G.R. No.

168967

February 12, 2010

CITY OF ILOILO represented by HON. JERRY P. TREAS, 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 persons 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. Factual Antecedents The essential facts are not in dispute. On September 18, 1981, petitioner filed a Complaint 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 Javellanas name under Transfer Certificate of Title (TCT) No. T-44894 (the Subject Property) to be used as a school site for Lapaz High 5 School. Petitioner alleged that the Subject Property was declared for tax purposes in Tax Declaration No. 40080 to have a value of P60.00 per square meter, or a total value of P43,560.00. 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 Answer where he admitted ownership of the Subject Property but denied the petitioners 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 7 no less than P220.00 per square meter. On May 11, 1982, petitioner filed a Motion for Issuance of Writ of Possession, alleging that it had deposited the amount of P40,000.00 with the Philippine National Bank-Iloilo Branch. Petitioner claimed that it was entitled to the 8 immediate possession of the Subject Property, citing Section 1 of Presidential Decree No. 1533, 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 Treasurers Office, stating that 9 said deposit was made. Javellana filed an Opposition to the Motion for the Issuance of Writ of Possession 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 Propertys tax valuation was grossly inadequate. On May 17, 1983, the trial court issued an Order which granted petitioners 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 12 known as Lot Nos. 3497-CC and 3497-DD x x x.
11 10 6 4

Thereafter, a Writ of Possession was issued in petitioners 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 14 respondent of his Amended Answer on April 21, 1984, 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 P40,000.00 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 15 Property. Private 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 Complaint 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, petitioners 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 P15,000.00 per month together with moral, exemplary, and actual damages, as well as attorneys fees.1avvphi1 On May 15, 2003, petitioner filed its Answer, 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 petitioners 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 18 possession (Civil Case No. 03-27571), which motion was granted by the trial court in an Order dated August 26, 19 20 2003. On November 14, 2003, a commission was created to determine the just compensation due to Javellana. 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 21 taking, since petitioners possession of the property was questionable. Before petitioner could file its Comment, 22 the RTC issued an Order dated November 21, 2003 denying the Motion. 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 P254,000.00. 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 23 2001, at the time when the parties were trying to negotiate a settlement. 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
17 16

13

report and have determined the value of the property not at the time it was condemned but at the time the 24 complaint was filed in court. (Emphasis ours) Second Assailed Order 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 original text) Third Assailed Order The Order dated June 15, 2004 among other things stated that parties and counsels must be bound by the Commissioners Report regarding the value of the property not at the time it was condemned but at the time this order was issued. Petitioners Arguments Petitioner is before us claiming that (1) the trial court gravely abused its discretion amounting to lack or excess of jurisdiction in overturning the Order dated May 17, 1983, which was already a final order; and (2) just compensation for the expropriation should be based on the Subject Propertys fair market value either at the time of taking or filing of the complaint. Private Respondents Arguments Private respondent filed his Comment on October 3, 2005, arguing that (1) there was no error of jurisdiction correctible by certiorari; and (2) that the Assailed Orders were interlocutory orders that were subject to amendment and nullification at the discretion of the court. Issues 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 is the correct reckoning point for the determination of just compensation? Our Ruling Expropriation proceedings have two stages. The first phase ends with an order of dismissal, or a determination 32 that the property is to be acquired for a public purpose. Either order will be a final order that may be appealed by 33 34 the aggrieved party. The second phase consists of the determination of just compensation. It ends with an 35 order fixing the amount to be paid to the landowner. Both orders, being final, are appealable. An order of condemnation or dismissal is final, resolving the question of whether or not the plaintiff has properly 36 and legally exercised its power of eminent domain. Once the first order becomes final and no appeal thereto is 37 taken, the authority to expropriate and its public use can no longer be questioned. 1avvphi1 Javellana did not bother to file an appeal from the May 17, 1983 Order which granted petitioners 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 petitioners 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.
31

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 38 property, the just compensation is to be ascertained as of the time of the filing of the complaint. 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 P200,000.00 as exemplary damages. SO ORDERED. REPUBLIC OF THE PHILIPPINES, G.R. No. 185091 REPRESENTED BY THE DEPARTMENT OF EDUCATION DIVISION OF LIPA CITY (FOR PANINSINGIN PRIMARY SCHOOL), Petitioner, Present: CARPIO, J., Chairperson, ABAD, VILLARAMA, JR., ** PEREZ, and MENDOZA, JJ. PRIMO MENDOZA and MARIA LUCERO, Respondents. Promulgated: August 8, 2010 x --------------------------------------------------------------------------------------- x DECISION

- versus -

ABAD, J.:

This case is about the propriety of filing an ejectment suit against the Government for its failure to acquire ownership of a privately owned property that it had long used as a school site and to pay just compensation for it.

The Facts and the Case

Paninsingin Primary School (PPS) is a public school operated by petitioner Republic of the Philippines (the Republic) through the Department of Education. PPS has been using 1,149 square meters of land in Lipa City, Batangas since 1957 for its school. But the property, a portion of Lots 1923 and 1925, were registered in the name of respondents Primo and Maria Mendoza (the Mendozas) under Transfer Certificate of Title (TCT) 11410.
[1]

T-

On March 27, 1962 the Mendozas caused Lots 1923 and 1925 to be consolidated and subdivided into four lots, as follows: Lot 1 292 square meters in favor of Claudia Dimayuga Lot 2 292 square meters in favor of the Mendozas Lot 3 543 square meters in favor of Gervacio Ronquillo; and [2] Lot 4 1,149 square meters in favor of the City Government of Lipa

As a result of subdivision, the Register of Deeds partially cancelled TCT T-11410 and issued new titles for Lots 1 and 3 in favor of Dimayuga and Ronquillo, respectively. Lot 2 remained in the name of the Mendozas but no new title was issued in the name of the City Government of Lipa for Lot 4. possession of the property.
[3]

Meantime, PPS remained in

The Republic claimed that, while no title was issued in the name of the City Government of Lipa, the Mendozas had relinquished to it their right over the school lot as evidenced by the consolidation and subdivision plan. Further, the property had long been tax-declared in the name of the City Government and PPS built significant, permanent improvements on the same. These improvements had also been tax-declared.
[4]

The Mendozas claim, on the other hand, that although PPS sought permission from them to use the property as a school site, they never relinquished their right to it. They allowed PPS to occupy the property since they had no need for it at that time. Thus, it has remained registered in their name under the original title, TCT T-11410, which had only been partially cancelled.
[5]

On November 6, 1998 the Mendozas wrote PPS, demanding that it vacate the disputed property.

When

PPS declined to do so, on January 12, 1999 the Mendozas filed a complaint with the Municipal Trial Court in Cities (MTCC) of Lipa City in Civil Case 0002-99 against PPS for unlawful detainer with application for temporary restraining order and writ of preliminary injunction.
[6]

On July 13, 1999 the MTCC rendered a decision, dismissing the complaint on ground of the Republics immunity from suit.
[7]

The Mendozas appealed to the Regional Trial Court (RTC) of Lipa City which ruled that the
[8]

Republics consent was not necessary since the action before the MTCC was not against it.

In light of the RTCs decision, the Mendozas filed with the MTCC a motion to render judgment in the case before it.
[9]

The MTCC denied the motion, however, saying that jurisdiction over the case had passed to the RTC
[10]

upon appeal.

Later, the RTC remanded the case back to the MTCC,

[12]

[11]

which then dismissed the case for

insufficiency of evidence.

Consequently, the Mendozas once again appealed to the RTC in Civil Case 2001-0236.

On June 27, 2006 the RTC found in favor of the Mendozas and ordered PPS to vacate the property. It held that the Mendozas had the better right of possession since they were its registered owners. PPS, on the other hand, could not produce any document to prove the transfer of ownership of the land in its favor. for reconsideration, but the RTC denied it.
[13]

PPS moved

The Republic, through the Office of the Solicitor General (OSG), appealed the RTC decision to the Court of Appeals (CA) in CA-G.R. SP 96604 on the grounds that: (1) the Mendozas were barred by laches from recovering possession of the school lot; (2) sufficient evidence showed that the Mendozas relinquished ownership of the subject lot to the City Government of Lipa City for use as school; and (3) Lot 4, Pcs-5019 has long been declared in the name of the City Government since 1957 for taxation purposes.
[14]

In a decision dated February 26, 2008, the CA affirmed the RTC decision.

[15]

Upholding the Torrens

system, it emphasized the indefeasibility of the Mendozas registered title and the imprescriptible nature of their right to eject any person occupying the property. The CA held that, this being the case, the Republics possession of the property through PPS should be deemed merely a tolerated one that could not ripen into ownership.

The CA also rejected the Republics claim of ownership since it presented no documentary evidence to prove the transfer of the property in favor of the government. Moreover, even assuming that the Mendozas relinquished their right to the property in 1957 in the governments favor, the latter never took steps to have the title to the property issued in its name or have its right as owner annotated on the Mendozas title. The CA held that, by its omissions, the Republic may be held in estoppel to claim that theMendozas were barred by laches from bringing its action.

With the denial of its motion for reconsideration, the Republic has taken recourse to this Court via petition for review on certiorari under Rule 45.

The Issue Presented

The issue in this case is whether or not the CA erred in holding that the Mendozas were entitled to evict the Republic from the subject property that it had used for a public school.

The Courts Ruling

A decree of registration is conclusive upon all persons, including the Government of the Republic and all its branches, whether or not mentioned by name in the application for registration or its notice. the land, once registered, is imprescriptible. and notorious possession.
[18] [17] [16]

Indeed, title to

No one may acquire it from the registered owner by adverse, open,

Thus, to a registered owner under the Torrens system, the right to recover

possession of the registered property is equally imprescriptible since possession is a mere consequence of ownership.

Here, the existence and genuineness of the Mendozas title over the property has not been disputed. While the consolidation and subdivision plan of Lots 1923 and 1925 shows that a 1,149 square meter lot had been designated to the City Government, the Republic itself admits that no new title was issued to it or to any of its subdivisions for the portion that PPS had been occupying since 1957.
[19]

That the City Government of Lipa tax-declared the property and its improvements in its name cannot defeat the Mendozas title. This Court has allowed tax declarations to stand as proof of ownership only in the absence of a certificate of title.
[20] [21]

Otherwise, they have little evidentiary weight as proof of ownership.

The CA erred, however, in ordering the eviction of PPS from the property that it had held as government school site for more than 50 years. The evidence on record shows that the Mendozas intended to cede the property to the City Government of Lipa permanently. In fact, they allowed the city to declare the property in its name for tax purposes. And when they sought in 1962 to have the bigger lot subdivided into four, the Mendozas earmarked Lot 4, containing 1,149 square meters, for the City Government of Lipa. Under the circumstances, it may be assumed that the Mendozas agreed to transfer ownership of the land to the government, whether to the City Government of Lipa or to the Republic, way back but never got around to do so and the Republic itself altogether forgot about it. Consequently, the Republic should be deemed entitled to possession pending the Mendozas formal transfer of ownership to it upon payment of just compensation.

The Court holds that, where the owner agrees voluntarily to the taking of his property by the government for public use, he thereby waives his right to the institution of a formal expropriation proceeding covering such property. Further, as the Court also held in Eusebio v. Luis,
[22]

the failure for a long time of the owner to question

the lack of expropriation proceedings covering a property that the government had taken constitutes a waiver of his right to gain back possession. The Mendozas remedy is an action for the payment of just compensation, not ejectment.
[23]

In Republic of the Philippines v. Court of Appeals,

the Court affirmed the RTCs power to award just

compensation even in the absence of a proper expropriation proceeding. It held that the RTC can determine just compensation based on the evidence presented before it in an ordinary civil action for recovery of possession of property or its value and damages. As to the time when just compensation should be fixed, it is settled that where property was taken without the benefit of expropriation proceedings and its owner filed an action for recovery of possession before the commencement of expropriation proceedings, it is the value of the property at the time of taking that is controlling.
[24]

Since the MTCC did not have jurisdiction either to evict the Republic from the land it had taken for public use or to hear and adjudicate the Mendozas right to just compensation for it, the CA should have ordered the complaint for unlawful detainer dismissed without prejudice to their filing a proper action for recovery of such compensation.

WHEREFORE, the Court partially GRANTS the petition, REVERSES the February 26, 2008 decision and the October 20, 2008 resolution of the Court of Appeals in CA-G.R. 96604, and ORDERS the dismissal of respondents Primo and Maria Mendozas action for eviction before the Municipal Trial Court in Cities of Lipa City in Civil Case 0002-99 without prejudice to their filing an action for payment of just compensation against the Republic of the Philippines or, when appropriate, against the City of Lipa.

LAND BANK OF THE PHILIPPINES, Petitioner,

G.R. No. 170685 Present: CORONA, C. J., Chairperson, CARPIO MORALES,

- versus -

VELASCO, JR., DEL CASTILLO, and PEREZ, JJ.

ENRIQUE LIVIOCO,

Promulgated: Respondent. September 22, 2010 x--------------------------------------------------------x

DECISION

DEL CASTILLO, J.

When the evidence received by the trial court are irrelevant to the issue of just compensation and in total disregard of the requirements provided under Section 17 of the Comprehensive Agrarian Reform Law, the Court is left with no evidence on record that could aid in the proper resolution of the case. While remand is frowned upon for obviating the speedy dispensation of justice, it becomes necessary to ensure compliance with the law and to give everyone the landowner, the farmers, and the State their due.
[1]

This is a Petition for Review under Rule 45, assailing the August 30, 2005 Decision of the Court of Appeals (CA), as well as its December 5, 2005 Resolution in CA-GR SP No. 83138. The dispositive portion of the assailed Decision reads as follows: WHEREFORE, premises considered, the petition is DENIED. The Decision dated January 29, 2004 and the Order dated March 16, 2004 of the RTC, Branch 56, Angeles City in Civil Case No. 10405 are hereby [3] AFFIRMED.
[2]

Factual Antecedents
[4]

Petitioner Land Bank of the Philippines (LBP) is the government financial institution established to aid in the implementation of the Comprehensive Agrarian Reform Program (CARP) as well as to act as financial intermediary of the Agrarian Reform Fund.
[5]

Respondent Enrique Livioco (Livioco) was the owner of 30.6329 hectares of sugarland located in Dapdap, Mabalacat, Pampanga. Sometime between 1987 and 1988, Livioco offered his sugarland to the Department of Agrarian Reform (DAR) for acquisition under the CARP at P30.00 per square meter, for a total of P9,189,870.00. The voluntary-offer-to-sell (VOS)
[7]

[6]

form he submitted to the DAR indicated that his property is adjacent to residential subdivisions and to an international paper mill.
[9]

[8]

The DAR referred Liviocos offer to the LBP for valuation. Administrative Order No. 17, series of 1989,
[14] [11]

[10]

Following Section 17 of Republic Act (RA) No. 6657 and DAR

[12]

as amended by Administrative Order No. 3, series of 1991,

[13]

the LBP set the

price at P3.21 per square meter or a total of P827,943.48 for 26 hectares. valuation
[15]

Livioco was then promptly informed of the

and that the cash portion of the claim proceeds have been kept in trust pending *his+ submission of the It appears however that Livioco did not act upon the notice given to him by both
[16]

*ownership documentary+ requirements.

government agencies. On September 20, 1991, LBP issued a certification to the Register of Deeds of Pampanga that it has earmarked the amount of P827,943.48 as compensation for Liviocos 26 hectares.
[17]

It was only two years later

that Livioco requested for a reevaluation of the compensation on the ground that its value
[18]

had already appreciated from the time it was first offered for sale. Nuesa on the ground that there was already a perfected sale.
[19]

The request was denied by Regional Director Antonio

The DAR proceeded to take possession of Liviocos property. In 1994, the DAR awarded Certificates of Land Ownership Award (CLOAs) covering Liviocos property to 26 qualified farmer-beneficiaries.
[20]

Livioco filed separate complaints to cancel the CLOAs and to recover his property but the same proved futile. The first case he filed in 1995 was for quieting of title, recovery of possession and damages against the DAR, LBP, Register of Deeds, and the farmer-beneficiaries.
[21] [22] [23]

In its final and executory Decision,

the CA sustained the validity of the CLOAs.

