to this Court
is highly improper, for it violates the established policy of strict observance of
the judicial hierarchy of courts. Although this Court, the RTCs and the Court of
Appeals have concurrent jurisdiction to issue writs of certiorari,
prohibition, mandamus, quo warranto, habeas corpus and injunction, such
concurrence does not give the petitioner unrestricted freedom of choice of
court forum. This Court is a court of last resort, and must so remain if it is to
satisfactorily perform the functions assigned to it by the Constitution and
immemorial tradition.10However, the judicial hierarchy of courts is not an iron-
clad rule. A strict application of the rule of hierarchy of courts is not necessary
when the cases brought before the appellate courts do not involve factual but
legal questions.11 Since petitioner raises a pure question of law pertaining to
the court's jurisdiction on complaint for judicial foreclosure of sale, we would
allow petitioner's direct resort to us.
The RTC dismissed the foreclosure cases finding that being a real action and
the assessed value of the mortgaged property is only P13,380.00, it is the first
level court which has jurisdiction over the case and not the RTC.
Jurisdiction over the subject matter is the power to hear and determine cases
of the general class to which the proceedings in question belong. It is conferred
by law and an objection based on this ground cannot be waived by the
parties.12 To determine whether a court has jurisdiction over the subject matter
of a case, it is important to determine the nature of the cause of action and of
the relief sought.13
Batas Pambansa Blg. (BP) 129 as amended by Republic Act No. (RA) 7691
pertinently provides for the jurisdiction of the RTC and the first level courts as
follows:
Sec. 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise
exclusive original jurisdiction:
1. In all civil actions in which the subject of the litigation is incapable of
pecuniary estimation;
2. In all civil actions which involve the title to, or possession of, real property,
or any interest therein, where the assessed value of the property involved
exceeds Twenty thousand pesos (P20,000.00) or, for civil actions in Metro
Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except
actions for forcible entry into and unlawful detainer of lands or buildings,
original jurisdiction over which is conferred upon the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts.
and
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in civil cases. - Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:
xxxx
3) Exclusive original jurisdiction in all civil actions which involve title to, or
possession of, real property, or any interest therein where the assessed value
of the property or interest therein does not exceed Twenty thousand pesos
(P20,000.00) or, in civil actions in Metro Manila, where such assessed value
does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest,
damages of whatever kind, attorney's fees, litigation expenses and costs:
Provided, That in cases of land not declared for taxation purposes, the value of actions as cases where the subject of the litigation may not be estimated in
such property shall be determined by the assessed value of the adjacent lots. terms of money, and are cognizable exclusively by courts of first instance (now
Regional Trial Courts).
From the foregoing, the RTC exercises exclusive original jurisdiction in civil
actions where the subject of the litigation is incapable of pecuniary estimation.
Examples of actions incapable of pecuniary estimation are those for specific
It also has jurisdiction in civil cases involving title to, or possession of, real
performance, support, or foreclosure of mortgage or annulment of judgment;
property or any interest in it where the assessed value of the property involved
also actions questioning the validity of a mortgage, annulling a deed of sale or
exceeds P20,000.00, and if it is below P20,000.00, it is the first level court
conveyance and to recover the price paid and for rescission, which is a
which has jurisdiction. An action "involving title to real property" means that
counterpart of specific performance.
the plaintiffs cause of action is based on a claim that he owns such property or
that he has the legal right to have exclusive control, possession, enjoyment, or
While actions under Sec. 33(3) of B.P. 129 are also incapable of pecuniary
disposition of the same.14
estimation, the law specifically mandates that they are cognizable by the MTC,
METC, or MCTC where the assessed value of the real property involved does
The allegations and reliefs sought in petitioner's action for foreclosure of
exceed P20,000.00 in Metro Manila, or P50,000.00, if located elsewhere. If the
mortgage showed that the loan obtained by respondents spouses Barrios from
value exceeds P20,000.00 or P50,000.00 as the case may be, it is the Regional
petitioner fell due and they failed to pay such loan which was secured by a
Trial Courts which have jurisdiction under Sec. 19(2). However, the subject
mortgage on the property of the respondents spouses; and prayed that in case
matter of the complaint in this case is annulment of a document denominated
of default of payment of such mortgage indebtedness to the court, the property
as "DECLARATION OF HEIRS AND DEED OF CONFIRMATION OF PREVIOUS
be ordered sold to answer for the obligation under the mortgage contract and
ORAL PARTITION."20
the accumulated interest. It is worthy to mention that the essence of a contract
of mortgage indebtedness is that a property has been identified or set apart Clearly, the last paragraph clarified that while civil actions which involve title
from the mass of the property of the debtor-mortgagor as security for the to, or possession of, real property, or any interest therein, are also incapable of
payment of money or the fulfillment of an obligation to answer the amount of pecuniary estimation as it is not for recovery of money, the court's jurisdiction
indebtedness, in case of default in payment.15Foreclosure is but a necessary will be determined by the assessed value of the property involved.
consequence of non-payment of the mortgage indebtedness.16 In a real estate
mortgage when the principal obligation is not paid when due, the mortgagee WHEREFORE, the petition for certiorari is DISMISSED as we find no grave
has the right to foreclose the mortgage and to have the property seized and abuse of discretion committed by the Regional Trial Court, Branch 6, Kalibo,
sold with the view of applying the proceeds to the payment of the Aklan in dismissing the complaint for lack of jurisdiction.
obligation.17 Therefore, the foreclosure suit is a real action so far as it is
against property, and seeks the judicial recognition of a property debt, and an SO ORDERED.
order for the sale of the res.18

