Tuesday, November 19, 2013

White Light Corporation vs City of Manila

G.R. No. 122846 January 20, 2009

Petitioner: White Light Corporation, Titanium Corporation and Sta. Mesa Tourist & Development
Corporation

Respondent: City of Manila

Facts: On December 3, 1992, City Mayor Alfredo S. Lim signed into a law Manila City Ordinance No. 7774
entitled “An Ordinance Prohibiting Short-Time Admission, Short-Time Admission Rates, and Wash-Up
Rate Schemes in Hotels, Motels, Inns, Lodging Houses, Pension Houses, and Similar Establishments in the
City of Manila.” On December 15, 1992, the Malate Tourist and Development Corporation (MTDC) filed a
complaint for declaratory relief with prayer for a writ of preliminary injunction and/or temporary
restraining order (TRO) impleading as defendant, herein respondent City of Manila represented by
Mayor Lim with the prayer that the Ordinance be declared invalid and unconstitutional.

On December 21, 1992, petitioners White Light Corporation (WLC), Titanium Corporation (TC) and Sta.
Mesa Tourist and Development Corporation (STDC) filed a motion to intervene and to admit attached
complaint-in-intervention on the ground that the Ordinance directly affects their business interests as
operators of drive-in-hotels and motels in Manila. The RTC issued a TRO directing the City to cease and
desist from enforcing the Ordinance. The City alleges that the Ordinance is a legitimate exercise of police
power. On October 20, 1993, the RTC rendered a decision declaring the Ordinance null and void. On a
petition for review on certiorari, the Court of Appeals reversed the decision of the RTC and affirmed the
constitutionality of the Ordinance.

Issue: Whether Manila City Ordinance No. 7774 is a valid exercise of police power

Ruling: Police power, while incapable of an exact definition, has been purposely veiled in general terms
to underscore its comprehensiveness to meet all exigencies and provide enough room for an efficient
and flexible response as the conditions warrant. Police power is based upon the concept of necessity of
the State and its corresponding right to protect itself and its people. Police power has been used as
justification for numerous and varied actions by the State. The apparent goal of the Ordinance is to
minimize if not eliminate the use of the covered establishments for illicit sex, prostitution, drug use and
alike. These goals, by themselves, are unimpeachable and certainly fall within the ambit of the police
power of the State. Yet the desirability of these ends do not sanctify any and all means for their
achievement. Those means must align with the Constitution, and our emerging sophisticated analysis of
its guarantees to the people.

That the Ordinance prevents the lawful uses of a wash rate depriving patrons of a product and the
petitioners of lucrative business ties in with another constitutional requisite for the legitimacy of the
Ordinance as a police power measure. It must appear that the interests of the public generally, as
distinguished from those of a particular class, require an interference with private rights and the means
must be reasonably necessary for the accomplishment of the purpose and not unduly oppressive of
private rights. It must also be evident that no other alternative for the accomplishment of the purpose
less intrusive of private rights can work. More importantly, a reasonable relation must exist between the
purposes of the measure and the means employed for its accomplishment, for even under the guise of
protecting the public interest, personal rights and those pertaining to private property will not be
permitted to be arbitrarily invaded. Lacking a concurrence of these requisites, the police measure shall
be struck down as an arbitrary intrusion into private rights. As held in Morfe v. Mutuc, the exercise of
police power is subject to judicial review when life, liberty or property is affected. However, this is not in
any way meant to take it away from the vastness of State police power whose exercise enjoys the
presumption of validity. Ordinance No. 7774 is hereby declared UNCONSTITUTIONAL.
Metropolitan Manila Development Authority vs. Trackworks Rail Transit Advertising, Vending and
Promotions, Inc.

G.R. No. 179554 December 16, 2009

Petitioner: Metropolitan Manila Development Authority

Respondent: Trackworks Rail Transit Advertising, Vending and Promotions, Inc.

Facts: In 1997, the Government, through the Department of Transportation and Communications,
entered into a build-lease-transfer agreement (BLT agreement) with Metro Rail Transit Corporation,
Limited (MRTC) pursuant to Republic Act No. 6957 (Build, Operate and Transfer Law), under which MRTC
undertook to build MRT3 subject to the condition that MRTC would own MRT3 for 25 years, upon the
expiration of which the ownership would transfer to the Government. In 1998, respondent Trackworks
Rail Transit Advertising, Vending & Promotions, Inc. (Trackworks) entered into a contract for advertising
services with MRTC. Trackworks thereafter installed commercial billboards, signages and other
advertising media in the different parts of the MRT3. In 2001, however, MMDA requested Trackworks to
dismantle the billboards, signages and other advertising media pursuant to MMDA Regulation No. 96-
009, whereby MMDA prohibited the posting, installation and display of any kind or form of billboards,
signs, posters, streamers, in any part of the road, sidewalk, center island, posts, trees, parks and open
space. After Trackworks refused the request of MMDA, MMDA proceeded to dismantle the former’s
billboards and similar forms of advertisement.

Issue: Whether MMDA has the power to dismantle, remove or destroy the billboards, signages and other
advertising media installed by Trackworks on the interior and exterior structures of the MRT3.

Ruling: That Trackworks derived its right to install its billboards, signages and other advertising media in
the MRT3 from MRTC’s authority under the BLT agreement to develop commercial premises in the MRT3
structure or to obtain advertising income therefrom is no longer debatable. Under the BLT agreement,
indeed, MRTC owned the MRT3 for 25 years, upon the expiration of which MRTC would transfer
ownership of the MRT3 to the Government.

Considering that MRTC remained to be the owner of the MRT3 during the time material to this case, and
until this date, MRTC’s entering into the contract for advertising services with Trackworks was a valid
exercise of ownership by the former. In fact, in Metropolitan Manila Development Authority v.
Trackworks Rail Transit Advertising, Vending & Promotions, Inc., this Court expressly recognized
Trackworks’ right to install the billboards, signages and other advertising media pursuant to said
contract. The latter’s right should, therefore, be respected.

It is futile for MMDA to simply invoke its legal mandate to justify the dismantling of Trackworks’
billboards, signages and other advertising media. MMDA simply had no power on its own to dismantle,
remove, or destroy the billboards, signages and other advertising media installed on the MRT3 structure
by Trackworks. In Metropolitan Manila Development Authority v. Bel-Air Village Association, Inc.,
Metropolitan Manila Development Authority v. Viron Transportation Co., Inc., and Metropolitan Manila
Development Authority v. Garin, the Court had the occasion to rule that MMDA’s powers were limited to
the formulation, coordination, regulation, implementation, preparation, management, monitoring,
setting of policies, installing a system, and administration. Nothing in Republic Act No. 7924 granted
MMDA police power, let alone legislative power.

The Court also agrees with the CA’s ruling that MMDA Regulation No. 96-009 and MMC Memorandum
Circular No. 88-09 did not apply to Trackworks’ billboards, signages and other advertising media. The
prohibition against posting, installation and display of billboards, signages and other advertising media
applied only to public areas, but MRT3, being private property pursuant to the BLT agreement between
the Government and MRTC, was not one of the areas as to which the prohibition applied.

of the Case: Acebedo Optical Co. vs. Court of Appeals

Nature: Petition for review under Rule 45 of the Rules of Court seeking to nullify the dismissal by the
Court of Appeals of the original petition for certiorari

Keywords: Optical shop, Business Permit

Petitioner: Acebedo Optical Company, Inc.

Respondent: The Honorable Court of Appeals

Facts: Petitioner applied with the Office of the City Mayor of Iligan for a business permit. After
consideration of petitioner's application and the opposition interposed thereto by local optometrists,
respondent City Mayor issued Business Permit No. 5342 subject to the following conditions: (1) Since it is
a corporation, Acebedo cannot put up an optical clinic but only a commercial store; (2) It cannot
examine and/or prescribe reading and similar optical glasses for patients, because these are functions of
optical clinics; (3) It cannot sell reading and similar eyeglasses without a prescription having first been
made by an independent optometrist or independent optical clinic. Acebedo can only sell directly to the
public, without need of a prescription, Ray-Ban and similar eyeglasses; (4) It cannot advertise optical
lenses and eyeglasses, but can advertise Ray-Ban and similar glasses and frames; (5) It is allowed to grind
lenses but only upon the prescription of an independent optometrist.

On December 5, 1988, private respondent Samahan ng Optometrist Sa Pilipinas (SOPI lodged a

complaint against the petitioner alleging that Acebedo had violated the conditions set forth in its
business permit and requesting the cancellation and/or revocation of such permit. On July 19, 1989, the
City Mayor sent petitioner a Notice of Resolution and Cancellation of Business Permit effective as of said
date and giving petitioner three (3) months to wind up its affairs.

Issue: Whether the City Mayor has the authority to impose special conditions, as a valid exercise of
police power, in the grant of business permits

Ratio: Police power as an inherent attribute of sovereignty is the power to prescribe regulations to
promote the health, morals, peace, education, good order or safety and general welfare of the people. It
is essentially regulatory in nature and the power to issue licenses or grant business permits, if exercised
for a regulatory and not revenue-raising purpose, is within the ambit of this power. The authority of city
mayors to issue or grant licenses and business permits is beyond cavil. However, the power to grant or
issue licenses or business permits must always be exercised in accordance with law, with utmost
observance of the rights of all concerned to due process and equal protection of the law.