The relevant

portions of the Decision read: What matters most is the fact that the requirements for Compulsory Acquisition of private lands, especially the indispensable ones, to wit: (1) valuation of the subject property by the proper government agency which is the LBP; (2) DARs Notice of Land Valuation to petitioner and; (3) most importantly, the deposit of the amount of land valuation in the name of petitioner after he rejected the said amount, were substantially complied with in the instant case. Considering therefore that there was material and substantial compliance with the requirements for the Compulsory Acquisition of the subject land, the acquisition of the same is indubitably in order and [24] in accordance with law.

Livioco then filed in 1998 a petition for reconveyance before the DAR Regional Office.

[25]

The case eventually reached the

CA, which dismissed the petition on the ground that the validity of the compulsory acquisition had already been decided with finality in the earlier CA case, to wit: As the disputed property was eventually acquired through Compulsory Acquisition, its reconveyance to the petitioners was properly disallowed by the DAR. The certifications by other

government agencies that the land was identified as a resettlement area [are] of no avail as the DAR is vested with primary jurisdiction to determine and adjudicate agrarian reform matters and has exclusive original jurisdiction over all matters involving the implementation of agrarian reform. xxxx Indeed, it is to the best interest of the public that the litigation regarding the reconveyance of the disputed property between the same parties for the same grounds must come to an end, the matter having [been] already fully and fairly adjudicated by the DAR, this Court and the Supreme Court which had [26] declined to disturb the judgment of this Court.

Upon the request of DAR, LBP made two amendments to the valuation. At first, they reduced the acquired area from 30.6329 hectares to 23.9191 hectares. Later, they increased the acquired area to 24.2088 hectares. The remaining 6.4241 hectares of the property was determined as not compensable because this comprised a residential area, a creek, road, and a chapel.
[27]

The total value for 24.2088 hectares was P770,904.54. Livioco was informed on August 8, 2001 that the payment
[28]

was already deposited in cash and agrarian reform bonds and may be withdrawn upon submission of the documentary requirements.

Unable to recover his property but unwilling to accept what he believes was an outrageously low valuation of his property, Livioco finally filed a petition for judicial determination of just compensation against DAR, LBP, and the CLOA holders before Branch 56 of the Regional Trial Court (RTC) of Angeles City on December 18, 2001.
[29]

He maintained that between 1990

and 2000, the area where his property is located has become predominantly residential hence he should be paid his propertys value as such. To prove that his property is now residential, Livioco presented a Certification from the Office of the Municipal Planning and Development Coordinator of the Municipality of Mabalacat that, as per zoning ordinance, Liviocos land is located in an area where the dominant land use is residential. Regulatory Board,
[31] [30]

He also presented certifications from the Housing and Land Use

[33]

the Mt. Pinatubo Commission,

[32]

and the National Housing Authority

that his property is suitable for a

resettlement area or for socialized housing. None of these plans pushed through.

Livioco then presented evidence to prove the value of his property as of 2002. According to his sworn valuation, his property has a market value of P700.00/square meter.
[34]

He also presented the Bureau of Internal Revenue (BIR) zonal value

[35]

for residential lands in Dapdap, as ranging from P150.00 to P200.00/square meter. chief appraiser of the Rural Bank of Mabalacat, who testified
[36]

He then presented Franklin Olay (Olay),

and certified

[37]

that he valued the property at P800.00 per

[38]

square meter, whether or not the property is residential. Olay explained that he arrived at the said value by asking the buyers of adjacent residential properties as to the prevailing selling price in the area.
[40]

There was also a certification from the

[39]

Pinatubo Project Management Office that Liviocos property was valued at P300.00/square meter. compensation be computed at P700.00/square meter.

Livioco prayed that just

Only LBP filed its Answer

[41]

and participated in the trial. It justified the P3.21/square meter valuation of the property on

the ground that it was made pursuant to the guidelines in RA 6657 and DAR Administrative Order No. 3, series of 1991. LBP objected to respondents theory that his property should be valued as a residential land because the same was acquired for agricultural purposes, not for its potential for conversion to other uses. testified
[43] [42]

LBP presented its agrarian affairs specialist who

[44]

that, due to the increase in the acquired area, she was assigned to amend the claim of Livioco. She computed the The only other witness of LBP

total value thereof at P770,904.54, using the DAR Administrative Order No. 3, series of 1991.
[45]

was its lawyer, who explained the legal basis for the DAR administrative orders and the factors for land valuation provided in Section 17 of RA 6657.

Ruling of the Regional Trial Court

Apparently aware that neither party presented relevant evidence for the proper computation of the just compensation, the trial court issued its April 2, 2003 Order requiring the reception of additional evidence: A perusal of the record of this case as well as the evidence adduced by the parties shows that the facts required for the proper computation and/or determination of just compensation for the plaintiffs property i.e., land value of the property in accordance with the Listasaka, capitalized net income, comparable sales and market value pursuant to the corresponding tax declaration, are unavailable and insufficient. WHEREFORE, for the Court to properly determine and fix the just compensation to be accorded to *respondents+ property, the reopening of this case for the purpose of the presentation of additional evidence is hereby ordered. Let the reception of aforesaid additional evidence be set on April 22, 2003 at 8:30 am. xxxx
[46]

Based on the records, the next hearing took place on July 10, 2003 where none of the parties presented additional evidence, whether testimonial or documentary.
[47]

Nevertheless, the trial court proceeded to rule in favor of Livioco:

WHEREFORE, premises considered, the Court hereby renders judgment in favor of the [respondent], Enrique Livioco, and against the Department of Agrarian Reform and the Land Bank of the Philippines with a determination that the just compensation of Liviocos property, consisting of 24.2088 hectares located at Mabalacat, Pampanga is worth Php700.00 per square meter. Defendants Department of Agrarian Reform and Land Bank of the Philippines are, therefore, ordered to pay [respondent] the amount of Php700.00 per square meter multiplied by 24.2088 hectares [48] representing the entire area taken by the government from the plaintiff.

The trial court was of the opinion that Livioco was able to prove the higher valuation of his property with a preponderance of evidence. In contrast, there was a dearth of evidence to support LBPs P3.21 per square meter valuation of the property. Not a single documentary evidence was presented to substantiate its valuation.
[49]

LBP sought a reconsideration

of the adverse decision arguing that the court should have considered the factors

appearing in Section 17. It stressed that in failing to consider the propertys productive capacity (capitalized net income), the court placed the farmer-beneficiaries in a very difficult position. They would not be able to pay off the just compensation for their lands because it is valued way beyond its productive capacity. The same was denied by the trial court.
[50]

Upon respondents motion, the lower court ordered LBP on March 29, 2004 to release as initial cash down payment the amount of P827,943.48, inclusive of legal interest accruing from the time of taking on September 20, 1991 (the date when LBP informed the Register of Deeds that it has earmarked the said amount in favor of Livioco).
[51]

LBP sought a reconsideration of the said order. It clarified that the just compensation deposited by LBP in the account of respondent was only P770,904.54 for the 24.2088 hectares. It likewise asked that the release of the deposit be subject to respondents compliance with the release requirements of the ownership documents. the courts action on the motion as well as to the execution of this order.
[53] [52]

The records are silent as to

Ruling of the Court of Appeals

Petitioner turned to the CA to no avail. The CA affirmed the trial courts decision in toto. First it held that factual findings of the trial courts are entitled to respect. It held that the factors for determining just compensation, set out in Section 17 of RA 6657, were all considered by the trial court in arriving at its decision. It stated that among the relevant evidence considered were Liviocos sworn valuation, tax declarations, zonal value, actual use of the property, and the socio-economic benefits contributed by the government to the property. It likewise noted that the taking of Liviocos property coincided with the Mt. Pinatubo eruption in 1991, which event affected its valuation.
[55] [54]

Pursuant to Section 18(1)(b) of RA 6657, the CA ordered LBP

to pay 30% of the purchase price in cash, while the balance may be paid in government financial instruments negotiable at any time.

A motion for reconsideration 5, 2005.

[56]

was filed on September 29, 2005, which was denied in a Resolution

[57]

dated December

Hence, this petition.

Petitioners arguments

In this Petition before us, LBP assails the CAs assent to the valuation of Liviocos property as a residential land. It maintains that it is not the States policy to purchase residential land. Since the property was acquired under the CARP, it had to be valued as an agricultural land.
[58]

Moreover, the assumption that Liviocos property has a residential use is entirely
[59]

speculative and baseless because none of the government plans to use it as a residential land was carried out.

LBP also assails the Decision of the trial court which valued the land as of 1997 when the rule is that just compensation must be valued at the time of taking, which in this case was in 1988. By considering events that transpired after 1988, the court obviously relied on factors that were not in existence at the time of taking.
[60]

LBP further argues that the trial court should have given more weight to its land valuation because it is the authorized agency recognized by the legislature as having expertise on the matter.
[61]

LBP insists that the Claim Valuation and Processing Form that it presented before the appellate court clearly established the area covered, the land use or crop planted, the average price/hectare and the total value of the subject land. LBP describes this document as clear and convincing evidence of the correctness of its valuation.
[62]

LBP likewise assails the lower courts valuation on the ground that they disregarded the factors set out in Section 17 of RA 6657 for the determination of just compensation. It argues that the factors stated in that provision are exclusive and the courts cannot consider factors that are not included therein.
[63]

Respondents arguments

Respondent argues that by seeking a review of the just compensation, LBP is raising a question of fact, which entails an examination of the probative value of the evidence presented by the parties.
[64]

He points out that LBP is merely reiterating the

[65]

arguments already presented in its motion for reconsideration before the CA, which makes the instant petition dilatory.

Respondent then argues that, with respect to the determination of just compensation, courts are not bound by the findings of administrative agencies such as LBP. Courts are the final authority in this matter. LBPs valuation is only preliminary and it has the duty to prove to the trial courts the veracity of its valuation. In the instant case, the trial court decided based on the evidence presented but found LBPs valuation unsubstantiated. review.
[67] [66]

He then prays for the dismissal of the instant petition for

Issue

Was the compensation for respondents property determined in accordance with law?

Our Ruling

For purposes of just compensation, the fair market value of an expropriated property is determined by its character and its price at the time of taking.
[68]

There are three important concepts in this definition the character of the property, its price,

and the time of actual taking. Did the appellate court properly consider these three concepts when it affirmed the trial courts decision? We find that it did not.

As to the character of the property

The trial and appellate courts valued respondents property as a residential land worth P700.00 per square meter. They considered the use for the property as having changed from agricultural in 1988 (when Livioco offered it to DAR) to residential by 2002 (allegedly due to the eruption of Mt. Pinatubo). Both courts erred in treating the land as residential and accepting the change in the character of the property, without any proof that authorized land conversion had taken place.

In expropriation cases (including cases involving lands for agrarian reform), the propertys character refers to its actual use at the time of taking,
[69]

not its potential uses.

[70]

Respondent himself admitted that his property was agricultural at the time
[71]

he offered it for sale to DAR in 1988. In his letter to the DAR in 1988, respondent manifested that his land is agricultural and suitable for agricultural purposes, although it stood adjacent to residential properties. decided by final judgment in the earlier cases
[72]

Moreover, it has been conclusively

filed by respondent that his property was validly acquired under RA 6657 and

validly distributed to agrarian reform beneficiaries. Since the coverage of RA 6657 only extends to agricultural lands, respondents property should be conclusively treated as an agricultural land and valued as such.

The lower courts erred in ruling that the character or use of the property has changed from agricultural to residential, because there is no allegation or proof that the property was approved for conversion to other uses by DAR. It is the DAR that is mandated by law to evaluate and to approve land use conversions reform coverage. Even reclassification
[74] [73]

so as to prevent fraudulent evasions from agrarian by local government units (LGUs) will not ipso

and plans for expropriation

[75]

facto convert an agricultural property to residential, industrial or commercial. Thus, in the absence of any DAR approval for the conversion of respondents property or an actual expropriation by an LGU, it cannot be said that the character or use of said property changed from agricultural to residential. Respondents property remains agricultural and should be valued as such. Hence, the CA and the trial court had no legal basis for considering the subject propertys value as residential.

Respondents evidence of the value of his land as residential property (which the lower courts found to be preponderant) could, at most, refer to the potential use of the property. While the potential use of an expropriated property is sometimes considered in cases where there is a great improvement in the general vicinity of the expropriated property,
[76]

it should never

control the determination of just compensation (which appears to be what the lower courts have erroneously done). The

potential use of a property should not be the principal criterion for determining just compensation for this will be contrary to the well-settled doctrine that the fair market value of an expropriated property is determined by its character and its price at the time of taking, not its potential uses. If at all, the potential use of the property or its adaptability for conversion in the future is a factor, not the ultimate in determining just compensation.
[77]

The proper approach should have been to value respondents property as an agricultural land, which value may be adjusted in light of the improvements in the Municipality of Mabalacat. Valuing the property as a residential land (as the lower courts have done) is not the correct approach, for reasons explained above. It would also be contrary to the social policy of agrarian reform, which is to free the tillers of the land from the bondage of the soil without delivering them to the new oppression of exorbitant land valuations. Note that in lands acquired under RA 6657, it is the farmer-beneficiaries who will ultimately pay the valuations paid to the former land owners (LBP merely advances the payment).
[78]

If the farmer-beneficiaries

are made to pay for lands valued as residential lands (the valuation for which is substantially higher than the valuation for agricultural lands), it is not unlikely that such farmers, unable to keep up with payment amortizations, will be forced to give up their landholdings in favor of the State or be driven to sell the property to other parties. This may just bring the State right back to the starting line where the landless remain landless and the rich acquire more landholdings from desperate farmers.

The CA also erroneously considered the Mt. Pinatubo eruption in 1991 as converting the use for respondents property from agricultural to residential. We find no basis for the appellate courts conclusion. First, as already explained, there was no conversion order from DAR, or even an application for conversion with DAR, to justify the CAs decision to treat the property as residential. Second, respondent himself testified that his property was not affected by the volcanic ashfall,
[79]

which can only

mean that its nature as an agricultural land was not drastically affected. The Mt. Pinatubo eruption only served to make his property attractive to government agencies as a resettlement area, but none of these government plans panned out; hence, his property remained agricultural. Third, the circumstance that respondents property was surrounded by residential subdivisions was already in existence when he offered it for sale sometime between 1987 and 1988. The VOS form that respondent accomplished described his property as being located adjacent to residential subdivisions. It was not therefore a drastic change caused by volcanic eruption. All together, these circumstances negate the CAs ruling that the subject property should be treated differently because of the natural calamity.

As to the price: Applying Section 17 of RA 6657

[80]

The trial and appellate courts also erred in disregarding Section 17 of RA 6657

in their determination of just

compensation. Section 17 of RA 6657 provides: Sec. 17. Determination of Just Compensation. In determining just compensation, the cost of acquisition of the land, the current value of the like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the assessments 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 non-payment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation.

Jurisprudence is replete with reminders to special agrarian courts to strictly adhere to the factors set out in Section 17 of RA 6657.
[81]

By issuing its April 2, 2003 Order requiring the reception of additional evidence, the trial court revealed its awareness of the importance of adhering to Section 17 of RA 6657. It recognized that the evidence presented by the parties were insufficient to arrive at the just compensation and that the necessary evidence were unavailable for its consideration. For some reason, however, the trial court proceeded to rule on the case without actually receiving such relevant evidence. Instead, the trial court, as affirmed by the CA, ruled in favor of respondent based on preponderance of evidence, regardless of the fact that the evidence presented by respondent were not really relevant to the factors mentioned in section 17 of RA 6657.