As foreclosure of mortgage is a real action, it is the assessed value of the

property which determines the court's jurisdiction. Considering that the
assessed value of the mortgaged property is only P13,380.00, the RTC
correctly found that the action falls within the jurisdiction of the first level
court. er Section 33(3) of BP 129 as amended.

Petitioner cites Russell v. Vestil19 to show that action for foreclosure of

mortgage is an action incapable of pecuniary estimation and, therefore, within
the jurisdiction of the RTC. We are not persuaded. In the Russell case, we held:
In Singsong vs. Isabela Sawmill, we had the occasion to rule that:

[I]n determining whether an action is one the subject matter of which is not
capable of pecuniary estimation, this Court has adopted the criterion of first
ascertaining the nature of the principal action or remedy sought. If it is
primarily for the recovery of a sum of money, the claim is considered capable
of pecuniary estimation, and whether jurisdiction is in the municipal courts or
in the courts of first instance would depend on the amount of the claim.
However, where the basic issue is something other than the right to recover a
sum of money, where the money claim is purely incidental to, or a
consequence of, the principal relief sought, this Court has considered such
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-14303 March 24, 1960
REHABILITATION FINANCE CORPORATION, plaintiff-appellant,
vs.
ALTO SURETY and INSURANCE COMPANY, INC., oppositor-appellee.
Jesus A. Avanceña and Federico G. Cabling for appellant.
Raul A. Aristorenas and Benjamin Relova for appellee.
BARRERA, J.:
This is an appeal from an order of the Court of First Instance of
Camarines Sur, sitting as a land registration court (in Special Proceeding
No. 781—G.L.R.O. Rec. No. 14837) denying appellant's petition under
Section 112 of Act No. 496 for cancellation of the annotation of appellee's
second mortgage on appellant's transfer certificate of title No. 1155 of the
Register of Deeds of Camarines Sur.
Eustaquio Palma registered owner of a parcel of land with its
improvements, located in San Agustin, Iriga, Camarines Sur, covered by
Transfer Certificate of Title No. 12—Camarines Sur, executed a first
mortgage to secure a loan of P20,000.00, in favor of the Rehabilitation
Finance Corporation (RFC), and subsequently, with the consent of the
RFC, a second mortgage over the same property, in favor of Alto Surety
& Insurance Company, Inc. (Alto). Both mortgages were duly registered
in the Office of the Register of Deeds of Camarines Sur and annotated on
the corresponding certificate of title. Upon failure of the mortgagor to
settle the P20,000.00 loan on its maturity, RFC foreclosed the mortgage
extrajudicially under Act 3135 as authorized in the deed of mortgage and
the property was sold in public auction under the direction of the
Provincial Sheriff of Camarines Sur on April 17, 1951 in favor of
mortgagee RFC as the highest bidder for the sum of P11,211.68.
Six months later, mortgagor Palma, by a deed of assignment dated
October 15, 1951, transferred and conveyed all his rights, title and
interest in and to the mortgaged property to the spouses Anacleto
Trinidad and Rosa S. de Trinidad, the assignees assuming the obligation
of paying the repurchase price of the auctioned property. Within the year
of redemption, that is, on December 29, 1951, the assignee-spouses and
the RFC executed a "Deed of Resale" whereby the mortgaged property
was resold and reconveyed in favor of the "redemptioners, their heirs,
assignees and successors in interest". However, instead of paying the
whole redemption price, only P5,500 was paid on hand and the sum of
P21,505.11, balance of the total indebtedness including 6% interest was
agreed to be paid in ten annual amortizations.
On April 3, 1952, Alto, as junior encumbrancer, wrote the RFC inquiring
as to the actual status of the property subject to redemption expiring on
April 17, 1952. In its reply dated April 9, 1952, RFC advised Alto that the
auctioned property had already been sold to the Trinidad spouses "under
a deed of redemption on the installment plan".
This notwithstanding, the RFC, on October 2, 1952, executed an affidavit
consolidating ownership on the purchased property, stating therein that
the period of redemption had expired on April 18, 1952 without the debtor
or any lien-holder thereon exercising said right of redemption or
repurchase. This affidavit, together with the deed of sale evidencing its
(RFC's) purchase of the property at public auction were registered on
December 16, 1953, by virtue of which, RFC was able to secure the