In the case under consideration, the business permit granted by respondent City Mayor to petitioner was
burdened with several conditions. Petitioner agrees with the holding by the Court of Appeals that
respondent City Mayor acted beyond his authority in imposing such special conditions in its permit as
the same have no basis in the law or ordinance. Public respondents and private respondent SOPI are one
in saying that the imposition of said special conditions is well within the authority of the City Mayor as a
valid exercise of police power.

The issuance of business licenses and permits by a municipality or city is essentially regulatory in nature.
The authority, which devolved upon local government units to issue or grant such licenses or permits, is
essentially in the exercise of the police power of the State within the contemplation of the general
welfare clause of the Local Government Code.

What is sought by petitioner from respondent City Mayor is a permit to engage in the business of
running an optical shop. It does not purport to seek a license to engage in the practice of optometry. The
objective of the imposition of subject conditions on petitioner's business permit could be attained by
requiring the optometrists in petitioner's employ to produce a valid certificate of registration as
optometrist, from the Board of Examiners in Optometry. A business permit is issued primarily to regulate
the conduct of business and the City Mayor cannot, through the issuance of such permit, regulate the
practice of a profession. Such a function is within the exclusive domain of the administrative agency
specifically empowered by law to supervise the profession, in this case the Professional Regulations
Commission and the Board of Examiners in Optometry.

Ruling: WHEREFORE, the petition is GRANTED; the Decision of the Court of Appeals in CA-GR SP No.
22995 REVERSED: and the respondent City Mayor is hereby ordered to reissue petitioner's business
permit in accordance with law and with this disposition. No pronouncement as to costs.

Doctrine: The scope of police power has been held to be so comprehensive as to encompass almost all
matters affecting the health, safety, peace, order, morals, comfort and convenience of the community.
Police power is essentially regulatory in nature and the power to issue licenses or grant business permits,
if exercised for a regulatory and not revenue-raising purpose, is within the ambit of this power.

Requisites

1 - LAWFUL SUBJECT: The interests of the public generally, as distinguished from those of a particular
class, require the exercise of the police power
2 - LAWFUL MEANS: The means employed are reasonably necessary for the accomplishment of the
purpose and not unduly oppressive upon individuals

Association of Small Landowners in the Philippines vs. Honorable Secretary of Agrarian Reform

G.R. No. 78742 July 14, 1989

Petitioner: Association of Small Landowners in the Philippines

Respondent: Honorable Secretary of Agrarian Reform

Facts: These are consolidated cases which involve common legal, including serious challenges to the
constitutionality of the several measures such as P.D. No. 27, E.O. No. 228, Presidential Proclamation No.
131, E.O. No. 229, and R.A. No. 6657.

G.R. No. 79777

The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of separation
of powers, due process, equal protection and the constitutional limitation that no private property shall
be taken for public use without just compensation. G.R. No. 79310

G.R. No. 79310

This petition seeks to prohibit the implementation of Proc. No. 131 and E.O. No. 229. They contend that
taking must be simultaneous with payment of just compensation as it is traditionally understood, i.e.,
with money and in full, but no such payment is contemplated in Section 5 of the E.O. No. 229.

G.R. No. 79744

The petitioner argues that E.O. Nos. 228 and 229 are violative of the constitutional provision that no
private property shall be taken without due process or just compensation.

G.R. No. 78742

Petitioners claim they cannot eject their tenants and so are unable to enjoy their right of retention
because the Department of Agrarian Reform has so far not issued the implementing rules required under
the above-quoted decree.

Issue: Whether agrarian reform is an exercise of police power or eminent domain

Ruling: There are traditional distinctions between the police power and the power of eminent domain
that logically preclude the application of both powers at the same time on the same subject. Property
condemned under the police power is noxious or intended for a noxious purpose, such as a building on
the verge of collapse, which should be demolished for the public safety, or obscene materials, which
should be destroyed in the interest of public morals. The confiscation of such property is not
compensable, unlike the taking of property under the power of expropriation, which requires the
payment of just compensation to the owner.

The cases before us present no knotty complication insofar as the question of compensable taking is
concerned. To the extent that the measures under challenge merely prescribe retention limits for
landowners, there is an exercise of the police power for the regulation of private property in accordance
with the Constitution. But where, to carry out such regulation, it becomes necessary to deprive such
owners of whatever lands they may own in excess of the maximum area allowed, there is definitely a
taking under the power of eminent domain for which payment of just compensation is imperative. The
taking contemplated is not a mere limitation of the use of the land. What is required is the surrender of
the title to and the physical possession of the said excess and all beneficial rights accruing to the owner
in favor of the farmer-beneficiary. This is definitely an exercise not of the police power but of the power
of eminent domain

Philippime Press Institute v. COMELEC

Facts: COMELEC promulgated Resolution No 2772 directing newspapers to provide free print space of
not less than ½ page for use as “Comelec Space” from 06March1995 to 06May1995. COMELEC
Commisssioner sent letters to publishers informing them of the same. PPI seek to declare the resolution
unconstitutional and void on the ground of taking private property w/o just compensation. TRO was
enforced. SocGen argues that even if the questioned Resolution and its implementing letter directives
are viewed as mandatory, the same would nevertheless be valid as an exercise of the police power of the
State. COMELEC Chair stated that they will clarify the resolution that the letter was intended to solicit
and not to compel. Resolution No. 2772-A was promulgated.
Issue: Whether or not Resolution 2772 is void on the ground of deprivation of use w/o compensation of
newspaper?

Decision: To compel print media companies to donate “Comelec-space” amounts to “taking” of private
personal property for public use. The extent of the taking or deprivation is not insubstantial measured by
the advertising rates ordinarily charged by newspaper publishers whether in cities or in non-urban
areas.

The taking of print space here sought to be effected may first be appraised under the rubric of
expropriation of private personal property for public use. The threshold requisites for a lawful taking of
private property for public use need to be examined here: one is the necessity for the taking; another is
the legal authority to effect the taking. The element of necessity for the taking has not been shown by
respondent Comelec. It has not been suggested that the members of PPI are unwilling to sell print space
at their normal rates to Comelec for election purposes. It has not been suggested that Comelec has been
granted the power of eminent domain either by the Constitution or by the legislative authority. A
reasonable relationship between that power and the enforcement and administration of election laws by
Comelec must be shown.

The taking of private property for public use is, of course, authorized by the Constitution, but not
without payment of “just compensation.”

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DIVISION

[ GR No. 170147, Jan 30, 2009 ]

REPUBLIC v. SPS. AGUSTIN AND IMELDA CANCIO +

DECISION

597 Phil. 342

CORONA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to set aside the October
17, 2005 decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 75092.

Petitioner Philippine Economic Zone Authority is a government-owned and controlled corporation

created and existing under and by virtue of RA 7916,[2] as amended. It is vested with governmental
functions,[3] including the power of eminent domain, thus enabling it to acquire private land within or
adjacent to the ecozone for consolidation with land for zone development purposes.[4]

On January 15, 1979, then President Ferdinand E. Marcos issued Proclamation No. 1811[5] which
reserved certain parcels of land of the public domain in Lapu Lapu City in favor of petitioner (then Export
Processing Zone Authority or EPZA) for the establishment of the Mactan Export Processing Zone.
However, some of the parcels covered by the proclamation, including that of respondent spouses
Agustin and Imelda Cancio, were private land.

Petitioner eventually laid out the development of the economic zone and subsequently leased out
respondents' 47,540 sq. m. lot to an investor in the economic zone, Maitland Smith Inc. (Maitland).

On May 19, 2001, petitioner offered to purchase respondents' lot at P1,100 per sq. m. or P52,294,000 for
the whole property. The letter containing the offer further instructed respondents "to consider and
accept, otherwise we will initiate expropriation proceedings in the proper court."

Instead of accepting the offer, respondents filed an unlawful detainer case against Maitland in the
Municipal Trial Court of Lapu Lapu City.

Thereafter, petitioner commenced expropriation proceedings for respondents' property with the
Regional Trial Court (RTC) of Lapu Lapu City, Branch 54 on August 27, 2001.[6] Accordingly, it sought a
writ of possession for the property for which it was willing to deposit 10% of the offered amount or a
total of P5,229,400 with the Land Bank of the Philippines in accordance with Administrative Order (A.O.)
No. 50.[7]
Respondents, however, filed a motion to require petitioner to comply with RA 8974,[8] specifically
Section 4(a) thereof, which requires that, upon the filing of the complaint for expropriation, the
implementing agency shall immediately pay the owner of the property an amount equivalent to 100% of
the current zonal valuation thereof for purposes of the issuance of a writ of possession.

In its January 14, 2002 order (first order), the trial court granted respondents' motion.