The CA ruled that the trial court took into account all the factors in Section 17 of RA 6657. We disagree. Going over the factors in Section 17, it is clear that almost all were not properly considered and some positively ignored. For instance: (a) The cost of acquisition was not even inquired into. It would not have been difficult to require respondent to present evidence of the propertys price when he acquired the same. (b) As to the nature of the property, it has already been explained that the lower courts erroneously treated it as residential rather than agricultural. (c) Also, no heed was given to the current value of like properties. Since respondents property is agricultural in nature, like properties in this case would be agricultural lands, preferably also sugarcane lands, within the municipality or adjacent municipalities. But the chief appraiser of the Rural Bank of Mabalacat testified that he considered the value of adjacentresidential properties, not like properties as required under the law. Comparing respondents agricultural property to residential properties is not what the law envisioned. (d) The factor of actual use and income of the property was also ignored; what was instead considered was the propertys potential use.

Thus, we cannot accept the valuation by the lower courts, as it is not in accordance with Section 17 of RA 6657. It was based on respondents evidence which were irrelevant or off-tangent to the factors laid down by Section 17.

However, we also cannot accept the valuation proffered by LBP for lack of proper substantiation.

LBP argues that its valuation should be given more weight because it is the recognized agency with expertise on the matter, but this same argument had been struck down in Landbank of the Philippines v. Luciano.
[82]

The Court ruled that

LBPs authority is only preliminary and the landowner who disagrees with the LBPs valuation may bring the matter to court for a judicial determination of just compensation. The RTCs, organized as special agrarian courts, are the final adjudicators on the issue of just compensation.
[83]

We have ruled in several cases that in determining just compensation, LBP must substantiate its valuation. In Luciano, the Court held:

LAND BANKs valuation of lands covered by CARL is considered only as an initial determination, which is not conclusive, as it is the RTC, sitting as a SAC, that should make the final determination of just compensation, taking into consideration the factors enumerated in Section 17 of RA 6657 and the applicable DAR regulations. Land Banks valuation had to be substantiated during the hearing before it could be [84] considered sufficient in accordance with Section 17 of RA 6657 and DAR AO No. x x x

It is not enough that the landowner fails to prove a higher valuation for the property; LBP must still prove the correctness of its claims.
[85]

In the absence of such substantiation, the case may have to be remanded for the reception of evidence.

[86]

In the case at bar, we find that LBP did not sufficiently substantiate its valuation. While LBP insists that it strictly followed the statutory provision and its relevant implementing guidelines in arriving at its valuation, the Court notes the lack of evidence to prove the veracity of LBPs claims. LBP merely submitted its computation to the court without any evidence on record, whether documentary or testimonial, that would support the correctness of the values or data used in such computation.

LBP presented two of its officials, but their testimonies were hardly of any use. The first witness only testified that she prepared the documents, computed the value, and had the same approved by her superior. The other testified that LBP follows Section 17 of RA 6657 and the relevant administrative orders in arriving at its valuations. LBP also offered in evidence theClaims Valuation and Processing Form to show the total valuation
[87]

of the property. The effort was however futile

because LBP did not prove the correctness of the values or data contained in the said Form. The computation in the Form may be mathematically correct, but there is no way of knowing if the values or data used in the computation are true. For this Court to accept such valuation would be jumping to a conclusion without anything to support it.
[88]

Remand of the case

Given that both parties failed to adduce evidence of the propertys value as an agricultural land at the time of taking, it is premature for the Court to make a final decision on the matter. The barren records of this case leave us in no position to resolve the dispute. Not being a trier of facts, the Court cannot also receive new evidence from the parties that would aid in the prompt resolution of this case. We are thus constrained to remand the case to the trial court for the reception of evidence and determination of just compensation in accordance with Section 17 of RA 6657.

Guidelines in the remand of the case

The trial court should value the property as an agricultural land.

It is reminded to adhere strictly to the doctrine that just compensation must be valued at the time of taking. The time of taking
[89]

is the time when the landowner was deprived of the use and benefit of his property, such as when title is transferred

to the Republic. In the instant case, the records are silent as to the date when title was transferred to the Republic. However, we can take guidance from the findings contained in the final and executory decision in CA-GR SP No. 45486, which ruled on the validity of the DAR acquisition and is binding on both Livioco and LBP. The said Decision states that between 1993 and 1994, the Republic*,+ through DAR*,+ took possession of the subject portion of *Liviocos+ land and awarded the same to [agrarian reform beneficiaries] who were issued Certificates of Land Ownership Award sometime in 1994.
[90]

So as not to lose time in resolving this issue, the Court declares that the evidence to be presented by the parties before the trial court for the valuation of the property must be based on the values prevalent in 1994 for like agricultural lands. The evidence must conform to Section 17 of RA 6657 and, as far as practicable, to DAR Administrative Order No. 6, series of 1992, as amended by DAR Administrative Order No. 11, series of 1994.
[91]

Given the expertise of the DAR on the matter, due reliance on DAR Administrative Orders is encouraged; but, as the Administrative Orders themselves recognize, there are situations where their application is not practicable or possible. If the cited factors in the DAR Administrative Order are absent, irrelevant, or unavailable, the trial court should exercise judicial discretion and make its own computation of the just compensation based on the factors set in Section 17 of RA 6657.
[92]

The trial court may impose interest on the just compensation and based on prevailing jurisprudence.

as may be warranted by the circumstances of the case

The trial court is reminded that the practice of earmarking funds and opening trust accounts has been rejected by the Court for purposes of effecting payment;
[93]

hence, it must not be considered as valid payment.

In the event that the respondent had already withdrawn the amount deposited in the LBP as required by the trial courts March 29, 2004 Order,
[94]

the withdrawn amount should be deducted from the final land valuation to be paid by LBP.

In case the release required by the trial courts March 29, 2004 Order has not yet been effected, the trial courts first order of business should be to require LBPs immediate compliance therewith.
[95]

WHEREFORE, premises considered, the petition is DENIED insofar as it seeks to have the Land Bank of the Philippines valuation of the subject property sustained. The assailed August 30, 2005 Decision of the Court of Appeals and its December 5, 2005 Resolution in CA-G.R. SP No. 83138 are REVERSED and SET ASIDE for lack of factual and legal basis. Civil Case No. 10405 is REMANDED to Branch 56 of the Regional Trial Court
[96]

of Angeles City for reception of evidence on the issue of just

compensation. The trial court is directed to determine the just compensation in accordance with the guidelines set in this Decision. The trial court is further directed to conclude the proceedings and to submit to this Court a report on its findings and recommended conclusions within sixty (60) days from notice of this Decision.
[97]

SO ORDERED. G.R. No. 164195 February 6, 2007

APO FRUITS CORPORATION and HIJO PLANTATION, INC., Petitioners, vs. THE HON. COURT OF APPEALS and LAND BANK OF THE PHILIPPINES, Respondents. DECISION CHICO-NAZARIO, J.: Apo Fruits Corporation (AFC) and Hijo Plantation, Inc. (HPI) are the registered owners of five parcels of agricultural lands located in San Isidro, Tagum, Davao Province, to wit: Apo Fruits Corporation Transfer Certificate of 1 Title (TCT) No. T-113359
2

Area (Ha.) 115.2179

T-113366

525.1304
4

Hijo Plantation, Inc. TCT No. T-10361

Area (Ha.) 155.8408

T-10362

170.7980

T-10363

478.8920

On 12 October 1995, AFC and HPI voluntarily offered to sell the above parcels of land to the government. After 7 the initial processing at the Department of Agrarian Reform (DAR) of the Voluntary Offer to Sell (VOS) application of AFC and HPI, it was referred to the Land Bank of the Philippines (LBP) for initial valuation. On 16 October 1996, AFC and HPI received separately from the DARs Provincial Agrarian Reform Officer (PARO) of Davao province a notice of land acquisition and valuation, informing AFC that the value of the properties has been placed 8 atP86,900,925.88 or P165,484.47 per hectare while HPIs properties were valued 9 at P164,478,178.14. 1awphi1.net Both AFC and HPI considered the valuations unreasonably low and inadequate as just compensation for the properties.

On 5 November 1996, AFC rejected the valuation for both TCTs No. T-113366 and No.113359. AFC applied for the 11 shifting of the mode of acquisition for TCT No. 113359 from VOS to Voluntary Land Transfer/Direct Payment 12 Scheme. HPI also rejected the valuation of its three parcels of land covered by TCTs No. T-10361, No. T-10362 13 and No. T-10363. Owing to the rejection by both AFC and HPI of LBPs valuation, the DAR requested LBP to deposit the amounts 14 equivalent to their valuations in the names and for the accounts of AFC and HPI. AFC thereafter withdrew the amount of P26,409,549.86, while HPI withdrew the amount of P45,481,706.76, both in cash from LBP. The DAR PARO then directed the Register of Deeds of Davao to cancel the TCTs of AFC and HPI to the said properties and to issue a new one in the name of the Republic of the Philippines. After the issuance of the certificate of title in the name of the Republic of the Philippines, the Register of Deeds of Davao, upon the request of the DAR, issued TCTs and Certificates of Land Ownership Award to qualified farmerbeneficiaries. On 14 February 1997, AFC and HPI filed separate complaints for determination of just compensation with the DAR Adjudication Board (DARAB). Despite the lapse of more than three years from the filing of the complaints, the 15 DARAB failed and refused to render a decision on the valuation of the land. Hence, two complaints for determination and payment of just compensation were filed by AFC and HPI before Branch 2 of the Regional Trial Court (RTC) of Tagum City (acting as a Special Agrarian Court), which were subsequently consolidated. Agrarian Case No. 54-2000 filed by AFC covers two parcels of land in San Isidro, Tagum, Davao, with an aggregate area of 640.3483 hectares previously assessed by LBP with a valuation of P86,900,925.88. On the other hand, Agrarian Case No. 55-2000 filed by HPI relates to the other three parcels of land in Tagum City, with a total area of 814.5308 hectares, likewise, previously assessed by LBP with a valuation ofP164,478,178.14. Summons was served on 23 May 2000 to defendants DAR and LBP. The trial court appointed as 18 Commissioners persons it considered competent, qualified and disinterested to determine the proper valuation of the properties. LBP submitted its Answer on 26 July 2000, while the DAR Secretary, represented by PARO Pedro P. Gumabao, 20 filed its Answer on 18 August 2000. The pre-trial order issued by the trial court reads: This Court will determine the all-embracing concept of Just Compensation, and whether the plaintiff is entitled to damages, and also whether the value of the land and improvements as determined by the Land Valuation of Land Bank for the determination of just compensation, and whether the plaintiff has violated Section 13 of DARAB new 21 rules and procedure. The commissioners, together with all the representatives of the parties, conducted an ocular inspection first on 25 22 23 August 2000 and again on 16 December 2000. On 21 May 2001, the court-appointed commissioners submitted their appraisal report. On 14 September 2001, the case was considered submitted for decision.
26 25 24 19 17 16

10

After hearing, the trial court rendered a decision dated 25 September 2001, the fallo thereof reads:

WHEREFORE, consistent with all the foregoing premises, judgment is hereby rendered by this Special Agrarian Court where it has determined judiciously and now hereby fixed the just compensation for the 1,388.6027 hectares of lands and its improvements owned by the plaintiffs: APO FRUITS CORPORATION and HIJO PLANTATION, INC., as follows: First Hereby ordering after having determined and fixed the fair, reasonable and just compensation of the 1,338.6027 hectares of land and standing crops owned by plaintiffs APO FRUITS CORPORATION and HIJO PLANTATION, INC., based at only P103.33 per sq. meter, ONE BILLION THREE HUNDRED EIGHTYTHREE MILLION ONE HUNDRED SEVENTY-NINE THOUSAND PESOS (P1,383,179,000.00), Philippine Currency, under the current value of the Philippine Peso, to be paid jointly and severally to the herein PLAINTIFFS by the Defendants-Department of Agrarian Reform and its financial intermediary and codefendant Land Bank of the Philippines, thru its Land Valuation Office; Second Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay plaintiffs-APO FRUITS CORPORATION and HIJO PLANTATION, INC., interests on the above-fixed amount of fair, reasonable and just compensation equivalent to the market interest rates aligned with 91-day Treasury Bills, from the date of the taking in December 9, 1996, until fully paid, deducting the amount of the previous payment which plaintiffs received as/and from the initial valuation; Third Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly and severally the Commissioners fees herein taxed as part of the costs pursuant to Section 12, Rule 67 of the 1997 Rules of Civil Procedure, equivalent to, and computed at Two and One-Half (2 ) percent of the determined and fixed amount as the fair, reasonable and just compensation of plaintiffs land and standing crops plus interest equivalent to the interest of the 91-Day Treasury Bills from date of taking until full payment; Fourth - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly and severally the attorneys fees to plaintiffs equivalent to, and computed at ten (10%) Percent of the determined and fixed amount as the fair, reasonable and just compensation of plaintiffs land and standing crops, plus interest equivalent to the 91-Day Treasury Bills from date of taking until the full amount is fully paid; Fifth - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office to deduct from the total amount fixed as fair, reasonable and just compensation of plaintiffs properties the initial payment paid to the plaintiffs; Sixth - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay the costs of the suit; and Seventh - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay all the aforementioned amounts thru The Clerk of Court of this Court, in order that said Court Officer could collect for payment any docket fee deficiency, 27 should there be any, from the plaintiffs. LBP filed a Motion for Reconsideration on 5 October 2001 mainly on the ground that the trial court based its valuation on the value of residential and industrial lands in the area forgetting that the lands involved are agricultural. LBP also sought a reconsideration of the award of attorneys fees, the interest on the compensation over the lands and the order of the trial court regarding the payment of commissioners fees. In an Order dated 5 December 2001, the trial court modified its decision as follows:
29 28

WHEREFORE, premises considered, IT IS HEREBY ORDERED that the following modifications as they are hereby made on the dispositive portion of this Courts consolidated decision be made and entered in the following manner, to wit: On the Second Paragraph of the Dispositive Portion which now reads as follows, as modified: Second - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay plaintiffs-APO FRUITS CORPORATION and HIJO PLANTATION, INC., interest at the rate of Twelve (12%) Percent per annum on the above-fixed amount of fair, reasonable and just compensation computed from the time the complaint was filed until the finality of this decision. After this decision becomes final and executory, the rate of TWELVE (12%) PERCENT per annum shall be additionally imposed on the total obligation until payment thereof is satisfied, deducting the amounts of the previous payments by Defendant-LBP received as initial valuation; On the Third Paragraph of the Dispositive Portion which Now Reads As Follows, As Modified: Third - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly and severally the Co mmissioners fees herein taxed as part of the costs pursuant to Section 12, Rule 67 of the 1997 Rules of Civil Procedure, equivalent to, and computed at Two and One-Half (2 ) percent of the determined and fixed amount as the fair, reasonable and just compensation of plaintiffs land and standing crops and improvements; On the Fourth Paragraph of the Dispositive Portion which Now Reads As follows, As Modified: Fourth - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly and severally the attorneys fees to plaintiffs equivalent to, and computed at ten (10%) Percent of the determined and fixed amount as the fair, reasonable and just compensation of plaintiffs land and standing crops and improvements. Except for the above-stated modifications, the consolidated decision stands and shall remain in full force and 30 effect in all other respects thereof. From this Order, LBP filed a Notice of Appeal dated 27 December 2001. The same was given due course in the 32 Order of the RTC dated 15 May 2002. In the same Order, the RTC set aside its Order dated 5 December 2001 granting execution pending appeal. Subsequently, the trial court, citing this Courts ruling in the case of "Land Bank of the Philippines v. De 33 Leon," that a petition for review, not an ordinary appeal, is the proper mode of appeal from a decision on the determination of just compensation rendered by a special agrarian court, issued an Order dated 4 November 34 2002 recalling its Order dated 15 May 2002 and directed LBP to file a Petition for Review within the reglementary 35 period. LBP filed a Motion for Reconsideration claiming that the case of Land Bank of the Philippines v. De Leon was not yet final at that time; hence, it is not certain whether the decision in that case would have a retroactive effect and that appeal is the appropriate remedy. This was denied by the trial court in its Order dated 12 February 36 2003. On 28 March 2003, LBP filed a Petition for Certiorari before the Court of Appeals assailing the 4 November 2002 and 12 February 2003 orders of the trial court. The Court of Appeals found the petition of LBP meritorious. In a decision dated 12 February 2004, the Court of Appeals held:
38 37 31