cancellation of Transfer Certificate of Title No. 12, in the name of the
owner-mortgagor Eustaquio Palma, and the issuance of a new title in its
name (T.C.T. No. 1155). The second mortgage in favor of Alto, however,
was carried and annotated at the back of the new title.
It is this annotation on its certificate of title No. 1155 that the RFC sought
to have cancelled, alleging that with the consolidation and transfer to it as
the first mortgagee of the mortgagee's rights on the property, the junior
encumbrancer's lien on the same property had ceased. Alto, the second
mortgagee, opposed the petition contending that with the execution of the
Deed of Resale between RFC and the spouses Anacleto Trinidad and
Rosa S. de Trinidad, assignees of the mortgagor, the mortgaged property
had been completely released from the first mortgage and the second
mortgage had been automatically transformed into a first lien on the
property.
From the order denying the petition for cancellation, RFC appealed to the
Court of Appeals. The case, however, was certified to this Court, the
questions raised therein being purely of law.
As stated by the lower court: "The only question at issue is whether the
annotation of the second mortgage in favor of the oppositor on the back
of Transfer Certificate of Title No. 1155 was made in accordance with
law". The petition for cancellation was filed by the RFC and the original
registration case, under Section 112 of Act 496, on the alleged ground
that the lien in favor of Alto had already ceased. In opposing this petition,
Alto claimed that with the execution of the deed of resale between RFC
and the Spouses Anacleto and Rosa S. de Trinidad, (Exhibit J), there had
been a valid exercise by the latter, as the mortgagor's successors-in-
interest, of the right of redemption, thus justifying the retention of the
encumbrance in favor of the junior mortgagee in the certificate of title
covering the property.
The court a quo acted correctly in denying, under the circumstances, the
petition to cancel the annotation of the second mortgage at the back of
the title covering the property originally owned by Eustaquio Palma. It has
been consistently held by this Court, that the relief afforded by Section
112 of the Land Registration Act may only be allowed if "there is a
unanimity among the parties, or there is no adverse claim or serious
objection on the part of any party in interest; otherwise, the case
becomes controversial and should be threshed out in an ordinary
case.1 In another case, this Court2 has held that "Section 112 authorizes,
in our opinion, only alterations which do not impair rights recorded in the
decree, or alterations which, if they do prejudice such rights, are
consented to by all parties concerned or alterations to correct obvious
mistakes". This doctrine is but sound and proper. The proceedings
provided in the Land Registration Act being summary in nature, they are
inadequate for the litigation of issues properly pertaining to ordinary civil
actions,3 thus, questions involving ownership of or title to a real
property,4 or relating to the validity or cancellation or discharge of a
mortgage should properly be ventilated in an ordinary proceeding."5
While as a general rule, the junior encumbrancer is not a necessary party
to a suit to foreclose by a senior mortgagee, it is always proper and
prudent to join him as a defendant, both to give an opportunity to defend
and to extinguish his right of redemption (Lee vs. Slemons, 150 So. 792,
112 Fla. 675; Woodward vs. Householder, 289 S.W. 571, 315 Mo. 1155).
When a senior mortgagee forecloses and becomes the purchaser at his
own foreclosure sale, but the holder of a subsequent mortgage or other
subordinate interest has not been joined or has been eliminated from the
proceeding, equity will keep the senior mortgage alive against the
subsequent encumbrance and the senior mortgagee will be entitled to an
action de novo to reforeclose the mortgage as to the omitted persons
(Van Meter vs. Field, 159 P. 2d 546, 195 Okl. 55; Rives vs. Stanford, 106
P. 2d 1101).
In view of the foregoing, the decision appealed from denying the first
mortgagee's petition to cancel the annotation of the second mortgage at
the back of Transfer Certificate of Title No. 1155, is hereby affirmed,
without prejudice to the proper adjudication, in an appropriate ordinary
action, of the respective rights of the parties herein as a result of the
execution of the Deed of Resale, Exhibit J. The petitioner-appellant shall
pay the costs. It is so ordered.
Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador,
Concepcion, Reyes, J.B.L., Endencia, and Gutierrez David, JJ., concur.