Petitioner moved for its reconsideration. It argued that RA 8974 was inapplicable as the payment
required under the law applied only to instances where the property was still in the owner's possession
and had yet to be transferred to the government. It could not be validly invoked when the property was
already in the government's possession, as in this case. It also averred that it should be made to pay only
the price of the land at the time of its taking. Corollarily, if it was ordered to pay the amount required
under RA 8974, it would be unjustly penalized for its own improvements to the property.

This time, the RTC agreed with petitioner's position. On February 26, 2002 (second order), the court a
quo granted petitioner's motion for reconsideration.

Respondents filed a motion for reconsideration, contending that petitioner should make the required
payment under the law because RA 8974, which took effect before the commencement of the
expropriation case, applied to all actions of such nature regardless of whether the government agency
was already in possession or not. The court a quo issued its September 5, 2002 order (third order) which
reversed its second order and reinstated the first one.

Thereafter, petitioner filed a petition for certiorari in the CA, assailing the first and third orders of the
RTC. The appellate court sustained the RTC's ruling.

Hence, this petition.

The issue before us is whether or not RA 8974 is applicable to this case for purposes of the issuance of
the writ of possession.[9] It is petitioner's stance that it is not. It cited A.O. No. 50 as its legal authority
when it offered to purchase respondents' property in an amount equivalent to ten percent (10%) higher
than the zonal value thereof.[10] Consequently, petitioner prayed in its complaint for expropriation[11]
that it be issued a writ of possession upon a showing that the amount equivalent to ten percent (10%) of
the offered amount has been duly deposited. Respondents, on the other hand, agree that RA 8974 is the
controlling law in this case as the complaint for expropriation was instituted when said law was already
in effect.

We deny the petition. RA 8974 governs this case, not A.O. No. 50 as petitioner insists.

A perusal of RA 8974 readily reveals that it applies to instances when the national government
expropriates property for national government infrastructure projects.[12] Undeniably, the economic
zone is a national government project - a matter undisputed by both parties. Also, the complaint for
expropriation was filed only on August 27, 2001 or almost one year after the law was approved on
November 7, 2000. Thus, there is no doubt about its applicability to this case.

We note that this expropriation case is still in its initial stages. The trial court had yet to approve a writ of
possession in petitioner's favor when the issue of payment of just compensation cropped up. Both
parties seemed to have confused the requirement of paying 100% of the current zonal valuation of the
property (as a prerequisite to the issuance of a writ of possession) with the payment of just
compensation itself.

In its complaint filed in the RTC,[13] petitioner prayed that:

a. A writ of possession be issued in favor of plaintiff respecting its possession, control and disposition of
the land sought to be expropriated including the power or authority to demolish, if any, improvements
thereon, upon showing that the amount equivalent to 10% of the offered amount has been duly
deposited.

In their motion to require petitioner to comply with RA 8974,[14] respondents countered that they:

x x x contest PEZA's proferred value as it is not a just compensation for the property sought to be
expropriated.

When petitioner moved for reconsideration[15] after the RTC granted respondents' aforementioned
motion, it argued that:

The inapplicability of R. A. No. 8974 is further highlighted by the fact that it requires a deposit based on
the current zonal valuation of the property. To apply such valuation to the instant case would be to
violate the cardinal principle in eminent domain proceedings that the just compensation for the property
should be its fair market value at the time of taking. The nature and character of the land at the time of
its taking is the principal criterion to determine just compensation to the landowner (National Power
Corporation vs. Henson, 300 SCRA 751 [1998]). (Emphasis supplied)

Clearly, there was a confusion regarding the nature of the amount to be paid for the issuance of a writ of
possession. In Capitol Steel Corporation v. PHIVIDEC Industrial Authority,[16] we clarified that the
payment of the provisional value as a condition for the issuance of a writ of possession is different from
the payment of just compensation for the expropriated property. While the provisional value is based on
the current relevant zonal valuation, just compensation is based on the prevailing fair market value of
the property.

In that case, we agreed with the CA's explanation[17] that:

The first refers to the preliminary or provisional determination of the value of the property. It serves a
double-purpose of pre-payment if the property is fully expropriated, and of an 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 value[s,] has also been described in a
variety of ways as the "price fixed by the buyer and seller in the open market in the usual and ordinary
course of legal trade and competition; the price and value of the article established as shown by sale,
public or private, in the ordinary way of business; the fair value of the property between one who
desires to purchase and one who desires to sell; the current price; the general or ordinary price for
which property may be sold in that locality." (Emphasis in the original)

There is therefore no need yet to determine with reasonable certainty the final amount of just
compensation in resolving the issue of a writ of possession.[18] In fact, it is the ministerial duty of the
trial court to issue the writ upon compliance with the requirements of Section 4[19] of the law. No
hearing is required and the court cannot exercise its discretion in order to arrive at the amount of the
provisional value of the property to be expropriated as the legislature has already fixed the amount
under the aforementioned provision of the law.[20]

It is only after the trial court ascertains the provisional amount to be paid that just compensation will be
determined.
In establishing the amount of just compensation, the parties may present evidence relative to the
property's fair market value, as provided under Section 5 of RA 8974.[21] Thus:

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.

This must be so as just compensation should take into account the consequential benefits and damages
which may arise from the expropriation.[22] Furthermore, it is well to remember that the concept of just
compensation does not mean fairness to the property owner alone. It must also be just to the public
which ultimately bears the cost of expropriation.[23]

Lastly, RA 8974 provides that "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."[24] In this case, almost eight
years have passed since petitioner commenced the expropriation proceedings on August 27, 2001. We,
however, hold that it is still feasible to comply with the spirit of the law by requiring the trial court to
make such determination within sixty (60) days from finalityof this decision, in accordance with the
guidelines laid down in RA 8974 and its implementing rules.[25]

WHEREFORE, the petition is hereby DENIED.

No costs.

SO ORDERED.

Carpio*, (Acting Chairperson), Austria-Martinez**, Carpio Morales, and Leonardo-De Castro, JJ., concur.

* Per Special Order No. 552-A dated January 15, 2009.

** Per Special Order No. 553 dated January 15, 2009.

[1] Penned by Associate Justice Enrico A. Lanzanas (retired) and concurred in by Associate Justices
Pampio A. Abarintos and Vicente L. Yap (retired) of the Special Eighteenth Division of the Court of
Appeals. Rollo, pp. 44-52.

[2] Otherwise known as the Special Economic Zone Act of 1995. It supersedes Presidential Decree 66
(The EPZA Law), which was promulgated in 1972.
[3] As provided for in Section 2 of PD 66, which reads:

Section 2. Creation of an Export Processing Zone Authority. - To carry out the above policy, there is
hereby created a body corporate to be known as the Export Processing Zone Authority, hereinafter
referred to as Authority, which shall be under the direct supervision of the Office of the President. The
functions of the Authority are hereby declared governmental.

[4] Section 29 of RA 7916 reads:

Section 29. Eminent Domain. - The areas comprising an ECOZONE may be expanded or reduced when
necessary. For this purpose, the government shall have the power to acquire, either by purchase,
negotiation or condemnation proceedings, any private lands within or adjacent to the ECOZONE for:

(a) Consolidation of lands for zone development purposes;

(b) Acquisition of right of way to the ECOZONE; and

(c) The protection of watershed areas and natural assets valuable to the prosperity of the ECOZONE.

[5] "Preserving for Purposes of the Export Processing Zone Authority a Certain Parcel of Land of the
Public Domain Situated in the City of Lapu lapu, Island of Mactan, Province of Cebu."

[6] Docketed as Civil Case No. 5578-L.

[7] Otherwise known as "Guidelines for the Acquisition of Certain Parcels of Private Land Intended for
Public Use Including the Right-of-Way Easement of Several Public Infrastructure Projects." Dated 17
February 1999.

[8] "An Act to Facilitate the Acquisition of Right-of-Way, Site or Location for National Government
Infrastructure Projects and for Other Purposes." Dated 7 November 2000.
[9] The main error actually assigned to this Court was the applicability of RA 8974 to this case for
purposes of determining the amount of just compensation due respondents. However, after
painstakingly sifting through the records of the case, the Court found that the parties, and even the
lower courts, have mistaken the payment of the provisional amount (as a prerequisite to the issuance of
a writ of possession) and the payment of just compensation to be one and the same. Thus, the parties'
insistence on the resolution of the aforementioned issue as shown in their pleadings filed in the RTC, CA
and this Court. Regrettably, both lower courts failed to differentiate between the two concepts and ruled
on the matter by agreeing with respondents' contentions.

[10] Annex D-3, rollo, p. 75. See Section 1 of A.O. No. 50.

[11] Rollo, pp. 60-66. See Section 2 of A.O. No. 50.

[12] See Section 1, RA 8974 and Republic v. Gingoyon, G.R. No. 152335, 19 December 2005, 478 SCRA
462, 515.

[13] Supra note 11.

[14] Rollo, pp. 80-83.

[15] Id., pp. 88-95.

[16] G.R. No. 169453, 6 December 2006, 510 SCRA 590, 602.

[17] Id., pp. 602-603.