WHEREFORE, the petition is GRANTED and the assailed orders dated November 4, 2002 and February 12, 2003 are 39 NULLIFIED and, accordingly, SET ASIDE. AFC and HPI filed a joint Motion for Reconsideration which the Court of Appeals denied in its Resolution dated 21 41 June 2004. Earlier, on 23 January 2003, DAR filed its own separate petition before the Court of Appeals by way of a Petition for 42 43 Review. In a Resolution dated 2 April 2003, the Court of Appeals dismissed the petition of the DAR for failure to 44 state the material dates under Rule 42, Section 2, of the Rules of Court. The appellate court held: The importance of stating the material dates cannot be overemphasized. It is only through a statement thereof in the petition can it be determined whether or not the petition was filed on time. For its failure to state the material dates, the petition can and should be outrightly dismissed. xxxx The petition is also defective in that it failed to attach material portions of the record as would support the allegations in the petition. More specifically, copies of the alleged motion for reconsideration filed by the DAR, the order denying it, and the notice of appeal were not attached to the petition. For all the foregoing, the court has no alternative but to dismiss the petition. WHEREFORE, the petition is DISMISSED.
45 40

The Decision of the Court of Appeals in the Petition filed by the DAR in CA-G.R. SP No. 74879 became final and 46 executory and entry of judgment was issued by the appellate court on 7 May 2003. On the other hand, from the decision of the Court of Appeals in the Petition filed by LBP in CA-G.R. SP No. 76222, AFC and HPI filed the present Petition for Review on Certiorari raising the following issues: I. WHETHER OR NOT THE QUESTIONED DECISION AND RESOLUTION ARE IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT? II. WHETHER OR NOT RESPONDENT LBP IS BOUND BY THE DECISION OF COURT OF APPEALS IN CA-G.R. SP NO. 74879 AND IS THEREFORE PRECLUDED FROM FILING CA-G.R. SP NO. 76222? III. WHETHER OR NOT THE FILING BY RESPONDENT LBP OF CA-G.R. SP NO. 76222 IS ALREADY BARRED BY RES JUDICATA? IV. WHETHER OR NOT THE RULING OF THE SUPREME COURT IN THE ARLENE DE LEON CASE, GIVING ONLY PROSPECTIVE EFFECT TO ITS EARLIER RESOLUTION AS TO THE PROPER MODE OF APPEAL FROM DECISIONS OF SPECIAL AGRARIAN COURTS IS APPLICABLE IN THE INSTANT CASE?

V. WHETHER OR NOT RESPONDENT LBP WAS DEPRIVED OF DUE PROCESS AND/OR OF ITS RIGHT TO APPEAL? VI. WHETHER OR NOT THE SUBJECT PETITION (CA-G.R. SP NO. 76222) WAS MERELY INTERPOSED TO DELAY THE EXECUTION OF SPECIAL AGRARIAN COURTS "DECISION" WHICH IS BASED ON EVIDENCE DULY PRESENTED AND 47 PROVED? AFC and HPI pray that the Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 76222 be reversed and set aside and that the Decision of the RTC dated 25 September 2001 in Agrarian Cases No. 54-2000 and No. 5548 2000 be declared as final and executory. In the case of Land Bank of the Philippines v. De Leon, decided on 10 September 2002, respondents are the registered owners of a parcel of land. They voluntarily offered the subject property for sale to the government pursuant to Republic Act No. 6657. Unable to agree on the valuation of the property offered by the DAR, respondents filed a petition with the RTC (acting as a Special Agrarian Court) to fix the just compensation of the property. In due time, the RTC rendered judgment fixing the compensation of the property. Before the Court of Appeals, the DAR and LBP filed separate petitions. The DAR filed a Petition for Review of the decision of the RTC which was assigned to the Special 3rd Division of the appellate court. LBP, on the other hand, raised the case on appeal to the Court of Appeals by way of ordinary appeal. The same was assigned to the 4th Division of the Court of Appeals. The petition of the DAR was given due course. On the other hand, the Court of Appeals dismissed LBPs ordinary appeal on the ground that the same was erroneous. LBP filed a petition for review before this Court. In Land Bank, we explained: A petition for review, not an ordinary appeal, is the proper procedure in effecting an appeal from decisions of the Regional Trial Courts acting as Special Agrarian Courts in cases involving the determination of just compensation to the landowners concerned. Section 60 of RA 6657 clearly and categorically states that the said mode of appeal should be adopted. There is no room for a contrary interpretation. Where the law is clear and categorical, there is 49 no room for construction, but only application. LBP filed a Motion for Reconsideration. In a Resolution of this Court dated 20 March 2003, this Court emphasized the prospective application of the Decision dated 10 September 2002. WHEREFORE, the motion for reconsideration dated October 16, 2002 and the supplement to the motion for reconsideration dated November 11, 2002 are PARTIALLY GRANTED. While we clarify that the Decision of this Court dated September 10, 2002 stands, our ruling therein that a petition for review is the correct mode of appeal from decisions of Special Agrarian Courts shall apply only to cases appealed after the finality of this 50 Resolution. (Emphasis supplied.) Essentially therefore, the rule is that a decision of the RTC acting as a Special Agrarian Court should be brought to the Court of Appeals via a Petition for Review. The Court of Appeals will no longer entertain ordinary appeals thereon. However, this rule applies only after the finality of the Resolution of this Court in Land Bank of the Philippines v. De Leon dated 20 March 2003. In this case, the Court of Appeals correctly ruled when it gave due course to the appeal of LBP. LBPs Notice of Appeal was filed on 27 December 2001. This was given due course by the RTC in an Order dated 15 May 2002. LBPs appeal was, thus, perfected before this Courts Resolution in the aforementioned Land Bank of the Philippines v. De Leon case. Hence, the Court of Appeals could give due course to LBPs petition.

Next we proceed to determine the issue of whether or not the petition of LBP before the Court of Appeals is barred by the disposition of the Petition for Review filed by the DAR in CA-G.R. SP No. 74879 on the ground of res judicata. The following are the elements of res judicata: (a) The former judgment must be final; (b) The court which rendered judgment must have jurisdiction over the parties and the subject matter; (c) It must be a judgment on the merits; and (d) There must be between the first and second actions identity of parties, subject matter, and cause of 51 action. In this case, the third element of res judicata, i.e., that the former judgment must be on the merits, is not present. It must be remembered that the dismissal of CA-G.R. SP No. 74879 was based on technicality, that is, for failure on the part of the DAR to state material dates required by the rules. Having been dismissed based on a technicality and not on the merits, the principle of res judicata does not apply. Res judicata applies only where judgment on 52 the merits is finally rendered on the first. Having disposed of the procedural issues involved herein, we shall now proceed to resolve the substantive questions in this case. This Court is aware that in the instant case, since LBPs appeal before the Court of Appeals is to be given due course, the normal procedure is for us to remand the case to the appellate court for further proceedings. However, when there is enough basis on which a proper evaluation of the merits of petitioners case may be had, the Court may dispense with the time-consuming procedure in order to prevent further delays in the disposition of the 53 case. Indeed, remand of the case to the lower court for further reception of evidence is not conducive to the speedy administration of justice and it becomes unnecessary where the Court is in a position to resolve the dispute based on the records before it. On many occasions, the Court, in the public interest and expeditious administration of justice, has resolved action on the merits, instead of remanding them for further proceedings, as where the 54 ends of justice would not be subserved by the remand of the case or where the trial court had already received 55 all the evidence of the parties. Briefly stated, a remand of the instant case to the Court of Appeals would serve no purpose save to further delay its disposition contrary to the spirit of fair play. It is already an accepted rule of procedure for us to strive to settle the entire controversy in a single 56 proceeding, leaving no root or branch to bear the seeds of future litigation. If, based on the records, the pleadings, and other evidence, the dispute can be resolved by us, we will do so to serve the ends of justice instead 57 of remanding the case to the lower court for further proceedings. The complete records of this case have already been elevated to this Court. The pleadings on record will fully support this adjudication. We have painstakingly gone over all of LBPs representations and arguments, and we found that the material and decisive facts are hardly disputable. From another perspective, due consideration should also be given to AFC and HPI for having voluntarily offered to sell their properties, a clear indication of AFC and HPIs willingness to participate in the agrarian reform program of the government. In turn, they must be given compensation that is just and timely. Records indicate that the case has been dragging on for more than ten years now without the landowners having been fully compensated. We cannot countenance such a glaring indifference to AFC and HPIs rights as land owners they should be afforded all that is just and due them. To be sure, they deserve nothing less than full compensation to give effect to their substantive rights.

While eminent domain lies as one of the inherent powers of the state, there is no requirement that it undertake a 58 prolonged procedure, or that the payment of the private owner be protracted as far as practicable. 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 59 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 farmerbeneficiaries, 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 LBPs 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 60 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 61 compensation is undoubtedly oppressive. It is in light of the foregoing that this Court will now undertake the final resolution of the present controversy which, as already elucidated, is within the power of this Court to do. The concept of just compensation embraces not only the correct determination of the amount to be paid to the owners of the land, but also the payment of the land within a reasonable time from its taking. Without prompt payment, compensation cannot be considered "just" inasmuch as the property owner is being made to suffer the consequences of being immediately deprived of his land while being made to wait for a decade or more before 62 actually receiving the amount necessary to cope with his loss. Just compensation is defined as the full and fair 63 equivalent of the property taken from its owner by the expropriator. It has been repeatedly stressed by this 64 Court that the measure is not the takers gain but the owners 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 65 taken shall be real, substantial, full, and ample. The two main issues, thus, for determination of this Court are the date of the taking of the property and the 66 amount of just compensation. First, it is settled that the property was taken on 9 December 1996, when a Certificate of Title was issued in favor of the Republic of the Philippines, and the Certificates of Title of AFC and HPI were cancelled. The farmer67 beneficiaries themselves took possession of the subject properties on 2 January 1997. Second, on payment of just compensation, we have previously held: Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands intended for public use upon payment of just compensation to the owner. Obviously, there is no need to expropriate where the owner is willing to sell under terms also acceptable to the purchaser, in which case an ordinary deed of sale may be agreed upon by the parties. It is only where the owner is unwilling to sell, or cannot accept the price or other

conditions offered by the vendee, that the power of eminent domain will come into play to assert the paramount authority of the State over the interests of the property owner. Private rights must then yield to the irresistible demands of the public interest on the time-honored justification, as in the case of the police power, that the welfare of the people is the supreme law. But for all its primacy and urgency, the power of expropriation is by no means absolute (as indeed no power is absolute). The limitation is found in the constitutional injunction that "private property shall not be taken for public use without just compensation" and in the abundant jurisprudence that has evolved from the interpretation of this principle. Basically, the requirements for a proper exercise of the power are: (1) public use and (2) just 68 compensation. (Emphases supplied.) Section 57 of Republic Act No. 6657 (Comprehensive Agrarian Reform Law) provides: SEC. 57. Special Jurisdiction. The Special Agrarian Courts shall have original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, and the prosecution of all criminal offenses under this Act. The Rules of Court shall apply to all proceedings before the Special Agrarian Courts, unless modified by this Act. The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction within thirty (30) days from submission of the case for decision. To implement the provisions of Republic Act No. 6657, Rule XIII, Section 11 of the DARAB Rules of Procedure, provides: Land Valuation and Preliminary Determination and Payment of Just Compensation. The decision of the Adjudicator on land valuation and preliminary determination and payment of just compensation shall not be appealable to the Board but shall be brought directly to the Regional Trial Courts designated as Special Agrarian Courts within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only one motion for reconsideration. (Emphasis supplied.) The next question now crops up, who shall determine just compensation? It is now settled that the valuation of property in eminent domain is essentially a judicial function which is vested with the RTC acting as Special Agrarian 69 Court. The same cannot be lodged with administrative agencies and may not be usurped by any other branch or 70 official of the government. We now come to the issue of just compensation. LBP argues that the trial courts valuation of the subject landholdings has incorporated irrelevant and /or immaterial factors such as the schedule of market values given by the City Assessor of Tagum, the comparative 71 sales of adjacent lands and the commissioners report. Section 17 of Republic Act No. 6657, which is particularly relevant, providing as it does the guideposts for the determination of just compensation, reads, as follows: 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 farm-workers and by the Government to the property as well as the non-payment of taxes or loans secured from any government financing institution on the said land shall be 72 considered as additional factors to determine its valuation.

The RTC provided the following elucidation in its assailed decision: The recommendation of the Commissioners Report for a value o f P85.00 per sq.m. or P850,000.00 per hectare (sic) is founded on evidence. The schedule of market values of the City of Tagum as per its 1993 and 1994 Revision of Assessment and Property Classification (Exhibit "J-6" and "CC-6") give the lowest value for residential land at P100/sq.m. for 4th class residential land in 1993. In 1994, it gave the lowest value of P80.00/sq.m. for barangay residential lot. It appears that certain portions of the land in question have been classified as Medium Industrial District (Exhibit "J-4" and "CC-4"). The lowest value as for industrial land, 3rd class in a barangay isP130.00 sq.m. The average of these figures, using the lowest values in Exhibit "6" and "CC-6" yields the figure ofP103.33 which is even higher by 22.2% than that recommended by the Commissioners. It is even of judicial notice that assessments made by local governments are much lower than real market value. Likewise, the value of the improvements thereon, not even considered in the average of P103.33. If considered, this will necessarily result in a higher average value. In said Appraisal Report, mention has been made on "improvements," and our Supreme Court in Republic vs. Gonzales, 50 O.G. 2461, decreed the rule, as follows: If such improvements are permanent in character, consisting of good paved road, playgrounds, water system, sewerage and general leveling of the land suitable for residential lots together with electric installations and buildings, the same are important factors to consider in determining the value of the land. The original cost of such improvements may be considered, with due regard to the corresponding depreciation. (Davao vs. Dacudao, L3741, May 8, 1952). Note should be taken that in said Appraisal Report, permanent improvements on plaintiffs lands have been introduced and found existing, e.g., all weather-road network, airstrip, pier, irrigation system, packing houses, among others, wherein substantial amount of capital funding have been invested in putting them up. This Court, however, notes that the comparative sales (Exhibits "A" to "F") referred to in the Appraisal Report are sales made after the taking of the land in 1996. However, in the offer of evidence, the plaintiff offered additional comparative sales of adjacent land from late 1995 to early 1997, ranging from a high of P580.00/sq.meter in September 1996 (Exhibit "L-4" for plaintiff Apo and "EE-4" for plaintiff Hijo) to a low of P146.02/sq.meter in October 1997 (Exhibits "L-2" and "EE-2"). The other sales in 1996 were in January 1996 for P530.00/sq.meter ( Exhs. "L-3" and "EE-3") and in December 1996 for P148.64/sq.meter (Exhs. "L-2" and "EE-1"). On the other hand, the sale in December 1995 (Exhs. "L-5" and "EE-5") was made for P530.00/sq.meter." The average selling price based on the foregoing transaction is P386.93/sq.meter. The same is even higher by around 350% than the recommended value of P85.00, as per the Commissioners Report. The Cuervo Appraisal Report, on the other hand, gave a value of P84.53/sq. meter based on the Capitalized Income Approach. The said approach considered only the use of the land and the income generated from such use. The just compensation for the parcels of land under consideration, taking into account the Schedule of Market Values given by the City Assessor of Tagum (Exhs. "J-6" for Apo "CC-6" for Hijo), the comparative sales covering adjacent lands at the time of taking of subject land, the Cuervo Report, and the Appraisal Report is hereby fixed atP103.33/sq.meter. The valuation given by Cuervo and the Appraisal Report of P84.53 and P85.00, respectively, in this Courts judgment, is the minimum value of the subject landholdings and definitely cannot in anyway be the price at which plaintiffs APO and/or HIJO might be willing to sell, considering that the parcels of land adjacent thereto were sold at much higher prices, specifically from a low of P146.02/sq.meter to a high of P580.00. The average of the lowest value under the 1993 and 1994 Revision of Assessment and Property Classification (Exhibits "J-6" and "CC-6") were already at P103.33/sq.meter, even without considering the improvements introduced on the subject landholdings.