There is another reason why the petition must be denied.

Granting arguendo that the extrajudicial foreclosure proceeding instituted
by the RFC is proper and justified, since the junior encumbrancer was
admittedly not notified thereof, the foreclosure of the first mortgage
cannot be considered to have terminated or extinguished the rights of
said junior encumbrancer over the property.

An interest in the mortgaged property acquired subsequent to the (first)

mortgage may be divested or barred only by making the holder thereof a
party to the proceedings to foreclose (Kurz vs. Pappas, 146 So. 100, 107
Fla. 861; Mediterranean Corp. vs. Pappas, 146 So. 106, 107 Fla. 876).
(Emphasis supplied.)
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-3619 October 29, 1951
BERNARDO TIGLAO, plaintiff-appellee,
vs.
ENGRACIO BOTONES, defendant-appellant.
Barrera, Calanog and Alafriz for appellant.
Enrico I. de la Cruz for appellee.
PARAS, C.J.:,
In civil case No. 5115 of the Court of First Instance of Tarlac in which
Bernardo Tiglao was the plaintiff and Engracio Botones the defendant,
judgment was rendered on March 24, 1943, the dispositive part of which
reads as follows: "El Juzgado, de acuerdo con dicho convenio, condena
al demandado al pago de la catidad de P4,000 con los intereses de 12
por ciento al año desde el 29 de Noviembre de 1937 hasta su pago
completo y se le ordena que deposite esta cantidad en poder del
Escribano dentro del plazo de 90 dias, de lo contrario se ordenara la
ejecucion de la sentencia vendiendo en publica subasta los bienes
hipotecados, con las costas a cargo del demandado."
Upon motion of the plaintiff, the Court of First Instance of Tarlac on July
20, 1943, ordered the issuance of a writ of execution. Accordingly, on
October 9, 1943, the provincial sheriff sold at public auction the
mortgaged properties to the plaintiff as the highest bidder. On March 7,
1944, the plaintiff filed an ex parte motion with the Court of First Instance
of Tarlac, for the confirmation of the sale in his favor. On March 22, 1944,
the court issued the following order: " As prayed for in the "Motion for
confirmation of the sheriff's sale dated October 9, 1943, of lots Nos. 784
and 1146 of the cadastral survey of Concepcion, executed by the
Provincial Sheriff of Tarlac in favor of Bernardo Tiglao, pursuant to the
order of execution entered herein, the said sale is hereby APPROVED."
On May 7, 1948, the plaintiff filed with the Court of First Instance of
Tarlac a motion for the issuance of a writ of possession. The defendant
filed an opposition alleging (1) that the judgment of March 24, 1943, is
null and void, because the defendant's former counsel had no special
authority to settle the case in the manner stated in said judgment, and (2)
that the sheriff's sale was not legally confirmed, because the defendant
was not given notice of the motion for confirmation or its hearing. On
June 30, 1948, the court granted plaintiff's motion for the issuance of a
writ of possession. The defendant filed on July 7, 1948, a motion for
reconsideration and under date of September 9, 1948, a motion invoking
moratorium under Republic Act No. 342 and praying that all proceedings
be suspended. In its order of October 12, 1948, the Court of First
Instance of Tarlac denied the motion for reconsideration. The defendant
appealed.
Appellant's first contention is that the trial court erred in sustaining the
order confirming the sheriff's sale and in issuing the corresponding writ of
possession in favor of the appellee. Under section 3 of rule 70 of the
Rules of Court, the sale of mortgaged property "when confirmed by an
order of the court . . . shall operate to divest the rights of all the parties to
the action and to vest their rights in the purchaser, subject to such rights
of redemption as may be allowed by law." The effect of confirmation was
more elaborately explained in the case of Raymundo vs. Sunico, 25 Phil.,
365, 368-369, as follows: "As the title to mortgaged real property does not
vest in the purchaser until after the confirmation of the sale, he has, prior
to that time, no right to the possession of such property, and no legal