[18] Id., p. 603.

[19] Section 4 of RA 8974 provides:

Sec. 4. Guidelines for Expropriation Proceedings. - Whenever it is necessary to acquire real property for
the right-of-way, site or location for any national government infrastructure project through
expropriation, the appropriate implementing agency shall initiate the expropriation proceedings before
the proper court under the following guidelines:

(a) Upon the filing of the complaint, and after due notice to the defendant, the implementing agency
shall immediately pay the owner of the property the amount equivalent to the sum of (1) one hundred
percent (100%) of the value of the property based on the current relevant 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;

xxx

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
the 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. (Emphasis supplied)

[20] Capitol Steel Corporation v. PHIVIDEC Industrial Authority, supra note 16, p. 602.

[21] Id., p. 617.

[22] National Power Corp. v. Spouses dela Cruz. G.R. No. 156093, 2 February 2007, 514 SCRA 56, 72-73,
citing B.H. Berkenkotter & Co. v. CA, G.R. No. 89980, 14 December 1992, 216 SCRA 584, 586-587.

[23] Republic v. CA, G.R. No. 147245, 31 March 2005, 454 SCRA 516, 536.

[24] See Section 4 of RA 8974.

[25] Republic v. Gingoyon, supra note 12.

. No. 169008, July 31, 2008

Landbank of the Philippines

vs Raymunda Martinez

Ponente: Nachura

Facts:

The land owned by Martinez was compulsory acquired by DAR for the purpose of CARP, of which the LBP
offered P1,955,485.60 as just compensation. Convinced that the amount was just and confiscatory,
Martinez rejected it. Thus, PARAD conducted a summary administrative proceedings for the preliminary
determination of the just compensation.

PARAD marked some inconsistencies in the figures and factors used by LBP in its computation, so they
rendered an amount of P12,179,492.50 as just compensation.

LBP however, filed at the RTC-Romblon that the ruling of the DARAB on the just compensation has
become final after the lapse of 15 days. Martinez opposed the motion. Later on, LBP instituted a petition
for certiorari against PARAD, assailing that PARAD gravely abuse its discretion when it issued the order
for the 12m just compensation despite the pending petition in the RTC. CA, finding LBP guilty of forum-
shopping dismissed the petition, Hence, this petition.
Issue:

(1) whether or not petitioner could file its appeal solely through its legal department; (2) whether or not
petitioner committed forum shopping; and (3) whether or not the Provincial Agrarian Reform
Adjudicator (PARAD) gravely abused his discretion when he issued a writ of execution despite the
pendency of LBP’s petition for fixing of just compensation with the Special Agrarian Court (SAC).

Ruling:

The Court went on to rule that the petition for review on certiorari could not be filed without the Office
of the Government Corporate Counsel (OGCC) entering its appearance as the principal legal counsel of
the bank or without the OGCC giving its conformity to the LBP Legal Department’s filing of the petition.
The Court also found petitioner to have forum-shopped when it moved to quash the PARAD resolutions
and at the same time petitioned for their annulment via certiorari under Rule 65. Most importantly, the
Court ruled that petitioner was not entitled to the issuance of a writ of certiorari by the appellate court
because the Office of the PARAD did not gravely abuse its discretion when it undertook to execute the
September 4, 2002 decision on land valuation. The said adjudicator’s decision attained finality after the
lapse of the 15-day period stated in Rule XIII, Section 11 of the Department of Agrarian Reform
Adjudication Board (DARAB) Rules of Procedure.

On the supposedly conflicting pronouncements in the cited decisions, the Court reiterates its ruling in
this case that the agrarian reform adjudicator’s decision on land valuation attains finality after the lapse
of the 15-day period stated in the DARAB Rules. The petition for the fixing of just compensation should
therefore, following the law and settled jurisprudence, be filed with the SAC within the said period.
Following settled doctrine, we ruled in this case that the PARAD’s decision had already attained finality
because of LBP’s failure to file the petition for the fixing of just compensation within the 15-day period.
VICENTE P. EUSEBIO v. JOVITO M. LUIS, GR No. 162474, 2009-10-13

Facts:

Respondents are the registered owners of a parcel of land covered by Transfer Certificate of Title Nos.
53591 and 53589 with an area of 1,586 square meters. Said parcel of land was taken by the City of Pasig
sometime in 1980 and used as a municipal road now known as A. Sandoval

Avenue, Barangay Palatiw, Pasig City. On February 1, 1993, the Sanggunian of Pasig City passed
Resolution No. 15 authorizing payments to respondents for said parcel of land. However, the Appraisal
Committee of the City of Pasig, in Resolution No. 93-13 dated October 19,... 1993, assessed the value of
the land only at P150.00 per square meter. In a letter dated June 26, 1995, respondents requested the
Appraisal Committee to consider P2,000.00 per square meter as the value of their land.

One of the respondents also wrote a letter dated November 25, 1994 to Mayor Vicente P. Eusebio calling
the latter's attention to the fact that a property in the same area, as the land subject of this case, had
been paid for by petitioners at the price of P2,000.00 per square... meter when said property was
expropriated in the year 1994 also for conversion into a public road. Subsequently, respondents' counsel
sent a demand letter dated August 26, 1996 to Mayor Eusebio, demand... respondents filed a Complaint
for Reconveyance and/or Damages (Civil Case No. 65937) against herein petitioners before the Regional
Trial Court (RTC) of Pasig City, Branch 155. Respondents prayed that the property be returned to them
with payment of... reasonable rental for sixteen years of use at P500.00 per square meter, or
P793,000.00, with legal interest of 12% per annum from date of filing of the complaint until full
payment, or in the event that said property can no longer be returned, that petitioners be ordered to
pay... just compensation in the amount of P7,930,000.00 and rental for sixteen years of use at P500.00
per square meter, or P793,000.00, both with legal interest of 12% per annum from the date of filing of
the complaint until full payment. In addition, respondents prayed for payment of... moral and exemplary
damages, attorney's fees and costs.

Petitioners then appealed the case to the CA, but the CA affirmed the RTC judgment in its Decision dated
November 28, 2003.

Issues:

whether respondents are entitled to regain possession of their property taken by the city government in
the 1980's and, in the event that said property can no longer be returned, how should just compensation
to respondents be determined.

Ruling:

the Court held that because the landowner did not act to question the lack of expropriation proceedings
for a very long period of time and even negotiated with the PNR as to how much it should be paid as just
compensation, said landowner is deemed to have waived... its right and is estopped from questioning
the power of the PNR to expropriate or the public use for which the power was exercised.

Just like in the Forfom case, herein respondents also failed to question the taking of their property for a
long period of time (from 1980 until the early 1990's) and, when asked during trial what action they took
after their property was taken, witness Jovito Luis, one... of the respondents, testified that "when we
have an occasion to talk to Mayor Caruncho we always asked for compensation."[9] It is likewise
undisputed that what was constructed by the city government on respondents' property was a road for
public use,... namely, A. Sandoval Avenue in Pasig City. Clearly, as in Forfom, herein respondents are also
estopped from recovering possession of their land, but are entitled to just compensation.

Now, with regard to the trial court's determination of the amount of just compensation to which
respondents are entitled, the Court must strike down the same for being contrary to established rules
and jurisprudence.
The prevailing doctrine on judicial determination of just compensation is that set forth in Forfom.[10]
Therein, the Court ruled that even if there are no expropriation proceedings instituted to determine just
compensation, the trial court is still... mandated to act in accordance with the procedure provided for in
Section 5, Rule 67 of the 1997 Rules of Civil Procedure, requiring the appointment of not more than
three competent and disinterested commissioners to ascertain and report to the court the just
compensation for the... subject property. The Court reiterated its ruling in National Power Corporation v.
Dela Cruz[11] that "trial with the aid of commissioners is a substantial right that may not be done away
with capriciously or for no reason at all."[12] It was also emphasized therein that although ascertainment
of just compensation is a judicial prerogative, the commissioners' findings may only be disregarded or
substituted with the trial court's own estimation of the property's value only if the commissioners... have
applied illegal principles to the evidence submitted to them, where they have disregarded a clear
preponderance of evidence, or where the amount allowed is either grossly inadequate or excessive

It is quite clear that the Court, in formulating and promulgating the procedure provided for in Sections 5
and 6, Rule 67, found this to be the fairest way of arriving at the just compensation to be paid for private
property taken for public use.

With regard to the time as to when just compensation should be fixed, it is settled jurisprudence that
where property was taken without the benefit of expropriation proceedings, and its owner files an action
for recovery of possession thereof before the commencement of... expropriation proceedings, it is the
value of the property at the time of taking that is controlling.[

Principles:

recovery of possession of the property by the landowner can no longer be allowed on the grounds of
estoppel and, more importantly, of public policy which imposes upon the public utility the obligation to
continue its services to the public. The... non-filing of the case for expropriation will not necessarily lead
to the return of the property to the landowner. What is left to the landowner is the right of
compensation
Sunday, February 19, 2017

G.R. No. 165828 NPC v. HEIRS OF SANGKAY 656 SCRA 60

NPC v. HEIRS OF SANGKAY

656 SCRA 60

G.R. No. 165828

August 24, 2011

TOPIC: Eminent Domain; Just Compensation

FACTS: National Power Corporation (NPC) undertook the Agus River Hydroelectric Power Plant Project to
generate electricity for Mindanao. It included the construction of several underground tunnels to be
used in diverting the water flow from the Agus River to the hydroelectric plants.