Moreover, the Commission made the findings that "portions of the land subject of th(e) report may x x x increase toP330.00/sq.meter, specifically th(e) strips of land surrounding the provincial roads" and made the conclusion that "(c)learly, the value recommended by th(e) Commission, which is only about P85.00/sq.meter is way below the x x x assessed values, which effectively was fixed (as early as) 1994 or earlier than the Voluntary Offer to Sell of the above plaintiffs properties." In the absence of any evidence to the contrary, the said assessed values are presumed to be prevailing [in] December 1996, the time of taking of plaintiffs landholdings. The Commission further stated that the average of the said "assessed values as submitted by the City Assessor of Tagum City (is)P265.00/sq.meter." This Court, therefore, finds it unfair that the just compensation for the subject landholdings should only be fixed at P85.00/sq.meter. It is similarly true, however, that the determination of just compensation cannot be made to the prejudice of defendants or the government for that matter. Thus, the selling price of P580.00/sq. meter nor the average selling price of P386.93/sq. meter or the average assessed value of P265.00/sq. meter cannot be said to be the value at which defendants might be willing to buy the subject landholdings. This Court, therefore, finds the price of P103.33/sq. meter for the subject landholdings fair and reasonable for all the parties. Said value is even lower than the lowest selling price of P148.64 for sale of adjacent land at the time of the taking of the subject landholdings [in] December 1996. It approximates, however, the average of the lowest values under the 1993 and 1994 Revision of Assessment and Property Clarification (Exhs. "J-6" and "CC-6") ofP103.33. The said figure will further increase, if the Court will further consider the improvements introduced by plaintiffs, which should be the case. Moreover, the said value of P103.33/sq. meter is more realistic as it does not depart from the government recognized values as specified in the 1993 and 1994 Revised Assessment and Property Classification of Tagum City. This Court finds the evidence of the plaintiffs sufficient and preponderant to 73 establish the value of P103.33/sq. meter. The trial court further rationalized its award thus: It may be admitted that plaintiffs properties are agricultural; however, it is simply beyond dispute that in going about the task of appraising real properties, as in the instant cases, "all the facts as to the condition of the property and its surroundings, its improvements and capabilities, may be shown and considered in estimating its value." (Manila Railroad Company vs. Velasquez, 32 Phil. 287, 314). It is undeniable that plaintiffs agricultura l lands as borne out from the records hereof, and remaining unrebutted, shows that all weather-roads network, airstrip, pier, irrigation system, packing houses, and among numerous other improvements are permanently in place and not just a measly, but substantial amounts investments have been infused. To exclude these permanent improvements in rendering its valuation of said properties would certainly be less than fair. x x x. xxxx The plaintiffs agricultural properties are just a stones throw from the residential and/or industrial sections of Tagum City, a fact defendants-DAR and LBP should never ignore. The market value of the property (plus the consequential damages less consequential benefits) is determined by such factors as the value of like properties, its actual or potential use, its size, shape and location as enunciated in B.H. Berkenkotter & Co. vs. Court of Appeals, 216 SCRA 584 (1992). To follow Defendants-DAR and LBP logic, therefore, would in effect restrict and delimit the broad judicial prerogatives of this Court in determining and fixing just compensation of properties taken by the State. Proceedings before the Panel of Commissioners revealed that permanent improvements as mentioned above exist inside the lands subject of this complaints. It was also established during the trial proper upon reception of the evidence of the plaintiffs which clearly revealed the character, use and valuation of the lands surrounding the

properties involved in these cases, indicating the strategic location of the properties subject of these cases. The findings being that surrounding properties have been classified as residential, commercial or industrial. And yet defendant-LBP refused to acknowledge the factual basis of the findings of the Panel of Commissioners and insisted 74 on its guideline in determining just compensation. x x x. In arriving at its valuation of the subject properties, the RTC conducted a thorough and meticulous examination of all determining factors. It did not rely merely on the report of Commissioners nor on the Cuervo appraisers report. It took into consideration the schedule of market values of the City of Tagum per its 1993 and 1994 Revision of Assessment and Property Clasisification, value of the permanent improvements thereon, as well as comparative sales of adjacent lands from early 1995 to early 1997, among other factors. Contrary to LBPs claim, the above factors are neither irrelevant nor immaterial. When the trial court arrived at the valuation of a landowners property taking into account its nature as irrigated land, location along the highway, market value, assessors value and the volume and value of its produce, such valuation is considered in accordance 75 with Republic Act No. 6657. Even the Commissioners report which the trial court took into consideration may not be dismissed as irre levant. In the first place the trial court acting as a special agrarian court is authorized to appoint commissioners to assist in 76 the determination of just compensation. In this case the Commissioners report was submitted only after ocular 77 inspections were conducted on the landholdings to give them a better idea of their real value. Conspicuously, the trial court did not merely rely solely on the appraisal report submitted by the Commissioners. The trial court conducted hearings for the purpose of receiving the parties evidence. Clearly evident from the records of this case is that in the proceedings before the Commission constituted by the RTC of Tagum City, Branch 2, to fix the just compensation for the properties, the LBP and the DAR were given all the opportunities to justify their stances. Thus: [T]he Commission set another hearing on February 23, 2001 at 9:00 a.m. at the Function Room, Marbella mansion, Rizal Street, Davao City, to give the LBP the opportunity to present evidence. The LBP counsels, Attys. Batingana and Sembrano, instead of presenting witnesses and other evidence, manifested that they will submit a position paper within fifteen (15) days from the date of the hearing. This was granted by the Chairman of the Commission, who also gave the plaintiff the opportunity to submit within five (5) days, if they so desire, their rejoinder. Inspite of the lapse of the period, the LBP failed to file its position paper. xxxx The plaintiffs have presented evidence to establish the value of their properties before the Court-appointed Commissioners, as well as before this Court. The Commissioners who acted and performed their assigned tasks under their Oaths of Office are deemed a surrogate or extension of the Court itself. (Secs. 3 and 4, Rule 32 of the 1997 Rules of Civil Procedure). Defendant-DAR and Defendant-LBP failed to present evidence during the hearings set by the Commissioners on February 5, 2001, and February 23, 2001, for the presentation of their evidence. This Court gave Defendant Land Bank and Defendant DAR additional opportunities to present evidence. Defendant Land Bank and DAR asked for extensions to submit their evidence in its motion dated July 27, 2001, which was granted by the Court. All exhibits and other documents offered in evidence were admitted, after which this Court 78 issued an order that these two cases were submitted for resolution. Given the already exhaustive analysis made by the RTC, this Court is convinced that the trial court correctly determined the amount of just compensation due to AFC and HPI.

WHEREFORE, premises considered, the instant Petition is PARTIALLY GRANTED. While the Decision, dated 12 February 2004, and Resolution, dated 21 June 2004, of the Court of Appeals in CA-G.R. SP No. 76222, giving due course to LBPs appeal, are hereby AFFIRMED, this Court, nonetheless, RESOLVES, in consideration of public interest, the speedy administration of justice, and the peculiar circumstances of the case, to give DUE COURSE to the present Petition and decide the same on its merits. Thus, the Decision, dated 25 September 2001, as modified by the Decision, dated 5 December 2001, of the Regional Trial Court of Tagum City, Branch 2, in Agrarian Cases No. 54-2000 and No. 55-2000 is AFFIRMED. No costs. SO ORDERED. SPOUSES LETICIA & JOSE ERVIN ABAD, SPS. ROSARIO AND ERWIN COLLANTES, SPS. RICARDO AND FELITA ANN, SPS. ELSIE AND ROGER LAS PIAS, LINDA LAYDA, RESTITUTO MARIANO, SPS. ARNOLD AND MIRIAM MERCINES, SPS. LUCITA AND WENCESLAO A. RAPACON, SPS. ROMEO AND EMILYN HULLEZA, LUZ MIPANTAO, SPS. HELEN AND ANTHONY TEVES, MARLENE TUAZON, SPS. ZALDO AND MIA SALES, SPS. JOSEFINA AND JOEL YBERA, SPS. LINDA AND JESSIE CABATUAN, SPS. WILMA AND MARIO ANDRADA, SPS. RAYMUNDO AND ARSENIA LELIS, FREDY AND SUSANA PILONEO, Petitioners,

G.R. No. 189239 Present: CARPIO MORALES, Chairperson, J., BRION, BERSAMIN VILLARAMA, JR., and SERENO, JJ.

- versus -

FIL-HOMES REALTY and DEVELOPMENT CORPORATION and MAGDIWANG REALTY CORPORATION, Respondents.

Promulgated:

November 24, 2010 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - x

DECISION CARPIO MORALES, J.:

Fil-Homes Realty and Development Corporation and Magdiwang Realty Corporation (respondents), coowners of two lots situated in Sucat, Paraaque City and covered by Transfer Certificates of Title Nos. 21712 and 21713, filed a complaint for unlawful detainer on May 7, 2003 against above-named petitioners before the Paraaque Metropolitan Trial Court (MeTC).

Respondents alleged that petitioners, through tolerance, had occupied the subject lots since 1980 but ignored their repeated demands to vacate them.

Petitioners countered that there is no possession by tolerance for they have been in adverse, continuous and uninterrupted possession of the lots for more than 30 years; and that respondents predecessor-in-interest, Pilipinas Development Corporation, had no title to the lots. In any event, they contend that the question of ownership must first be settled before the issue of possession may be resolved.

During the pendency of the case or on June 30, 2004, the City of Paraaque filed expropriation proceedings covering the lots before the Regional Trial Court of Paraaque with the intention of establishing a socialized housing project therein for distribution to the occupants including petitioners. A writ of possession was consequently issued and a Certificate of Turn-over given to the City.

Branch 77 of the MeTC, by Decision of March 3, 2008, rendered judgment in the unlawful detainer case against petitioners, disposing as follows: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants Leticia and Ervin Abad et. als. ordering the latter and all persons claiming rights under them toVACATE and SURRENDER possession of the premises (Lots covered by TCT NOS. (71065) 21712 and (71066) 21713 otherwise known as Purok I Silverio Compound, Barangay San Isidro, Paraaque City to plaintiff and to PAY the said plaintiff as follows: 1. The reasonable compensation in the amount of P20,000.00 a month commencing November 20, 2002 and every month thereafter until the defendants shall have finally vacated the premises and surrender peaceful possession thereof to the plaintiff; P20,000.00 as and for attorneys fees, and finally Costs of suit.
[1]

2. 3.

SO ORDERED. (emphasis in the original)

The MeTC held that as no payment had been made to respondents for the lots, they still maintain ownership thereon. It added that petitioners cannot claim a better right by virtue of the issuance of a Writ of Possession for the project beneficiaries have yet to be named.
[2]

On appeal, the Regional Trial Court (RTC), by Decision of September 4, 2008, reversed the MeTC decision and dismissed respondents complaint in this wise: x x x The court a quo ruled that the case filed by plaintiffs (respondents herein) is unlawful detainer as shown by the allegations of the Complaint. The ruling of the court a quo is not

accurate. It is not the allegations of the Complaint that finally determine whether a case is unlawful detainer, rather it is the evidence in the case.

Unlawful detainer requires the significant element of tolerance. Tolerance of the occupation of the property must be present right from the start of the defendants possession. The phrase from the start of defendants possession is significant. When there is no tolerance right from the start of the possession sought to be recovered, the case of unlawful [3] detainer will not prosper. (emphasis in the original; underscoring supplied)

The RTC went on to rule that the issuance of a writ of possession in favor of the City bars the continuation of the unlawful detainer proceedings, and since the judgment had already been rendered in the expropriation proceedings which effectively turned over the lots to the City, the MeTC has no jurisdiction to disregard the . . . final judgment and writ of possession due to non-payment of just compensation: The Writ of Possession shows that possession over the properties subject of this case had already been given to the City of Paraaque since January 19, 2006 after they were expropriated. It is serious error for the court a quo to rule in the unlawful detainer case that Magdiwang Realty Corporation and Fil-Homes Realty and Development Corporation could still be given possession of the properties which were already expropriated in favor of the City of Paraaque. There is also another serious lapse in the ruling of the court a quo that the case for expropriation in the Regional Trial Court would not bar, suspend or abate the ejectment proceedings. The court a quo had failed to consider the fact that the case for expropriation was already decided by the Regional Trial Court, Branch 196 way back in the year 2006 or 2 years before the court a quo rendered its judgment in the unlawful detainer case in the year 2008. In fact, there was already a Writ of Possession way back in the year 1996 (sic) issued in the expropriation case by the Regional Trial Court, Branch 196. The court a quo has no valid reason to disregard the said final judgment and the writ of possession already issued by the Regional Trial Court in favor of the City of Paraaque and against Magdiwang Realty Corporation and FilHomes Realty Development Corporation and make another judgment concerning possession of the subject properties contrary to the final judgment of the Regional Trial Court, Branch [4] 196. (emphasis in the original)

Before the Court of Appeals where respondents filed a petition for review, they maintained that respondents act of allowing several years to pass without requiring *them+ to vacate nor filing an ejectment case against them amounts to acquiescence or tolerance of their possession.
[6] [5]

By Decision of May 27, 2009, the appellate court, noting that petitioners did not present evidence to rebut respondents allegation of possession by tolerance, and considering petitioners admission that they commenced occupation of the property without the permission of the previous owner Pilipinas Development Corporation as indicium of tolerance by respondents predecessor -in-interest, ruled in favor of respondents. Held the appellate court: Where the defendants entry upon the land was with plaintiffs tolerance from the date and fact of entry, unlawful detainer proceedings may be instituted within one year from the demand on him to vacate upon demand. The status of such defendant is analogous to that of a tenant or lessee, the term of whose lease, has expired but whose occupancy is continued by the tolerance of the lessor. The same rule applies where the defendant purchased the house of the former lessee, who was already in arrears in the payment of rentals, and thereafter occupied the [7] premises without a new lease contract with the landowner.

Respecting the issuance of a writ of possession in the expropriation proceedings, the appellate court, citing Republic v. Gingoyon, held the same does not signify the completion of the expropriation proceedings. Thus it disposed: WHEREFORE, premises considered, the instant Petition is GRANTED. The assailed Decision of the Court a quo is REVOKED and SET ASIDE. The Decision of the Metropolitan Trial Court dated March 3, 2008 is hereby REINSTATED with MODIFICATION [by] deleting the award for attorneys fees. SO ORDERED. (underscoring supplied)
[8]

Petitioners motion for reconsideration was denied by Resolution dated August 26, 2009, hence, the filing of the present petition for review.

The petition fails.

In the exercise of the power of eminent domain, the State expropriates private property for public use upon payment of just compensation. A socialized housing project falls within the ambit of public use as it is in furtherance of the constitutional provisions on social justice.
[9]

As a general rule, ejectment proceedings, due to its summary nature, are not suspended or their resolution held in abeyance despite the pendency of a civil action regarding ownership.
[10]

Section 1 of Commonwealth Act No. 538

enlightens, however:

Section 1. When the Government seeks to acquire, through purchase or expropriation proceedings, lands belonging to any estate or chaplaincy (cappellania), any action for ejectment against the tenants occupying said lands shall be automatically suspended, for such time as may be required by the expropriation proceedings or the necessary negotiations for the purchase of the lands, in which latter case, the period of suspension shall not exceed one year. To avail himself of the benefits of the suspension, the tenants shall pay to the landowner the current rents as they become due or deposit the same with the court where the action for ejectment has been instituted. (emphasis and underscoring supplied)

Petitioners did not comply with any of the acts mentioned in the law to avail of the benefits of the suspension. They nevertheless posit that since the lots are the subject of expropriation proceedings, respondents can no longer assert a better right of possession; and that the City Ordinance authorizing the initiation of expropriation proceedings designated them as beneficiaries of the lots, hence, they are entitled to continue staying there.