cause of complaint against the defendants, who remain in possession,
exercising the rights of ownership. On the other hand, the mortgagors
have no means, until the confirmation of compelling the purchaser to
comply with the terms of the sale. Should the mortgagors attempt to
compel a purchaser to pay in his money, an answer on the part of the
purchaser to the effect that the sale had not been confirmed would be
sufficient. The confirmation operates to divest the title out of the former
owner and to vest it in the purchaser. It is at this time when the rights or
title passes, and not before. Sales of mortgaged real estate should be
more strictly scrutinized than ordinary sales under execution. In the
former the title, as we have said, passes to the purchaser upon
confirmation by the court, and the defendant or debtor has no right to
redeem within the statutory period granted in cases ordinary execution
sales. In some of the States of the American Union there are statutes
permitting the mortgagor to redeem after the foreclosure sale has been
confirmed. There is no such privilege extended to him by statute in the
Philippine Islands. The right of the mortgagor and those claiming under
him to redeem for mortgagee is extinguished by the foreclosure when the
same has been properly made. But, up to the time of confirmation the title
remains in the mortgagor." In said case this Court held that a hearing "is
a very essential part of those proceedings because the hearing gives the
interested parties an opportunity to lay before the court their reasons why
the sale should or should not be confirmed, and it is the result of this
hearing which diverts the title if the sale is confirmed."
In the case of Grimalt vs. Velasquez, 36 Phil., 936, 938, this Court,
relying upon its decision in Raymundo vs. Sunico, supra, ruled that "in
order that a foreclosure sale may be validly confirmed by the court, it is
necessary that a hearing be given the interested parties at which they
may have an opportunity to show cause why the sale should not be
confirmed; that a failure to give notice is good cause for setting aside the
sale."
In the cases of La Urbana vs. Belando, 54 Phil. 930, and Anderson vs.
Reyes, 54 Phil. 944, it was held, following the decision in Grimalt vs.
Velasquez, supra, that after the sale of mortgaged property and before its
confirmation, the court may still grant the judgment debtor an opportunity
to pay the amount of the judgment. In other words, until a sheriff's sale is
validly confirmed, the judgment debtor may exercise a right of
redemption.
Notice and hearing of motion for confirmation are therefore essential to
the validity of the order of confirmation, not only to enable the interested
parties to resist the motion but also to inform them of the time when their
right of redemption is cut off.
It is argued for the appellee that because section 3 of Rule 70 does not
carry the last part of section 257 of Act 190 to the effect that "should the
court decline to confirm the sale, for good cause shown, and should set it
aside, it shall order a resale in accordance with law," the cases
hereinabove cited are no longer efficacious. We disagree. The fact that
the present rules still require confirmation of the sheriff's sale implies the
power of the court to either confirm the same or not, when asked. And the
court may properly exercise its judgment on the matter only after hearing
both parties. Indeed, there is reason to suppose that the omitted
provision is superflous.
The case of Commonwealth of the Philippines vs. Ching yap, 70 Phil.,
116, citing So Chu vs. Nepomuceno, 29 Phil., 208, Jaranillo vs. Jacinto,
43 Phil. 588, Price vs. Sontua, 60 Phil. 410, and National Investment
Board vs. Peña, G.R. No. 46448, May 29, 1939, invoked by the appellee,
is obviously not controlling. In said case this Court found that notice of the
motion for confirmation was sent to the judgment debtors at their address
of record and when said notice was returned to the judgment creditor, the
latter filed it with the clerk of court in accordance with Rule 20 of the
Rules of Court of First Instance. What the creditor did was held sufficient,