On 1997, Respondents sued NPC for recovery of damages of the property and a prayer for just
compensation. They alleged that the tunnel deprived them of the agricultural, commercial, industrial
and residential value of their land; and that their land had also become an unsafe place for habitation,
forcing them and their workers to relocate to safer grounds.

ISSUE: Whether the Heirs of Sangkay have the right to just compensation

RULING: Just compensation is the full and fair equivalent of the property taken from its owner by the
expropriator. It has the objective to recover the value of property taken in fact by the governmental
defendant, even though no formal exercise of the power of eminent domain has been attempted by the
taking agency.
The underground tunnels impose limitations on respondents’ use of the property for an indefinite period
and deprive them of its ordinary use. Hence, respondents are clearly entitled to the payment of just
compensation.

Notwithstanding the fact that petitioner only occupies the sub-terrain portion, it is liable to pay not
merely an easement fee but rather the full compensation for land. It is settled that the taking of private
property for public use, to be compensable, need not be an actual physical taking or appropriation. This
is so because in this case, the nature of the easement practically deprives the owners of its normal
beneficial use. Compensable taking includes destruction, restriction, diminution, or interruption of the
rights of ownership or of the common and necessary use and enjoyment of the property in a lawful
manner, lessening or destroying its value
Expropriation; abandonment of public purpose. In this case, the Mactan Cebu International Airport
Authority (MCIAA) and/or its predecessor agency had not actually used the lots subject of the final
decree of expropriation in Civil Case No. R-1881 for the purpose they were originally taken by the
government, i.e., for the expansion and development of Lahug Airport. In fact, the Lahug Airport had
been closed and abandoned. Also, in this case, it was preponderantly established by evidence that the
National Airport Corporation, MCIAA’s predecessor, through its team of negotiators, had given assurance
to the affected landowners that they would be entitled to repurchase their respective lots in the event
they are no longer used for airport purposes. The SC held that the government acquires only such rights
in expropriated parcels of land as may be allowed by the character of its title over the properties. This
means that in the event the particular public use for which a parcel of land is expropriated is abandoned,
the owner shall not be entitled to recover or repurchase it as a matter of right, unless such recovery or
repurchase is expressed in or irresistibly deducible from the condemnation judgment. The SC held that
the decision in Civil Case No. R-1881 enjoined MCIAA, as a condition of approving expropriation, to allow
recovery or repurchase upon abandonment of the Lahug airport project. In effect, the government
merely held the properties condemned in trust until the proposed public use or purpose for which the
lots were condemned was actually consummated by the government. Since the government failed to
perform the obligation that is the basis of the transfer of the property, then the lot owners can demand
the reconveyance of their old properties after the payment of the condemnation price. A condemnor
should commit to use the property pursuant to the purpose stated in the petition for expropriation,
failing which it should file another petition for the new purpose. If not, then it behooves the condemnor
to return the said property to its private owner, if the latter so desires. The government cannot plausibly
keep the property it expropriated in any manner it pleases and, in the process, dishonor the judgment of
expropriation. Anunciacion Vda. De Ouano, et al. v. Republic of the Philippines, et al./Mactan-Cebu
International Airport [MCIAA] v. Ricardo L. Inocian, in his personal capacity and as Attorney-in-Fact of
Olympia E. Esteves, et al. and Aletha Suico Magat in her personal capacity and as Attorney-in-Fact of
Philip M. Suico, et al. G.R. Nos. 168770 & 168812, February 9, 2011.
Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 124795 December 10, 2008

FORFOM DEVELOPMENT CORPORATION, petitioner,

vs.

PHILIPPINE NATIONAL RAILWAYS, respondent.

DECISION

CHICO-NAZARIO, J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court which seeks to set
aside the Decision1 of the Court of Appeals dated 24 April 1996.

Petitioner Forfom Development Corporation (Forfom) is a domestic corporation duly organized and
existing under the laws of the Philippines with principal office at Cabuyao, Laguna, while respondent
Philippine National Railways (PNR) is a government corporation engaged in proprietary functions with
principal office at the PNR Railway Station, C.M. Recto Avenue, Tutuban, Binondo, Manila.

The facts, stripped of the non-essentials, are as follows:

Forfom is the registered owner of several parcels of land in San Vicente, San Pedro, Laguna under
Transfer Certificates of Title (TCT) Nos. T-34384, T-34386 and 34387, all of the Registry of Deeds of
Laguna. Said parcels of land were originally registered in the name of Felix Limcaoco, predecessor-in-
interest of Forfom, under Original Certificates of Title (OCT) Nos. (0-326) 0-384 and (0-328) 0-386.

In a cabinet meeting held on 1 November 1972, then President Ferdinand E. Marcos approved the
Presidential Commuter Service Project, more commonly known as the Carmona Project of the President.
Per Resolution No. 751 dated 2 November 1972 of the PNR Board of Directors, its General Manager was
authorized to implement the project. The San Pedro-Carmona Commuter Line Project was implemented
with the installation of railroad facilities and appurtenances.

During the construction of said commuter line, several properties owned by private
individuals/corporations were traversed as right-of-way. Among the properties through which the
commuter line passed was a 100,128 square-meter portion owned by Forfom covered by TCT Nos. T-
34384, T-34386 and T-34387.

On 24 August 1990, Forfom filed before the Regional Trial Court (RTC) of Binan, Laguna a complaint2 for
Recovery of Posssession of Real Property and/or Damages. It alleged that PNR, with the aid of military
men, and without its consent and against its will, occupied 100,128 square meters of its property located
in San Pedro, Laguna and installed thereon railroad and railway facilities and appurtenances. It further
alleged that PNR rented out portions of the property to squatters along the railroad tracks. Despite
repeated verbal and written demands for the return of the property or for the payment of its price, PNR
failed to comply. It prayed that PNR be ordered to vacate the property and to cause the eviction of all
shanties and squatters that PNR had taken in as lessees, and that it be restored to the peaceful
occupation and enjoyment thereof. It likewise asked that Forfom be ordered to pay (a) P1,000.00 per
month per hectare from occupation of the property until the same is vacated as rentals plus interest at
24% per annum; (b) P1,600,000.00 as unrealized income from occupation of the property up to the
present plus 12% interest per annum until fully paid; (c) P150,000.00 for actual damages on account of
the destruction of crops and improvements on the property when the occupation of the property
commenced plus 12% interest per annum until fully paid; (d) at least P100,000.00 as exemplary
damages; (e) P100,000.00 plus 15% of the amount and properties to be recovered as attorney's fees; and
(f) costs of the suit.3

In its Amended Answer,4 PNR alleged that, per authority granted by law (Presidential Decree No. 741), it
acquired parcels of land used in the construction of the railway track to Carmona, Cavite. It, however,
denied that the property acquired from Forfom was leased to tenants. It likewise denied that the
acquisition of Forfom's property was made without the consent of Dr. Felix Limcaoco, the former owner
of the property. It stressed that the acquisition of the properties used in the project was done through
negotiations with the respective owners. It asserted that no crop was damaged when it acquired the
property subject of the case. Further, it denied liability for unrealized income, exemplary damages and
attorney's fees.

PNR explained that former President Ferdinand E. Marcos approved what was known to be the Carmona
Project -- a 5.1 kilometer railroad extension line from San Pedro, Laguna to San Jose, Carmona, Cavite to
serve the squatters' resettlement area in said localities. It claimed that it negotiated with the respective
owners of the affected properties and that they were paid just compensation. Dr. Felix Limcaoco, it said,
was not paid because he failed to present the corresponding titles to his properties. It claimed that the
right to and just compensation for the subject property was the declared fair market value at the time of
the taking which was P0.60 per square meter. It disclosed that in a meeting with the representatives of
Dr. Limcaoco, the price agreed upon was P1.25 per square meter, the amount the adjoining owners was
paid. It prayed that the instant complaint be dismissed, and that the owner of the properties involved be
compelled to accept the amount of P1.25 per square meter as price for the properties.

In an Order dated 29 October 1990, the pre-trial conference on the case was set.5 On 13 March 1991, for
failure of the parties to reach any agreement, pre-trial was terminated and trial of the case scheduled.6
Thereafter, trial on the merits ensued.

The following witnesses testified for Forfom: (1) Leon Capati; (2) Marites Dimaculangan; (3) Marilene L.
de Guzman; (4) Gavino Rosas de Claro; and (5) Jose Elazegui.