Petitioners position does not lie.

The exercise of expropriation by a local government unit is covered by Section 19 of the Local Government Code (LGC): SEC. 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted: Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value of the property.
[11]

Lintag v. National Power Corporation

clearly outlines the stages of expropriation, viz:

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 . 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. 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 [12] property owners the final just compensation. (emphasis and underscoring supplied)

In the present case, the mere issuance of a writ of possession in the expropriation proceedings did not transfer ownership of the lots in favor of the City. Such issuance was only the first stage in expropriation. There is even no evidence that judicial deposit had been made in favor of respondents prior to the Citys possession of the lots, contrary to Section 19 of the LGC.

Respecting petitioners claim that they have been named beneficiaries of the lots, the city ordinance authorizing the initiation of expropriation proceedings does not state so. over the lots on the basis of the ordinance. Even if the lots are eventually transferred to the City, it is non sequitur for petitioners to claim that they are automatically entitled to be beneficiaries thereof. For certain requirements must be met and complied with before they can be considered to be beneficiaries.
[13]

Petitioners cannot thus claim any right

In another vein, petitioners posit that respondents failed to prove that their possession is by mere tolerance. This too fails. Apropos is the ruling in Calubayan v. Pascual:
[14]

In allowing several years to pass without requiring the occupant to vacate the premises nor filing an action to eject him, plaintiffs have acquiesced to defendants possession and use of the premises. It has been held that a person who occupies the land of another at the latters tolerance or permission, without any contract between them, is necessarily bound by an implied promise that he will vacate upon demand , failing which a summary action for ejectment is the proper remedy against them. The status of the defendant is analogous to that of a lessee or tenant whose term of lease has expired but whose occupancy continued by tolerance of the owner. In such a case, the unlawful deprivation or withholding of possession is to be counted from the date of the demand to vacate. (emphasis and underscoring supplied)

Respondents bought the lots from Pilipinas Development Corporation in 1983. They stepped into the shoes of the seller with respect to its relationship with petitioners. Even if early on respondents made no demand or filed no action against petitioners to eject them from the lots, they thereby merely maintained the status quo allowed petitioners possession by tolerance.

WHEREFORE, the petition for review is DENIED. G.R. No. 168770 February 9, 2011

ANUNCIACION VDA. DE OUANO, MARIO P. OUANO, LETICIA OUANO ARNAIZ, and CIELO OUANO MARTINEZ, Petitioners, vs. THE REPUBLIC OF THE PHILIPPINES, THE MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY, and THE REGISTER OF DEEDS FOR THE CITY OF CEBU, Respondents. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 168812 MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA), Petitioner, vs. RICARDO L. INOCIAN, in his personal capacity and as Attorney-in-Fact of OLYMPIA E. ESTEVES, EMILIA E. BACALLA, RESTITUTA E. MONTANA, and RAUL L. INOCIAN; and ALETHA SUICO MAGAT, in her personal capacity and as Attorney-in-Fact of PHILIP M. SUICO, DORIS S. DELA CRUZ, JAMES M. SUICO, EDWARD M. SUICO, ROSELYN SUICO-LAWSIN, REX M. SUICO, KHARLA SUICO-GUTIERREZ, ALBERT CHIONGBIAN, and JOHNNY CHAN, Respondents. DECISION VELASCO, JR., J.: At the center of these two (2) Petitions for Review on Certiorari under Rule 45 is the issue of the right of the former owners of lots acquired for the expansion of the Lahug Airport in Cebu City to repurchase or secure reconveyance of their respective properties. In the first petition, docketed as G.R. No. 168770, petitioners Anunciacion vda. de Ouano, Mario Ouano, Leticia 1 Ouano Arnaiz and Cielo Ouano Martinez (the Ouanos) seek to nullify the Decision dated September 3, 2004 of the Court of Appeals (CA) in CA-G.R. CV No. 78027, affirming the Order dated December 9, 2002 of the Regional Trial Court (RTC), Branch 57 in Cebu City, in Civil Case No. CEB-20743, a suit to compel the Republic of the Philippines and/or the Mactan-Cebu International Airport Authority (MCIAA) to reconvey to the Ouanos a parcel of land. The second petition, docketed as G.R. No. 168812, has the MCIAA seeking principally to annul and set aside the 2 3 Decision and Resolution dated January 14, 2005 and June 29, 2005, respectively, of the CA in CA-G.R. CV No. 64356, sustaining the RTC, Branch 13 in Cebu City in its Decision of October 7, 1988 in Civil Case No. CEB-18370.

Per its October 19, 2005 Resolution, the Court ordered the consolidation of both cases. Except for the names of the parties and the specific lot designation involved, the relevant factual antecedents 4 which gave rise to these consolidated petitions are, for the most part, as set forth in the Courts Decision of 5 October 15, 2003, as reiterated in a Resolution dated August 9, 2005, in G.R. No. 156273 entitled Heirs of Timoteo Moreno and Maria Rotea v. Mactan-Cebu International Airport Authority (Heirs of Moreno), and in other earlier 6 related cases. In 1949, the National Airport Corporation (NAC), MCIAAs predecessor agency, pursued a program to expand the Lahug Airport in Cebu City. Through its team of negotiators, NAC met and negotiated with the owners of the properties situated around the airport, which included Lot Nos. 744-A, 745-A, 746, 747, 761-A, 762-A, 763-A, 942, and 947 of the Banilad Estate. As the landowners would later claim, the government negotiating team, as a sweetener, assured them that they could repurchase their respective lands should the Lahug Airport expansion project do not push through or once the Lahug Airport closes or its operations transferred to Mactan-Cebu Airport. Some of the landowners accepted the assurance and executed deeds of sale with a right of repurchase. Others, however, including the owners of the aforementioned lots, refused to sell because the purchase price offered was viewed as way below market, forcing the hand of the Republic, represented by the then Civil Aeronautics Administration (CAA), as successor agency of the NAC, to file a complaint for the expropriation of Lot Nos. 744-A, 745-A, 746, 747, 761-A, 762-A, 763-A, 942, and 947, among others, docketed as Civil Case No. R-1881 entitled Republic v. Damian Ouano, et al. On December 29, 1961, the then Court of First Instance (CFI) of Cebu rendered judgment for the Republic, disposing, in part, as follows: IN VIEW OF THE FOREGOING, judgment is hereby rendered: 1. Declaring the expropriation of Lots Nos. 75, 76, 76, 89, 90, 91, 92, 105, 106, 107, 108, 104, 921-A, 88, 93, 913-B, 72, 77, 916, 777-A, 918, 919, 920, 764-A, 988, 744-A, 745-A, 746, 747, 762-A, 763-A, 951, 942, 720-A, x x x and 947, included in the Lahug Airport, Cebu City, justified in and in lawful exercise of the right of eminent domain. xxxx 3. After the payment of the foregoing financial obligation to the landowners, directing the latter to deliver to the plaintiff the corresponding Transfer Certificates of Title to their respective lots; and upon the presentation of the said titles to the Register of Deeds, ordering the latter to cancel the same and to issue, 7 in lieu thereof, new Transfer Certificates of Title in the name of the plaintiff. In view of the adverted buy-back assurance made by the government, the owners of the lots no longer appealed 8 the decision of the trial court. Following the finality of the judgment of condemnation, certificates of title for the 9 covered parcels of land were issued in the name of the Republic which, pursuant to Republic Act No. 6958, were subsequently transferred to MCIAA. At the end of 1991, or soon after the transfer of the aforesaid lots to MCIAA, Lahug Airport completely ceased operations, Mactan Airport having opened to accommodate incoming and outgoing commercial flights. On the ground, the expropriated lots were never utilized for the purpose they were taken as no expansion of Lahug Airport was undertaken. This development prompted the former lot owners to formally demand from the government that they be allowed to exercise their promised right to repurchase. The demands went unheeded. Civil suits followed. G.R. No. 168812 (MCIAA Petition)

On February 8, 1996, Ricardo L. Inocian and four others (all children of Isabel Limbaga who originally owned six [6] of the lots expropriated); and Aletha Suico Magat and seven others, successors-in-interest of Santiago Suico, the original owner of two (2) of the condemned lots (collectively, the Inocians), filed before the RTC in Cebu City a complaint for reconveyance of real properties and damages against MCIAA. The complaint, docketed as Civil Case No. CEB-18370, was eventually raffled to Branch 13 of the court. On September 29, 1997, one Albert Chiongbian (Chiongbian), alleging to be the owner of Lot Nos. 761-A and 762-A but which the Inocians were now claiming, moved and was later allowed to intervene. During the pre-trial, MCIAA admitted the following facts: 1. That the properties, which are the subject matter of Civil Case No. CEB-18370, are also the properties involved in Civil Case R-1881; 2. That the purpose of the expropriation was for the expansion of the old Lahug Airport; that the Lahug Airport was not expanded; 3. That the old Lahug Airport was closed sometime in June 1992; 4. That the price paid to the lot owners in the expropriation case is found in the decision of the court; and 5. That some properties were reconveyed by the MCIAA because the previous owners were able to secure express waivers or riders wherein the government agreed to return the properties should the expansion of the Lahug Airport not materialize. During trial, the Inocians adduced evidence which included the testimony of Ricardo Inocian (Inocian) and Asterio Uy (Uy). Uy, an employee of the CAA, testified that he was a member of the team which negotiated for the acquisition of certain lots in Lahug for the proposed expansion of the Lahug Airport. He recalled that he acted as the interpreter/spokesman of the team since he could speak the Cebuano dialect. He stated that the other members of the team of negotiators were Atty. Pedro Ocampo, Atty. Lansang, and Atty. Saligumba. He recounted that, in the course of the negotiation, their team assured the landowners that their landholdings would be reconveyed to them in the event the Lahug Airport would be abandoned or if its operation were transferred to the Mactan Airport. Some landowners opted to sell, while others were of a different bent owing to the inadequacy of the offered price. Inocian testified that he and his mother, Isabel Lambaga, attended a meeting called by the NAC team of negotiators sometime in 1947 or 1949 where he and the other landowners were given the assurance that they could repurchase their lands at the same price in the event the Lahug Airport ceases to operate. He further testified that they rejected the NACs offer. However, he said that they no longer appealed the decree of expropriation due to the repurchase assurance adverted to. The MCIAA presented Michael Bacarizas (Bacarizas), who started working for MCIAA as legal assistant in 1996. He testified that, in the course of doing research work on the lots subject of Civil Case No. CEB-18370, he discovered that the same lots were covered by the decision in Civil Case No. R-1881. He also found out that the said decision did not expressly contain any condition on the matter of repurchase. Ruling of the RTC On October 7, 1998, the RTC rendered a Decision in Civil Case No. CEB-18370, the dispositive portion of which reads as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered directing defendant Mactan Cebu International Airport Authority (MCIAA) to reconvey (free from liens and encumbrances) to plaintiffs Ricardo Inocian, Olimpia E. Esteves, Emilia E. Bacalla, Restituta E. Montana and Raul Inocian Lots No. 744-A, 745-A, 746, 762-A, 747, 761-A and to plaintiffs Aletha Suico Magat, Philip M. Suico, Doris S. dela Cruz, James M. Suico, Edward M. Suico, Roselyn S. Lawsin, Rex M. Suico and Kharla Suico-Gutierrez Lots No. 942 and 947, after plaintiffs shall have paid MCIAA the sums indicated in the decision in Civil Case No. R-1881. Defendant MCIAA is likewise directed to pay the aforementioned plaintiffs the sum or P50,000.00 as and for attorneys fees and P1 0,000.00 for litigation expenses. Albert Chiongbians intervention should be, as it is hereby DENIED for utter lack of factual basis. With costs against defendant MCIAA.
10

Therefrom, MCIAA went to the CA on appeal, docketed as CA-G.R. CV No. 64356. Ruling of the CA On January 14, 2005, the CA rendered judgment for the Inocians, declaring them entitled to the reconveyance of the questioned lots as the successors-in-interest of the late Isabel Limbaga and Santiago Suico, as the case may be, who were the former registered owners of the said lots. The decretal portion of the CAs Decision reads: WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DISMISSING the appeal filed in this case and AFFFIRMING the decision rendered by the court a quo on October 7, 1998 in Civil Case No. CEB18370. SO ORDERED. The CA, citing and reproducing excerpts from Heirs of Moreno, virtually held that the decision in Civil Case No. R1881 was conditional, stating "that the expropriation of [plaintiff-appellees+ lots for the proposed expansion of the Lahug Airport was ordered by the CFI of Cebu under the impression that Lahug Airport would continue in 12 operation." The condition, as may be deduced from the CFIs decision, was t hat should MCIAA, or its precursor agency, discontinue altogether with the operation of Lahug Airport, then the owners of the lots expropriated may, if so minded, demand of MCIAA to make good its verbal assurance to allow the repurchase of the properties. To the CA, this assurance, a demandable agreement of repurchase by itself, has been adequately established. On September 21, 2005, the MCIAA filed with Us a petition for review of the CAs Decision, docketed as G.R. No. 168812. G.R. No. 168770 (Ouano Petition) Soon after the MCIAA jettisoned the Lahug Airport expansion project, informal settlers entered and occupied Lot No. 763-A which, before its expropriation, belonged to the Ouanos. The Ouanos then formally asked to be allowed to exercise their right to repurchase the aforementioned lot, but the MCIAA ignored the demand. On August 18, 1997, the Ouanos instituted a complaint before the Cebu City RTC against the Republic and the MCIAA for reconveyance, docketed as Civil Case No. CEB-20743. Answering, the Republic and MCIAA averred that the Ouanos no longer have enforceable rights whatsoever over the condemned Lot No. 763-A, the decision in Civil Case No. R-1881 not having found any reversionary condition. Ruling of the RTC
11

By a Decision dated November 28, 2000, the RTC, Branch 57 in Cebu City ruled in favor of the Ouanos, disposing as follows: WHEREFORE, in the light of the foregoing, the Court hereby renders judgment in favor of the plaintiffs, Anunciacion Vda. De Ouano, Mario P. Ouano, Leticia Ouano Arnaiz and Cielo Ouano Martinez and against the Republic of the Philippines and Mactan Cebu International Airport Authority (MCIAA) to restore to plaintiffs, the possession and ownership of their land, Lot No. 763-A upon payment of the expropriation price to defendants; and 2. Ordering the Register of Deeds to effect the transfer of the Certificate of Title from defendant Republic of the Philippines on Lot 763-A, canceling TCT No. 52004 in the name of defendant Republic of the Philippines and to issue a new title on the same lot in the names of Anunciacion Vda. De Ouano, Mario P. Ouano, Leticia Ouano Arnaiz and Cielo Ouano Martinez. No pronouncement as to costs.
13

Acting on the motion of the Republic and MCIAA for reconsideration, however, the RTC, Branch 57 in Cebu City, 14 presided this time by Judge Enriqueta L. Belarmino, issued, on December 9, 2002, an Order that reversed its earlier decision of November 28, 2000 and dismissed the Ouanos complaint. Ruling of the CA In time, the Ouanos interposed an appeal to the CA, docketed as CA-G.R. CV No. 78027. Eventually, the appellate 15 court rendered a Decision dated September 3, 2004, denying the appeal, thus: WHEREFORE, premises considered, the Order dated December 9, 2002, of the Regional Trial Court, 7th Judicial Region, Branch 57, Cebu City, in Civil Case No. CEB-20743, is hereby AFFIRMED. No pronouncement as to costs. SO ORDERED. Explaining its case disposition, the CA stated that the decision in Civil Case No. R-1881 did not state any condition that Lot No. 763-A of the Ouanosand all covered lots for that matterwould be returned to them or that they could repurchase the same property if it were to be used for purposes other than for the Lahug Airport. The appellate court also went on to declare the inapplicability of the Courts pronouncement in MCIAA v. Court of 16 Appeals, RTC, Branch 9, Cebu City, Melba Limbago, et al. , to support the Ouanos cause, since the affected landowners in that case, unlike the Ouanos, parted with their property not through expropriation but via a sale and purchase transaction. The Ouanos filed a motion for reconsideration of the CAs Decision, but was denied per the CAs May 26, 2005 17 Resolution. Hence, they filed this petition in G.R. No. 168770. The Issues G.R. No. 168812 GROUNDS FOR ALLOWANCE OF THE PETITION l. THE ASSAILED ISSUANCES ILLEGALLY STRIPPED THE REPUBLIC OF ITS ABSOLUTE AND UNCONDITIONAL TITLE TO THE SUBJECT EXPROPRIATED PROPERTIES.