because if the debtors failed to receive the notice sent to their address
appearing in the record, it was their fault. The statement in said case,
therefore, that lack of notice does not deprive the court of its jurisdiction
to approve a sheriff's sale, was purely an obiter dictum. Moreover, the
cases of So Chu vs. Nepomuceno, Jaranillo vs. Jacinto, Price vs. Sontua,
and National Investment Board vs. Peña, did not involve situations in
which confirmation of sheriff's sale was upheld although there was no
notice or hearing. .
In the more recent case of Somera vs. Navarro, 42 Off. Gaz., 2106, it
was contended that no 3-day notice of the motion for confirmation was
given, because the hearing of the motion was set for July 26, 1941, the
notice was mailed to the appellants on July 23 and was received by them
on July 26, the appellants were present and at their instance said hearing
was postponed to August 9. Other postponements were conceded and
the motion was not heard until December 4, 1942. This Court held:
"Resulta evidente, por tanto, que la regla sobre notificaciones se cumplio
substancialmente, y que toda discusion ahora sobre el particularveine a
ser meramente academica, porque, aun suponiendo que la primera
notificacion haya sido irregular, de ella no se siquio ningun perjuicio para
los apelantes, toda vez que la mocion no se considero y resolvio sino
despues de varias transferencias, de los cuales aquellos habian sido
debidamente avisados." We have thus inferentially recognized the
essential need for notice of motion for confirmation of a sheriff's sale, for,
on the contrary supposition. we would have summarily dismissed
appellant's contention and held that notice and hearing were
unnecessary.
In the case at bar, the lower court undoubtedly had acquired jurisdiction
over the foreclosure proceedings but, in confirming the sheriff's sale
without the essential requisite as to notice of the motion for confirmation,
it exceeded its power, with the result that the order of confirmation is null
and void. As stated by Mr. Justice Feria in Caluag et al.,*46 Off. Gaz.,
514. "a wrong, or for that matter a correct, decision is void, and may be
set aside either directly or collaterally, where the court exceeds its
jurisdiction and power in rendering it." In Ang Lam vs. Rosillosa,** 47 Off.
Gaz., Supp.(12), 103, it was held that "a void judgment may be assailed
or impugned at any time either directly or collaterally, by means of a
petition filed in the same case or by means of a separate action, or by
resisting such judgment in any action or proceeding wherein it is
invoked." Hence there is no merit in appellee's contention that the order
of confirmation had become final and cannot be set aside after the 6-
month period provided in rule 38 of the Rules of Court, within which relief
could be asked, had expire.

The second contention of the appellant is that the trial court erred in not
suspending the proceedings because of the Moratorium Law (Republic
Act No. 342). This contention is untenable. The foreclosure judgment had
long become final. By his motion for confirmation of the sheriff's sale and
his motion for a writ of possession, the appellee sought to recover, not a
monetary obligation, but the properties sold to him at public auction. What
was held in Barrozo vs. Macaraeg, 46 Off. Gaz., 4932, is decisive against
appellant's position. "The debt moratorium merely prohibited the
enforcement by action of the debts therein included; and in this case no
one is attempting to force anybody to pay his debt. The judgment debtor
whose property has been sold is not in debt for the redemption money.
He could not be required by action to redeem. Hence, he is not entitled to
invoke the suspension."

Wherefore the order of March 22, 1944, confirming the sheriff's sale of
the mortgaged properties, being null and void, the order of June 30,
1948, granting appellee's motion for the issuance of a writ of possession
is hereby set aside, without prejudice to appellee's right to move anew for
the confirmation of the sheriff's sale in his favor, with due notice and
hearing. So ordered without costs.

Feria, Pablo, Bengzon, Padilla, Tuason, Reyes, Jugo and Bautista

Angelo, JJ., concur.