Mr. Leon Capati,7 employee of Forfom, testified that he knew Dr. Felix Limcaoco, Sr. because he worked
for him since 1951 until his death. He knew Forfom Development Corporation to be a corporation
formed by the children of Dr. Limcaoco and owner of the properties left behind by said doctor. He said he
worked as overseer in Hacienda Limcaoco in San Pedro, Laguna owned by Dr. Limcaoco. Said hacienda
was converted to the Olympia Complex Subdivision now owned by Forfom. Being a worker of Forfom, he
disclosed that in 1972, the PNR forcibly took portions of the property of Forfom. Armed men installed
railroads and even used bulldozers which caused the destruction of around eleven hectares of sugar
land. Since 1972, he said PNR used the property for its benefit and even leased part of it to people living
near the railroad. At that time, he claimed that the value of sugarcane was P200.00 per piko and that the
plantation harvested sixty (60) tons annually worth P224,000.00. In all, from 1972 to 1985, he claimed
Forfom lost P2,917,200.00 in ruined sugar, unrealized harvest, excluding unrealized harvest for nine
mango trees which yielded 60 kaings per tree per harvest.

Ms. Marites Dimaculangan,8 an officer of Forfom, corroborated the testimony of Mr. Leon Capati. She
presented documents9 showing that Hacienda Limcaoco was previously owned by Dr. Felix Limcaoco,
then the ownership was transferred to Forfom. As proof that Hacienda Limcaoco was converted into a
low-cost housing subdivision known as the Olympia Complex Subdivision, she presented permits from
the Human Settlements Regulatory Commission and from the Municipality of San Pedro.10 She also
adduced in evidence several letters11 allegedly showing that PNR occupied the property owned by the
Limcaocos. As a result, around eleven hectares of the sugar cane plantation were destroyed.12 From
1972 to 1985, she claimed that part of the property taken by PNR was leased to squatters beside the
railroad tracks. She added that Forfom incurred a loss totaling P2,917,200.00. She claimed that the
current price of land contiguous to the parcels taken by PNR was P1,000.00 per square meter.

Ms. Marilene L. De Guzman,13 Executive Vice-President of Forfom and daughter of the Late Dr. Felix
Limcaoco, corroborated the testimonies of Mr. Capati and Ms. Dimaculangan. She disclosed that his
father died on 25 March 1973. She learned from her father and from Mr. Leon Capati that when the
armed men took a portion of their property, the armed men did not show any court order or authority
from any agency of the government. The armed men used bulldozers destroying 11 hectares of
sugarcane and some mango trees. She said those taken over were used as railroad tracks and a portion
beside the tracks were being leased to squatters. She revealed that the present fair market value of land
at Olympia Complex is P1,400.00 per square meter.14 If the land is not developed, same can be sold for
P800.00 per square meter. She said from the time their property was taken over by PNR, her family has
been writing to PNR regarding compensation for their land.15

Ms. De Guzman said the property was still in the name of Dr. Felix Limcaoco, Sr. and Mrs. Olympia
Limcaoco when the PNR took over a portion of their properties. She said she was not informed by Mr.
Capati that the PNR took the said property over pursuant to a Presidential Mandate in order to provide
transportation for relocated squatters. She explained that her father and Mr. Capati were not advised to
harvest their crops and were surprised by the taking over of the land.

Mr. Gavino Rosas de Claro,16 Land Register Examiner of the Register of Deeds of Calamba, Laguna,
testified as representative of the Register of Deeds. He brought in Court the originals of TCT Nos. T-
3438417 and T-34386,18 both in the name of Forfom Development Corporation and OCT Nos. (O-326) O-
38419 and (O-328) O-386, both in the name of Dr. Felix Limcaoco, Sr.20 Thereafter, photocopies thereof
were compared with the originals which were found to be faithful reproductions of the same.
Jose Elazegui,21 Supervisor, Southern Tagalog Facoma, Inc. was presented to show the production of
sugar and molasses on the property of Forfom. He presented duplicate original copies of Tuos ng inaning
Tubo for the years 1984-1985, 1985-1986, 1986-1987 and 1987-1988.22 The documents showed the
production (average yield per area per picul) in other properties owned by Forfom other than the
properties subject matter of this case.

For the defendant, Mrs. Edna Ramos, Department Manager of the Real Estate Department of the PNR,
took the stand.23 She testified that she was familiar with the acquisition by the PNR of the right of way
for the San Pedro-Carmona Commuter Line. It was acquired and established by Presidential Mandate
and pursuant to the authority of the PNR to expropriate under its charter (Presidential Decree No.
741).24 She explained that President Ferdinand E. Marcos authorized the PNR to acquire said right of
way in a Cabinet Meeting on 1 November 1972 as evidenced by an excerpt of the minutes of the
meeting of the PNR Board of Directors on Resolution No. 751.25 The right of way was acquired to
provide a cheap, efficient and safe means of transportation to the squatters who were relocated in
Cavite. The commuter line, she said, was primarily for service rather than profit. As shown by the
letter26 dated 30 April 1974 of Nicanor T. Jimenez, former General Manager of the PNR, to Mrs. Olympia
Hemedes Vda. de Limcaoco, the acquisition of the right of way was with the knowledge and consent of
Dr. Felix Limcaoco, Sr.

Mrs. Ramos disclosed that the total area acquired by the PNR for the San Pedro-Carmona Commuter
Line was 15.7446 hectares or sixteen (16) lots in all owned by seven (7) private landowners and three (3)
corporations. Among the private landowners were Isabel Oliver, Leoncia Blanco, Catalina Sanchez, Tomas
Oliver, Alejandro Oliver and Antonio Sibulo. Per record of PNR, they were paid P1.25 per square meter
for their lands. They executed Absolute Deeds of Sale in favor of the PNR, as a result of which, titles to
the lands were transferred to PNR.27 The remaining 9 lots belonging to the three private corporations -
Forfom Development Corporation, Alviar Development Manufacturing & Trading Supply Corp. and Life
Realty Development Corporation - were not paid for because these corporations were not able to
present their respective titles, which had been used as loan collaterals in the Philippine National Bank
and the Government Service Insurance System.28 The unit price per square meter, which the negotiating
panel of the PNR and the representatives of the three corporations was considering then, was P1.25. In a
letter dated 3 October 1975, Mr. Felix Limcaoco, Jr. of Forfom was asking for P12.00 per square meter for
their land and P150,000.00 for damaged sugar crops and mango trees.29 She likewise said she had the
minutes of the conference between Mr. Limcaoco and the PNR Chief Construction Engineer held at the
PNR General Manager's Office on 24 July 1979.30
Mrs. Ramos clarified that as a matter of policy, PNR employees and other persons were not allowed to
settle on the PNR's right of way. Squatting along the right of way had never been encouraged. To prevent
its proliferation, special contracts were entered into with selected parties under strict conditions to
vacate the property leased upon notice. She explained that the leasing of PNR's right of way was an
incidental power and was in response to the government's social housing project.

In its decision dated 29 October 1992, the trial court ruled generally in favor of plaintiff, the dispositive
portion reading:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff and against
defendant ordering the latter to pay the former the following:

1. Just compensation of the subject real properties consisting of 100,128 square meters and covered by
TCT Nos. T-34387, T-34384 and T-34386 at P10.00 per square meter, with legal interest from the time of
actual taking of plaintiff's real properties until payment is made by the defendant;

2. The amount of P4,480,000.00 as unearned income of plaintiff from 1972 up to the current year, and
thereafter, the amount of P224,000 yearly, with legal interest until payment is made;

3. Actual damages in the amount of P150,000 corresponding to sugarcane crops and mango trees
destroyed or damaged as a result of the unlawful taking of plaintiff's real properties, with legal interest
until payment is made;

4. The amount of P100,000 as and for attorney's fees;

5. The amount of P150,000 for litigation expenses plus the costs of this suit.

Plaintiff's claim for recovery of possession and the other prayers in the complaint are hereby dismissed
for want of merit.31
The trial court found that the properties of Forfom were taken by PNR without due process of law and
without just compensation. Although the power of eminent domain was not exercised in accordance
with law, and PNR occupied petitioner's properties without previous condemnation proceedings and
payment of just compensation, the RTC ruled that, by its acquiescence, Forfom was estopped from
recovering the properties subject of this case. As to its right to compensation and damages, it said that
the same could not be denied. The trial court declared that P10.00 per square meter was the fair and
equitable market value of the real properties at the time of the taking thereof.

Not contented with the decision, both parties appealed to the Court of Appeals by filing their respective
Notices of Appeal.32 PNR questioned the trial court's ruling fixing the just compensation at P10.00 per
square meter and not the declared value of P0.60 per square meter or the fair market value of P1.25
paid to an adjacent owner. It likewise questioned the award of actual damages and unearned income to
Forfom.

On 24 April 1996, the appellate court disposed of the case as follows:

WHEEFORE, the decision appealed from is hereby AFFIRMED insofar as (1) it denies plaintiff's claim for
recovery of possession and (2) it awards just compensation at the rate of P10.00 per square meter which
defendant must pay to plaintiff, but with legal rate of interest thereon hereby specifically fixed at six (6)
percent per annum starting from January of 1973 until full payment is made. However, the appealed
decision is MODIFIED in the sense that plaintiff's claim for damages is DENIED for lack of merit.