ll. THE IMPUNGED DISPOSITIONS INVALIDLY OVERTURNED THIS HONORABLE COURTS FINAL RULINGS IN FERY V. MUNICIPALITY OF CABANATUAN, MCIAA V. COURT OF APPEALS AND REYES V. NATIONAL HOUSING AUTHORITY. lll. THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THIS HONORABLE COURTS RULING IN 18 MORENO, ALBEIT IT HAS NOT YET ATTAINED FINALITY. G.R. No. 168770 Questions of law presented in this Petition Whether or not the testimonial evidence of the petitioners proving the promises, assurances and representations by the airport officials and lawyers are inadmissbale under the Statute of Frauds. Whether or not under the ruling of this Honorable Court in the heirs of Moreno Case, and pursuant to the principles enunciated therein, petitioners herein are entitiled to recover their litigated property. Reasons for Allowances of this Petition Respondents did not object during trial to the admissibility of petitioners testimonial evidence under the Statute of Frauds and have thus waived such objection and are now barred from raising the same. In any event, the Statute of Frauds is not applicable herein. Consequently, petitioners evidence is admissible and should be duly 19 given weight and credence, as initially held by the trial court in its original Decision. While their respective actions against MCIAA below ended differently, the Ouanos and the Inocians proffered arguments presented before this Court run along parallel lines, both asserting entitlement to recover the litigated property on the strength of the Courts ruling in Heirs of Moreno. MCIAA has, however, formulated in its Consolidated Memorandum the key interrelated issues in these consolidated cases, as follows: I WHETHER ABANDONMENT OF THE PUBLIC USE FOR WHICH THE SUBJECT PROPERTIES WERE EXPROPRIATED ENTITLES PETITIONERS OUANOS, ET AL. AND RESPONDENTS INOCIAN, ET AL. TO REACQUIRE THEM. II WHETHER PETITIONERS OUANOS, ET AL. AND RESPONDENTS INOCIAN, ET AL. ARE ENTITLED TO RECONVEYANCE OF THE SUBJECT PROPERTIES SIMPLY ON THE BASIS OF AN ALLEGED VERBAL PROMISE OR ASSURANCE OF SOME NAC OFFICIALS THAT THE SUBJECT PROPERTIES WILL BE RETUNRED IF THE AIRPORT PROJECT WOULD BE ABANDONED. The Courts Ruling The Republic and MCIAAs petition in G.R. No. 168812 i s bereft of merit, while the Ouano petition in G.R. No. 168770 is meritorious. At the outset, three (3) fairly established factual premises ought to be emphasized:

First, the 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. Second, the Lahug Airport had been closed and abandoned. A significant portion of it had, in fact, been purchased 20 by a private corporation for development as a commercial complex. Third, it has been preponderantly established by evidence that the NAC, 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 21 they are no longer used for airport purposes. "No less than Asterio Uy," the Court noted in Heirs of Moreno, "one of the members of the CAA Mactan Legal Team, which interceded for the acquisition of the lots for the Lahug Airports expansion, affirmed that persistent assurances were given to the landowners to the effect that as soon as the Lahug Airport is abandoned or transferred to Mactan, the lot owners would be able to reacquire their 22 23 properties." In Civil Case No. CEB-20743, Exhibit "G," the transcript of the deposition of Anunciacion vda. de Ouano covering the assurance made had been formally offered in evidence and duly considered in the initial decision of the RTC Cebu City. In Civil Case No. CEB-18370, the trial court, on the basis of testimonial evidence, and 24 later the CA, recognized the reversionary rights of the suing former lot owners or their successors in interest and resolved the case accordingly. In point with respect to the representation and promise of the government to return the lots taken should the planned airport expansion do not materialize is what the Court said in Heirs of Moreno, thus: This is a difficult case calling for a difficult but just solution. To begin with there exists an undeniable historical narrative that the predecessors of respondent MCIAA had suggested to the landowners of the properties covered by the Lahug Airport expansion scheme that they could repurchase their properties at the termination of the airports venue. Some acted on this assurance and sold their properties; other landowners held out and waited for the exercise of eminent domain to take its course until finally coming to terms with respondents predecessors that they would not appeal nor block further judgment of condemnation if the right of repurchase was extended to them. A handful failed to prove that they acted on such assurance when they parted with ownership of their 25 land. (Emphasis supplied; citations omitted.) For perspective, Heirs of Morenolater followed by MCIAA v. Tudtud (Tudtud) and the consolidated cases at baris cast under the same factual setting and centered on the expropriation of privately-owned lots for the public purpose of expanding the Lahug Airport and the alleged promise of reconveyance given by the negotiating NAC officials to the private lot owners. All the lots being claimed by the former owners or successors-in-interest of the former owners in the Heirs of Moreno, Tudtud, and the present cases were similarly adjudged condemned in favor of the Republic in Civil Case No. R-1881. All the claimants sought was or is to have the condemned lots reconveyed to them upon the payment of the condemnation price since the public purpose of the expropriation was never met. Indeed, the expropriated lots were never used and were, in fact, abandoned by the expropriating government agencies. In all then, the issues and supporting arguments presented by both sets of petitioners in these consolidated cases have already previously been passed upon, discussed at length, and practically peremptorily resolved in Heirs of Moreno and the November 2008 Tudtud ruling. The Ouanos, as petitioners in G.R. No. 168770, and the Inocians, as respondents in G.R. No. 168812, are similarly situated as the heirs of Moreno in Heirs of Moreno and Benjamin Tudtud in Tudtud. Be that as it may, there is no reason why the ratio decidendi in Heirs of Moreno and Tudtudshould not be made to apply to petitioners Ouanos and respondents Inocians such that they shall be entitled to recover their or their predecessors respective properties under the same manner and arrangement as the heirs of Moreno and Tudtud. Stare decisis et non quieta movere (to adhere to precedents, and 27 not to unsettle things which are established). Just like in Tudtud and earlier in Heirs of Moreno, MCIAA would foist the theory that the judgment of condemnation in Civil Case No. R-1881 was without qualification and was unconditional. It would, in fact, draw
26

attention to thefallo of the expropriation courts decision to prove that there is nothing in the decision indicating that the government gave assurance or undertook to reconvey the covered lots in case the Lahug airport expansion project is aborted. Elaborating on this angle, MCIAA argues that the claim of the Ouanos and the Inocians regarding the alleged verbal assurance of the NAC negotiating team that they can reacquire their 28 landholdings is barred by the Statute of Frauds. Under the rule on the Statute of Frauds, as expressed in Article 1403 of the Civil Code, a contract for the sale or acquisition of real property shall be unenforceable unless the same or some note of the contract be in writing and subscribed by the party charged. Subject to defined exceptions, evidence of the agreement cannot be received without the writing, or secondary evidence of its contents. MCIAAs invocation of the Statute of Frauds is misplaced primarily because the statute applies only to executory 29 and not to completed, executed, or partially consummated contracts. Carbonnel v. Poncio, et al., quoting Chief Justice Moran, explains the rationale behind this rule, thusly: x x x "The reason is simple. In executory contracts there is a wide field for fraud because unless they may be in writing there is no palpable evidence of the intention of the contracting parties. The statute has been precisely been enacted to prevent fraud." x x x However, if a contract has been totally or partially performed, the exclusion of parol evidence would promote fraud or bad faith , for it would enable the defendant to keep the benefits already derived by him from the transaction in litigation, and at the same time, evade the obligations, responsibilities or 30 liabilities assumed or contracted by him thereby. (Emphasis in the original.) Analyzing the situation of the cases at bar, there can be no serious objection to the proposition that the agreement package between the government and the private lot owners was already partially performed by the government through the acquisition of the lots for the expansion of the Lahug airport. The parties, however, failed to accomplish the more important condition in the CFI decision decreeing the expropriation of the lots litigated upon: the expansion of the Lahug Airport. The projectthe public purpose behind the forced property takingwas, in fact, never pursued and, as a consequence, the lots expropriated were abandoned. Be that as it may, the two groups of landowners can, in an action to compel MCIAA to make good its oral undertaking to allow repurchase, adduce parol evidence to prove the transaction. At any rate, the objection on the admissibility of evidence on the basis of the Statute of Frauds may be waived if not timely raised. Records tend to support the conclusion that MCIAA did not, as the Ouanos and the Inocians posit, object to the introduction of parol evidence to prove its commitment to allow the former landowners to repurchase their respective properties upon the occurrence of certain events. In a bid to deny the lot owners the right to repurchase, MCIAA, citing cases, points to the dispositive part of the decision in Civil Case R-1881 which, as couched, granted the Republic absolute title to the parcels of land declared expropriated. The MCIAA is correct about the unconditional tone of the dispositive portion of the decision, but that actuality would not carry the day for the agency. Addressing the matter of the otherwise absolute tenor of the CFIs disposition in Civil Case No. R-1881, the Court, in Heirs of Moreno, after taking stock of the ensuing portion of the body of the CFIs decision, said: As for the public purpose of the expropriation proceeding, it cannot now be doubted. Although Mactan Airport is being constructed, it does not take away the actual usefulness and importance of the Lahug Airport: it is handling the air traffic of both civilian and military. From it aircrafts fly to Mindanao and Visayas and pass thru it on their flights to the North and Manila. Then, no evidence was adduced to show how soon is the Mactan Airport to be placed in operation and whether the Lahug Airport will be closed immediately thereafter. It is up to the other departments of the Government to determine said matters. The Court cannot substitute its judgments for those of the said departments or agencies. In the absence of such showing, the court will presume that the Lahug Airport 32 will continue to be in operation. (Emphasis supplied.)
31

We went on to state as follows: While the trial court in Civil Case No. R-1881 could have simply acknowledged the presence of public purpose for the exercise of eminent domain regardless of the survival of the Lahug Airport, the trial court in its Decision chose not to do so but instead prefixed its finding of public purpose upon its understanding that Lahug Airport will continue to be in operation. Verily, these meaningful statements in the body of the Decision warrant the conclusion that the expropriated properties would remain to be so until it was confirmed that Lahug Airport was no longer in operation. This inference further implies two (2) things: (a) after the Lahug Airport ceased its undertaking as such and the expropriated lots were not being used for any airport expansion project, the rights vis-vis the expropriated lots x x x as between the State and their former owners, petitioners herein, must be equitably adjusted; and (b) the foregoing unmistakable declarations in the body of the Decision should merge with and become an intrinsic part of the fallo thereof which under the premises is clearly inadequate since the 33 dispositive portion is not in accord with the findings as contained in the body thereof. Not to be overlooked of course is what the Court said in its Resolution disposing of MCIAAs motion to reconsider the original ruling in Heirs of Moreno. In that resolution, We stated that the fallo of the decision in Civil Case R1881 should be viewed and understood in connection with the entire text, which contemplated a return of the property taken if the airport expansion project were abandoned. For ease of reference, following is what the Court wrote: Moreover, we do not subscribe to the *MCIAAs+ contention that since the possibility of the Lahug Airports closure was actually considered by the trial court, a stipulation on reversion or repurchase was so material that it should not have been discounted by the court a quo in its decision in Civil Case No. R-1881, if, in fact, there was one. We find it proper to cite, once more, this Courts ruling that the fallo of the decision in Civil Case No. R-1881 must be read in reference to the other portions of the decision in which it forms a part. A reading of the Courts judgment must not be confined to the dispositive portion alone; rather it should be meaningfully construed in unanimity 34 with the ratio decidendi thereof to grasp the true intent and meaning of a decision. The Court has, to be sure, taken stock of Fery v. Municipality of Cabanatuan, a case MCIAA cites at every possible turn, where the Court made these observations: If, for example, land is expropriated for a particular purpose, with the condition that when that purpose is ended or abandoned the property shall return to its former owner, then of course, when the purpose is terminated or abandoned, the former owner reacquires the property so expropriated. x x x If, upon the contrary, however the decree of expropriation gives to the entity a fee simple title, then, of course, the land becomes the absolute property of the expropriator x x x and in that case the non-user does not have the effect of defeating the title acquired by the expropriation proceedings x x x. Fery notwithstanding, MCIAA cannot really rightfully say that it has absolute title to the lots decreed expropriated in Civil Case No. R-1881. The correct lesson of Fery is captured by what the Court said in that case, thus: "the government acquires only such rights in expropriated parcels of land as may be allowed by the character of its title over the properties." In light of our disposition in Heirs of Moreno and Tudtud, the statement immediately adverted to 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. But as has been determined below, 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. To borrow from our underlying decision in Heirs of Moreno, "[n]o doubt, the return or repurchase of the condemned properties of petitioners could readily be justified as the manifest legal effect of consequence of the tr ial courts underlying presumption that Lahug Airport will continue to be in operation when it granted the complaint for eminent domain and the airport 36 discontinued its activities."
35