No pronouncement as to costs.33

Except for the deletion of the award of damages, attorney's fees and litigation expenses, the appellate
court agreed the with trial court. We quote:

There is no dispute that defendant neither commenced an expropriation proceedings nor paid just
compensation prior to its occupation and construction of railroad lines on the subject property.
Nevertheless, plaintiff's prayer to recover the property cannot be granted. Immediately after the
occupation, or within a reasonable time thereafter, there is no showing that the same was opposed or
questioned by plaintiff or its representatives on the ground that defendant never filed an expropriation
proceedings and that no just compensation was ever paid. Neither is there a showing that plaintiff
sought to recover the property because the taking was done forcibly with the aid of armed men. Instead,
and this is borne out by certain communications between the parties through their respective officers or
representatives, what plaintiff actually did was to negotiate with defendant for the purpose of fixing the
amount which the latter should pay as just compensation and, if there be any, damages. x x x.

xxxx

Clearly, a continuing negotiation between the parties took place for the purpose only of fixing the
amount of just compensation and not because plaintiff wanted to recover the subject property. Thus, the
failure of defendant to first file an expropriation proceedings and pay just compensation is now beside
the point. And even if the contention of plaintiff that defendant used force is true, the former can no
longer complain at this time. What controls now is the fact that by its own act of negotiating with
defendant for the payment of just compensation, plaintiff had in effect made representations that it
acquiesced to the taking of its property by defendant. We therefore agree with the lower court that
plaintiff, by its acquiescence, waived its right, and is thus estopped, from recovering the subject property
or from challenging any supposed irregularity in its acquisition.

xxxx

Plaintiff's right to recover just compensation, however, remains. On this matter, we agree with the
P10.00 per square meter valuation fixed by the trial court x x x.

xxxx

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

Still unsatisfied with the decision, Forfom filed the instant petition for review on certiorari raising the
following issues:
A. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER CANNOT RECOVER
POSSESSION OF ITS LAND DESPITE THE ADMISSION THAT IT WAS FORCIBLY TAKEN (DURING THE
MARTIAL LAW ERA) WITHOUT ANY EXPROPRIATION PROCEEDING OR PAYMENT OF COMPENSATION
SIMPLY BECAUSE PETITIONER DID NOT OPPOSE THE ARMED AND FORCIBLE TAKING THEREOF:

B. THE HONORABLE COURT OF APPEALS EMPLOYED DOUBLE STANDARD OF JUSTICE IN ADMITTING

HEARSAY EVIDENCE OF PNR YET REJECTING THAT OF PETITIONER WHICH IS PROPERLY IDENTIFIED WITH
ABUNDANT CROSS EXAMINATION CONDUCTED ON THE BASIS OF PETITIONER'S REJECTED EVIDENCE:

C. THE HONORABLE COURT OF APPEALS ERRED GRIEVOUSLY IN HOLDING THAT IN THIS ACTION "THE
FAILURE OF DEFENDANT TO FIRST FILE AN EXPROPRIATION PROCEEDINGS AND PAY JUST
COMPENSATION (FOR THE PROPERTY OF PETITIONER FORCIBLY TAKEN BY PRIVATE RESPONDENT) IS
(NOW) BESIDE THE POINT."

D. THE HONORABLE COURT OF APPEALS ERRED IN AGREEING WITH THE RTC IN FIXING THE
COMPENSATION FOR THE LAND FORCIBLY TAKEN BY PNR AT A RIDICULOUS, OUTRAGEOUS, AND ABSURD
PRICE OF P10.00 PER SQUARE METER DESPITE THE EVIDENCE SHOWING THAT THE PRICE OF LAND IN
THE ADJACENT AND SURROUNDING AREAS IS MORE THAN P1,500.00 PER SQUARE METER:

E. THE HONORABLE COURT OF APPEALS ERRED IN IGNORING THE EVIDENCE ESTABLISHING THE RIGHT
OF THE PETITIONER TO BE AWARDED ACTUAL OR COMPENSATORY DAMAGES, ATTORNEY'S FEES, AND
UNREALIZED INCOME:

F. THE HONORABLE COURT OF APPEALS ERRED IN AND ABUSED ITS DISCRETION IN ADOPTING DOUBLE
STANDARD IN ITS EVALUATION OF THE EVIDENCE AND IN ADMITTING PNR's PATENTLY HEARSAY
EVIDENCE WHILE REJECTING PETITIONER'S RELEVANT - MATERIAL AND ADMISSIBLE EVIDENCE:

G. THE HONORABLE COURT OF APPEALS DEVIATED FROM ESTABLISHED JURISPRUDENCE IN

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

H. THE HONORABLE COURT OF APPEALS APPARENTLY SUPPRESSED THE EVIDENCE THAT PRIVATE
RESPONDENT PNR APART FROM FORCIBLY TAKING THE LAND OF PETITIONER WITH THE EMPLOYMENT
OF ARMED MEN, RENTED OUT PORTIONS OF SAID LAND TO ITS TENANTS WHO PAID HEFTY RENTALS FOR
THE USE OF THE SAME AS RESIDENTIAL LOTS (AND NOT FOR PUBLIC PURPOSES).35

On the other hand, PNR accepted the decision of the Court of Appeals and no longer appealed.

The primary question to be resolved is: Can petitioner Forfom recover possession of its property because
respondent PNR failed to file any expropriation case and to pay just compensation?

The power of eminent domain is an inherent and indispensable power of the State. Being inherent, the
power need not be specifically conferred on the government by the Constitution.36 Section 9, Article III
states that private property shall not be taken for public use without just compensation. The
constitutional restraints are public use and just compensation.37

The fundamental power of eminent domain is exercised by the Legislature. It may be delegated by
Congress to the local governments, other public entities and public utilities.38 In the case at bar, PNR,
under its charter,39 has the power of expropriation.

A number of circumstances must be present in the taking of property for purposes of eminent domain:
(1) the expropriator must enter a private property; (2) the entrance into private property must be for
more than a momentary period; (3) the entry into the property should be under warrant or color of legal
authority; (4) the property must be devoted to a public purpose or otherwise informally, appropriately or
injuriously affected; and (5) the utilization of the property for public use must be in such a way as to oust
the owner and deprive him of all beneficial enjoyment of the property.40

In the case at bar, the expropriator (PNR) entered the property of Forfom, a private land. The entrance
into Forfom's property was permanent, not for a fleeting or brief period. PNR has been in control,
possession and enjoyment of the subject land since December 1972 or January 1973. PNR's entry into
the property of Forfom was with the approval of then President Marcos and with the authorization of
the PNR's Board of Directors. The property of Forfom measuring around eleven hectares was devoted to
public use - railroad tracks, facilities and appurtenances for use of the Carmona Commuter Service. With
the entrance of PNR into the property, Forfom was deprived of material and beneficial use and
enjoyment of the property. It is clear from the foregoing that there was a taking of property within the
constitutional sense.
Forfom argues that the property taken from it should be returned because there was neither
expropriation case filed by PNR nor just compensation paid for the same.

It can be gathered from the records that Forfom accepted the fact of the taking of its land when it
negotiated with PNR for just compensation, knowing fully well that there was no expropriation case filed
at all. Forfom's inaction for almost eighteen (18) years to question the absence of expropriation
proceedings and its discussions with PNR as to how much petitioner shall be paid for its land preclude it
from questioning the PNR's power to expropriate or the public purpose for which the power was
exercised. In other words, it has waived its right and is estopped from assailing the takeover of its land
on the ground that there was no case for expropriation that was commenced by PNR.

In Manila Railroad Co. v. Paredes,41 the first case in this jurisdiction in which there was an attempt to
compel a public service corporation, endowed with the power of eminent domain, to vacate the
property it had occupied without first acquiring title thereto by amicable purchase or expropriation
proceedings, we said:

x x x whether the railroad company has the capacity to acquire the land in dispute by virtue of its
delegated power of eminent domain, and, if so, whether the company occupied the land with the
express or implied consent or acquiescence of the owner. If these questions of fact be decided in the
affirmative, it is uniformly held that an action of ejectment or trespass or injunction will not lie against
the railroad company, but only an action for damages, that is, recovery of the value of the land taken,
and the consequential damages, if any. The primary reason for thus denying to the owner the remedies
usually afforded to him against usurpers is the irremedial injury which would result to the railroad
company and to the public in general. It will readily be seen that the interruption of the transportation
service at any point on the right of way impedes the entire service of the company and causes loss and
inconvenience to all passengers and shippers using the line. Under these circumstances, public policy, if
not public necessity, demands that the owner of the land be denied the ordinarily remedies of ejectment
and injunction. The fact that the railroad company has the capacity to eventually acquire the land by
expropriation proceedings undoubtedly assists in coming to the conclusion that the property owner has
no right to the remedies of ejectment or injunction. There is also something akin to equitable estoppel in
the conduct of one who stands idly by and watches the construction of the railroad without protest. x x
x. But the real strength of the rule lies in the fact that it is against public policy to permit a property
owner, under such circumstances, to interfere with the service rendered to the public by the railroad
company. x x x. (I)f a landowner, knowing that a railroad company has entered upon his land and is
engaged in constructing its road without having complied with a statute requiring either payment by
agreement or proceedings to condemn, remains inactive and permits it to go on and expend large sums
in the work, he is estopped from maintaining either trespass or ejectment for the entry, and will be
regarded as having acquiesced therein, and will be restricted to a suit for damages.

Further, in De Ynchausti v. Manila Electric Railroad & Light Co.,42 we ruled:

The owner of land, who stands by, without objection, and sees a public railroad constructed over it, can
not, after the road is completed, or large expenditures have been made thereon upon the faith of his
apparent acquiescence, reclaim the land, or enjoin its use by the railroad company. In such a case there
can only remain to the owner a right of compensation.

xxxx

One who permits a railroad company to occupy and use his land and construct its roads thereon without
remonstrance or complaint, cannot afterwards reclaim it free from the servitude he has permitted to be
imposed upon it. His acquiescence in the company's taking possession and constructing its works under
circumstances which made imperative his resistance, if he ever intended to set up illegality, will be
considered a waiver. But while this presumed waiver is a bar to his action to dispossess the company, he
is not deprived of his action for damages for the value of the land, of for injuries done him by the
construction or operation of the road.

xxxx

We conclude that x x x the complaint in this action praying for possession and for damages for the
alleged unlawful detention of the land in question, should be dismissed x x x but that such dismissal x x x
should be without prejudice to the right of the plaintiff to institute the appropriate proceedings to
recover the value of the lands actually taken, or to compel the railroad corporation to take the necessary
steps to secure the condemnation of the land and to pay the amount of the compensation and damages
assessed in the condemnation proceedings.

In Ansaldo v. Tantuico, Jr.,43 a case involving the takeover by the Government of two private lots to be
used for the widening of a road without the benefit of an action for expropriation or agreement with its
owners, we held that the owners therein, having been silent for more than two decades, were deemed
to have consented to such taking -- although they knew that there had been no expropriation case
commenced -- and therefore had no reason to impugn the existence of the power to expropriate or the
public purpose for which that power had been exercised. In said case, we directed the expropriator to
forthwith institute the appropriate expropriation action over the land, so that just compensation due the
owners may be determined in accordance with the Rules of Court.

From the afore-cited cases, it is clear that recovery of possession of the property by the landowner can
no longer be allowed on the grounds of estoppel and, more importantly, of public policy which imposes
upon the public utility the obligation to continue its services to the public. The non-filing of the case for
expropriation will not necessarily lead to the return of the property to the landowner. What is left to the
landowner is the right of compensation.

Forfom argues that the recovery of its property is justified because PNR failed to pay just compensation
from the time its property was taken. We do not agree. It is settled that non-payment of just
compensation does not entitle the private landowners to recover possession of their expropriated lot.44

Forfom contends that since there is enormous proof that portions of the property taken by PNR were
being leased to third parties there was enough justification for the Court of Appeals to order the return
to petitioner of the leased portions as well as the rents received therefrom.

We find such contention to be untenable. As ruled above, Forfom's inaction on and acquiescence to the
taking of its land without any expropriation case being filed, and its continued negotiation with PNR on
just compensation for the land, prevent him from raising any issues regarding the power and right of the
PNR to expropriate and the public purpose for which the right was exercised. The only issue that remains
is just compensation. Having no right to further question PNR's act of taking over and the corresponding
public purpose of the condemnation, Forfom cannot now object to PNR's lease of portions of the land to
third parties. The leasing out of portions of the property is already a matter between PNR and third
persons in which Forfom can no longer participate. The same no longer has any bearing on the issue of
just compensation.

Forfom further avers that the leasing out of portions of the property to third persons is beyond the
scope of public use and thus should be returned to it. We do not agree. The public-use requisite for the
valid exercise of the power of eminent domain is a flexible and evolving concept influenced by changing
conditions. At present, it may not be amiss to state that whatever is beneficially employed for the
general welfare satisfies the requirement of public use.45 The term "public use" has now been held to be
synonymous with "public interest," "public benefit," "public welfare," and "public convenience."46 It
includes the broader notion of indirect public benefit or advantage.47 Whatever may be beneficially
employed for the general welfare satisfies the requirement of public use.48

In the instant case, Mrs. Ramos of the PNR explains that the leasing of PNR's right of way is an incidental
power and is in response to the government's social housing project. She said that to prevent the
proliferation of squatting along the right of way, special contracts were entered into with selected parties
under strict conditions to vacate the property leased upon notice. To the court, such purpose is indeed
public, for it addresses the shortage in housing, which is a matter of concern for the state, as it directly
affects public health, safety, environment and the general welfare.

Forfom claims it was denied due process when its property was forcibly taken without due compensation
for it. Forfom is not being denied due process. It has been given its day in court. The fact that its cause is
being heard by this Court is evidence that it is not being denied due process.

We now go to the issue of just compensation.

Under Section 5 of the 1997 Rules of Civil Procedure, the court shall appoint not more than three
competent and disinterested persons as commissioners to ascertain and report to the court the just
compensation for the property. Though the ascertainment of just compensation is a judicial
prerogative,49 the appointment of commissioners to ascertain just compensation for the property
sought to be taken is a mandatory requirement in expropriation cases. While it is true that the findings
of commissioners may be disregarded and the trial court may substitute its own estimate of the value, it
may only do so for valid reasons; that is, where the commissioners have applied illegal principles to the
evidence submitted to them, where they have disregarded a clear preponderance of evidence, or where
the amount allowed is either grossly inadequate or excessive. Thus, "trial with the aid of the
commissioners is a substantial right that may not be done away with capriciously or for no reason at
all."50

In the case before us, the trial court determined just compensation, but not in an expropriation case.
Moreover, there was no appointment of commissioners as mandated by the rules. The appointment of
commissioners is one of the steps involved in expropriation proceedings. What the judge did in this case
was contrary to what the rules prescribe. The judge should not have made a determination of just
compensation without first having appointed the required commissioners who would initially ascertain
and report the just compensation for the property involved. This being the case, we find the valuation
made by the trial court to be ineffectual, not having been made in accordance with the procedure
provided for by the rules.

The next issue to be resolved is the time when just compensation should be fixed. Is it at the time of the
taking or, as Forfom maintains, at the time when the price is actually paid?

Where actual taking was made without the benefit of expropriation proceedings, and the owner sought
recovery of the possession of the property prior to the filing of expropriation proceedings, the Court has
invariably ruled that it is the value of the property at the time of taking that is controlling for purposes of
compensation.51 In the case at bar, the just compensation should be reckoned from the time of taking
which is January 1973. The determination thereof shall be made in the expropriation case to be filed
without delay by the PNR after the appointment of commissioners as required by the rules.

Admittedly, the PNR's occupation of Forfom's property for almost eighteen (18) years entitles the latter
to payment of interest at the legal rate of six (6%) percent on the value of the land at the time of taking
until full payment is made by the PNR.52

For almost 18 years, the PNR has enjoyed possession of the land in question without the benefit of
expropriation proceedings. It is apparent from its actuations that it has no intention of filing any
expropriation case in order to formally place the subject land in its name. All these years, it has given
Forfom the runaround, failing to pay the just compensation it rightly deserves. PNR's uncaring and
indifferent posture must be corrected with the awarding of exemplary damages, attorney's fees and
expenses of litigation. However, since Forfom no longer appealed the deletion by both lower courts of
said prayer for exemplary damages, the same cannot be granted. As to attorney's fees and expenses of
litigation, we find the award thereof to be just and equitable. The amounts of P100,000.00 as attorney's
fees and P50,000.00 as litigation expenses are reasonable under the premises.

As explained above, the prayer for the return of the leased portions, together with the rental received
therefrom, is denied. Unearned income for years after the takeover of the land is likewise denied. Having
turned over the property to PNR, Forfom has no more right to receive any income, if there be any,
derived from the use of the property which is already under the control and possession of PNR.

As to actual damages corresponding to the sugarcane and mango trees that were allegedly destroyed
when PNR entered and took possession of the subject land, we find that the same, being a question of
fact, is better left to be determined by the expropriation court where the PNR will be filing the
expropriation case. Evidence for such claim may be introduced before the condemnation proceedings.53

WHEREFORE, the instant petition is PARTIALLY DENIED insofar as it denies Forfom Development
Corporation's prayer for recovery of possession (in whole or in part) of the subject land, unearned
income, and rentals. The petition is PARTIALLY GRANTED in that attorney's fees and litigation expenses in
the amounts of P100,000.00 and P50,000.00, respectively, are awarded. The Philippine National Railways
is DIRECTED to forthwith institute the appropriate expropriation action over the land in question, so that
just compensation due to its owner may be determined in accordance with the Rules of Court, with
interest at the legal rate of six (6%) percent per annum from the time of taking until full payment is
made. As to the claim for the alleged damaged crops, evidence of the same, if any, may be presented
before the expropriation court. No costs.

SO ORDERED.