Providing added support to the Ouanos and the Inocians right to repurchase is what in Heirs of Moreno was 37 referred to as constructive trust, one that is akin to the implied trust expressed in Art. 1454 of the Civil Code, the 38 purpose of which is to prevent unjust enrichment. In the case at bench, the Ouanos and the Inocians parted with their respective lots in favor of the MCIAA, the latter obliging itself to use the realties for the expansion of Lahug Airport; failing to keep its end of the bargain, MCIAA can be compelled by the former landowners to reconvey the parcels of land to them, otherwise, they would be denied the use of their properties upon a state of affairs that was not conceived nor contemplated when the expropriation was authorized. 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 Ouanos and Inocians can demand the reconveyance of their old properties after the payment of the condemnation price. Constructive trusts are fictions of equity that courts use as devices to remedy any situation in which the holder of the legal title, MCIAA in this case, may not, in good conscience, retain the beneficial interest. We add, however, as in Heirs of Moreno, that the party seeking the aid of equity the landowners in this instance, in establishing the trustmust himself do equity in a manner as the court may deem just and reasonable. The Court, in the recent MCIAA v. Lozada, Sr., revisited and abandoned the Fery ruling that the former owner is not entitled to reversion of the property even if the public purpose were not pursued and were abandoned, thus: On this note, we take this opportunity to revisit our ruling in Fery, which involved an expropriation suit commenced upon parcels of land to be used as a site for a public market. Instead of putting up a public market, respondent Cabanatuan constructed residential houses for lease on the area. Claiming that the municipality lost its right to the property taken since it did not pursue its public purpose, petitioner Juan Fery, the former owner of the lots expropriated, sought to recover his properties. However, as he had admitted that, in 1915, respondent Cabanatuan acquired a fee simple title to the lands in question, judgment was rendered in favor of the municipality, following American jurisprudence, particularly City of Fort Wayne v. Lake Shore & M.S. RY. Co.,McConihay v. Theodore Wright, and Reichling v. Covington Lumber Co., all uniformly holding that the transfer to a third party of the expropriated real property, which necessarily resulted in the abandonment of the particular public purpose for which the property was taken, is not a ground for the recovery of the same by its previous owner, the title of the expropriating agency being one of fee simple. 1avvphi1 Obviously, Fery was not decided pursuant to our now sacredly held constitutional right that private property shall not be taken for public use without just compensation. It is well settled that the taking of private property by the Governments power of eminent domain is subject to two mandatory requirements: (1) that it is for a particular public purpose; and (2) that just compensation be paid to the property owner. These requirements partake of the nature of implied conditions that should be complied with to enable the condemnor to keep the property expropriated. 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 owners right to justice, fairness, and equity. In light of these premises, we now expressly hold that the taking of private property, consequent to the Governments 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 39 justification. (Emphasis supplied.) Clinging to Fery, specifically the fee simple concept underpinning it, is no longer compelling, considering the ensuing inequity such application entails. Too, the Court resolved Fery not under the cover of any of the Philippine Constitutions, each decreeing that private property shall not be taken for public use without just compensation. The twin elements of just compensation and public purpose are, by themselves, direct limitations to the exercise of eminent domain, arguing, in a way, against the notion of fee simple title. 1avvphi1 The fee does not vest until 40 payment of just compensation. In esse, expropriation is forced private property taking, the landowner being really without a ghost of a chance to defeat the case of the expropriating agency. In other words, in expropriation, the private owner is deprived of property against his will. Withal, the mandatory requirement of due process ought to be strictly followed, such that the state must show, at the minimum, a genuine need, an exacting public purpose to take private property, the purpose to be specifically alleged or least reasonably deducible from the complaint. Public use, as an eminent domain concept, has now acquired an expansive meaning to include any use that is of 41 "usefulness, utility, or advantage, or what is productive of general benefit [of the public]." If the genuine public necessitythe very reason or condition as it wereallowing, at the first instance, the expropriation of a private land ceases or disappears, then there is no more cogent point for the governments retention of the expropriated land. The same legal situation should hold if the government devotes the property to another public use very much different from the original or deviates from the declared purpose to benefit another private person. It has been said that the direct use by the state of its power to oblige landowners to renounce their productive possession to 42 another citizen, who will use it predominantly for that citizens own private gain, is offensive to our laws. A condemnor should commit to use the property pursuant to the purpose stated in the petition for expropriation, failing which it should file another petition for the new purpose. If not, then it behooves the condemnor to return the said property to its private owner, if the latter so desires. The government cannot plausibly keep the property it expropriated in any manner it pleases and, in the process, dishonor the judgment of expropriation. This is not in keeping with the idea of fair play, The notion, therefore, that the government, via expropriation proceedings, acquires unrestricted ownership over or a fee simple title to the covered land, is no longer tenable. We suggested as much in Heirs of Moreno and inTudtud and more recently in Lozada, Sr. Expropriated lands should be differentiated from a piece of land, ownership of which was absolutely transferred by way of an unconditional purchase and sale contract freely entered by two parties, one without obligation to buy and the other without the duty to sell. In that case, the fee simple concept really comes into play. There is really no occasion to apply the "fee simple concept" if the transfer is conditional. The taking of a private land in expropriation proceedings is always conditioned on its continued devotion to its public purpose. As a necessary corollary, once the purpose is terminated or peremptorily abandoned, then the former owner, if he so desires, may seek its reversion, subject of course to the return, at the very least, of the just compensation received. To be compelled to renounce dominion over a piece of land is, in itself, an already bitter pill to swallow for the owner. But to be asked to sacrifice for the common good and yield ownership to the government which reneges on its assurance that the private property shall be for a public purpose may be too much. But it would be worse if the power of eminent domain were deliberately used as a subterfuge to benefit another with influence and power in the political process, including development firms. The mischief thus depicted is not at all far-fetched with the continued application of Fery. Even as the Court deliberates on these consolidated cases, there is an uncontroverted allegation that the MCIAA is poised to sell, if it has not yet sold, the areas in question to Cebu Property Ventures, Inc. This provides an added dimension to abandon Fery.

Given the foregoing disquisitions, equity and justice demand the reconveyance by MCIAA of the litigated lands in question to the Ouanos and Inocians. In the same token, justice and fair play also dictate that the Ouanos and Inocian return to MCIAA what they received as just compensation for the expropriation of their respective properties plus legal interest to be computed from default, which in this case should run from the time MCIAA 43 complies with the reconveyance obligation. They must likewise pay MCIAA the necessary expenses it might have incurred in sustaining their respective lots and the monetary value of its services in managing the lots in question to the extent that they, as private owners, were benefited thereby. In accordance with Art. 1187 of the Civil Code on mutual compensation, MCIAA may keep whatever income or fruits it may have obtained from the parcels of land expropriated. In turn, the Ouanos and Inocians need not 44 require the accounting of interests earned by the amounts they received as just compensation. Following Art. 1189 of the Civil Code providing that "[i]f the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor x x x," the Ouanos and Inocians do not have to settle the appreciation of the values of their respective lots as part of the reconveyance process, since the value increase is merely the natural effect of nature and time. Finally, We delete the award of PhP 50,000 and PhP 10,000, as attorneys fees and litigation expenses, respectively, made in favor of the Inocians by the Cebu City RTC in its judgment in Civil Case No. CEB-18370, as later affirmed by the CA. As a matter of sound policy, no premium should be set on the right to litigate where there 45 is no doubt about the bona fides of the exercise of such right, as here, albeit the decision of MCIAA to resist the former landowners claim eventually turned out to be untenable. WHEREFORE, the petition in G.R. No. 168770 is GRANTED. Accordingly, the CA Decision dated September 3, 2004 in CA-G.R. CV No. 78027 is REVERSED and SET ASIDE. Mactan-Cebu International Airport Authority is ordered to reconvey subject Lot No. 763-A to petitioners Anunciacion vda. de Ouano, Mario P. Ouano, Leticia Ouano Arnaiz, and Cielo Ouano Martinez. The Register of Deeds of Cebu City is ordered to effect the necessary cancellation of title and transfer it in the name of the petitioners within fifteen (15) days from finality of judgment. The petition of the Mactan-Cebu International Airport Authority in G.R. No. 168812 is DENIED, and the CAs Decision and Resolution dated January 14, 2005 and June 29, 2005, respectively, in CA-G.R. CV No. 64356 areAFFIRMED, except insofar as they awarded attorneys fees and litigation expenses that are hereby DELETED. Accordingly, Mactan-Cebu International Airport Authority is ordered to reconvey to respondents Ricardo L. Inocian, Olympia E. Esteves, Emilia E. Bacalla, Restituta E. Montana, and Raul L. Inocian the litigated Lot Nos. 744-A, 745-A, 746, 762-A, 747, and 761-A; and to respondents Aletha Suico Magat, Philip M. Suico, Dolores S. dela Cruz, James M. Suico, Edward M. Suico, Roselyn S. Lawsin, Rex M. Suico, and Kharla Suico-Gutierrez the litigated Lot Nos. 942 and 947. The Register of Deeds of Cebu City is ordered to effect the necessary cancellation of title and transfer it in the name of respondents within a period of fifteen (15) days from finality of judgment. The foregoing dispositions are subject to QUALIFICATIONS, to apply to these consolidated petitions, when appropriate, as follows: (1) Petitioners Ouano, et al. in G.R. No. 168770 and respondents Ricardo L Inocian, et al. in G.R. No. 168812 are ordered to return to the MCIAA the just compensation they or their predecessors-in-interest received for the expropriation of their respective lots as stated in Civil Case No. R-1881, within a period of sixty (60) days from finality of judgment; (2) The MCIAA shall be entitled to RETAIN whatever fruits and income it may have obtained from the subject expropriated lots without any obligation to refund the same to the lot owners; and

(3) Petitioners Ouano, et al. in G.R. No. 168770 and respondents Ricardo L. Inocian, et al. in G.R. No. 168812 shall RETAIN whatever interests the amounts they received as just compensation may have earned in the meantime without any obligation to refund the same to MCIAA. SO ORDERED. NATIONAL POWER CORPORATION, Petitioner, Present: G.R. No. 165828

- versus -

CORONA, C.J., Chairperson, LEONARDO-DE CASTRO, BERSAMIN,

HEIRS OF MACABANGKIT SANGKAY, namely: CEBU, BATOWA-AN, SAYANA, NASSER, MANTA, EDGAR, * PUTRI , MONGKOY , and AMIR, all surnamed MACABANGKIT, Respondents.

DEL CASTILLO, and VILLARAMA, JR., JJ.

Promulgated:

August 24, 2011 x-----------------------------------------------------------------------------------------x

DECISION

BERSAMIN, J.:

Private property shall not be taken for public use without just compensation . Section 9, Article III, 1987 Constitution

The application of this provision of the Constitution is the focus of this appeal.

Petitioner National Power Corporation (NPC) seeks the review on certiorari of the decision promulgated on October 5, 2004, whereby the Court of Appeals (CA) affirmed the decision dated August 13, 1999 and the supplemental decision dated August 18, 1999, ordering NPC to pay just compensation to the respondents, both rendered by the Regional Trial Court, Branch 1, in Iligan City (RTC).
[1]

Antecedents

Pursuant to its legal mandate under Republic Act No. 6395 (An Act Revising the Charter of the National Power Corporation), NPC undertook the Agus River Hydroelectric Power Plant Project in the 1970s to generate electricity for Mindanao. The project included the construction of several underground tunnels to be used in diverting the water flow from the Agus River to the hydroelectric plants.
[2]

On November 21, 1997, the respondents, namely: Cebu, Bangowa-an, Sayana, Nasser, Manta, Edgar, Putri, Mongkoy and Amir, all surnamed Macabangkit (Heirs of Macabangkit), as the owners of land with an area of 221,573 square meters situated in Ditucalan, Iligan City, sued NPC in the RTC for the recovery of damages and of the property, with the alternative prayer for the payment of just compensation.
[3]

They alleged that they had

belatedly discovered that one of the underground tunnels of NPC that diverted the water flow of the Agus River for the operation of the Hydroelectric Project in Agus V, Agus VI and Agus VII traversed their land; that their discovery had occurred in 1995 after Atty. Saidali C. Gandamra, President of the Federation of Arabic Madaris School, had rejected their offer to sell the land because of the danger the underground tunnel might pose to the proposed Arabic Language Training Center and Muslims Skills Development Center; that such rejection had been followed by the withdrawal by Global Asia Management and Resource Corporation from developing the land into a housing project for the same reason; that Al-Amanah Islamic Investment Bank of the Philippines had also refused to accept their land as collateral because of the presence of the underground tunnel; that the underground tunnel had been constructed without their knowledge and consent; that the presence of 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 because of the loud sound of the water rushing through the tunnel and the constant shaking of the ground, forcing them and their workers to relocate to safer grounds.

In its answer with counterclaim, NPC countered that the Heirs of Macabangkit had no right to compensation under section 3(f) of Republic Act No. 6395, under which a mere legal easement on their land was established; that their cause of action, should they be entitled to compensation, already prescribed due to the tunnel having been constructed in 1979; and that by reason of the tunnel being an apparent and continuous easement, any action arising from such easement prescribed in five years.

[4]

Ruling of the RTC

On July 23, 1998, an ocular inspection of the land that was conducted by RTC Judge Mamindiara P. Mangotara and the representatives of the parties resulted in the following observations and findings:

a.

That a concrete post which is about two feet in length from the ground which according to the claimants is the middle point of the tunnel.

b.

That at least three fruit bearing durian trees were uprooted and as a result of the construction by the defendant of the tunnel and about one hundred coconuts planted died.
[5]

c.

That underground tunnel was constructed therein .

After trial, the RTC ruled in favor of the plaintiffs (Heirs of Macabangkit), decreeing:

[6]

WHEREFORE, premises considered:

1. The prayer for the removal or dismantling of defendants tunnel is denied. However, defendant is hereby directed and ordered:

a)To pay plaintiffs land with a total area of 227,065 square meters, at the rate of FIVE HUNDRED (P500.00) PESOS per square meter, or a total of ONE HUNDRED THIRTEEN MILLION FIVE HUNDRED THIRTY TWO THOUSAND AND FIVE HUNDRED (P113,532,500.00), PESOS, plus interest, as actual damages or just compensation;

b) To pay plaintiff a monthly rental of their land in the amount of THIRTY THOUSAND (P30,000.00) PESOS from 1979 up to July 1999 with 12% interest per annum;

c)To pay plaintiffs the sum of TWO HUNDRED THOUSAND (P200,000.00) PESOS, as moral damages;

d) To pay plaintiffs, the sum of TWO HUNDRED THOUSAND (P200,000.00) PESOS, as exemplary damages;

e)To pay plaintiffs, the sum equivalent to 15% of the total amount awarded, as attorneys fees, and to pay the cost.

SO ORDERED.

The RTC found that NPC had concealed the construction of the tunnel in 1979 from the Heirs of Macabangkit, and had since continuously denied its existence; that NPC had acted in bad faith by taking possession of the subterranean portion of their land to construct the tunnel without their knowledge and prior consent; that the existence of the tunnel had affected the entire expanse of the land, and had restricted their right to excavate or to construct a motorized deep well; and that they, as owners, had lost the agricultural, commercial, industrial and residential value of the land.

The RTC fixed the just compensation at P500.00/square meter based on the testimony of Dionisio Banawan, OIC-City Assessor of Iligan City, to the effect that the appraised value of the adjoining properties ranged from P700.00 to P750.00, while the appraised value of their affected land ranged from P400.00 to P500.00. The RTC also required NPC to pay rentals from 1979 due to its bad faith in concealing the construction of the tunnel from the Heirs of Macabangkit.

On August 18, 1999, the RTC issued a supplemental decision, viz:

[7]

Upon a careful review of the original decision dated August 13, 1999, a sentence should be added to paragraph 1(a) of the dispositive portion thereof, to bolster, harmonize, and conform to the findings of the Court, which is quoted hereunder, to wit:

Consequently, plaintiffs land or properties are hereby condemned in favor of defendant National Power Corporation, upon payment of the aforesaid sum .

Therefore, paragraph 1(a) of the dispositive portion of the original decision should read, as follows:

a)

To pay plaintiffs land with a total area of 227,065 square meters, at the rate of FIVE HUNDRED (P500.00) PESOS per square meter, or a total of ONE HUNDRED THIRTEEN MILLION FIVE HUNDRED THIRTY TWO THOUSAND AND FIVE HUNDRED (P113,532,500.00) PESOS, plus interest, as actual damages or just compensation; Consequently, plaintiffs land or properties are hereby condemned in favor of defendant National Power Corporation, upon payment of the aforesaid sum;

This supplemental decision shall be considered as part of paragraph 1(a) of the dispositive portion of the original decision.

Furnish copy of this supplemental decision to all parties immediately.

SO ORDERED.

On its part, NPC appealed to the CA on August 25, 1999.

[8]

Earlier, on August 18, 1999, the Heirs of Macabangkit filed an urgent motion for execution of judgment pending appeal.
[9]

The RTC granted the motion and issued a writ of execution,

[10]

prompting NPC to assail the writ

by petition for certiorari in the CA. On September 15, 1999, the CA issued a temporary restraining order (TRO) to enjoin the RTC from implementing its decision. The Heirs of Macabangkit elevated the ruling of the CA (G.R. No. 141447), but the Court upheld the CA on May 4, 2006.
[11]

Ruling of the CA

NPC raised only two errors in the CA, namely:

I THE COURT A QUO SERIOUSLY ERRED IN RULING THAT NAPOCORS UNDERGROUND TUNNEL IN ITS AGUS RIVER HYDRO-ELECTRIC PLANT PROJECT TRAVERSED AND/OR AFFECTED APPELLEES PROPERTY AS THERE IS NO CLEAR EVIDENCE INDUBITABLY ESTABLISHING THE SAME

II THE COURT A QUO SERIOUSLY ERRED IN GRANTING APPELLEES CLAIMS IN THEIR ENTIRETY FOR GRANTING ARGUENDO THAT NAPOCORS UNDERGROUND TUNNEL INDEED TRAVERSED APPELLEES PROPERTY, THEIR CAUSE OF ACTION HAD ALREADY BEEN BARRED BY PRESCRIPTION, ESTOPPEL AND LACHES

On October 5, 2004, the CA affirmed the decision of the RTC, holding that the testimonies of NPCs witness Gregorio Enterone and of the respondents witness Engr. Pete Sacedon, the topographic survey map, the sketch map, and the ocular inspection report sufficiently established the existence of the underground tunnel traversing the land of the Heirs of Macabangkit; that NPC did not substantiate its defense that prescription already barred the claim of the Heirs of Macabangkit; and that Section 3(i) of R.A. No. 6395, being silent about tunnels, did not apply, viz:

As regard Section 3(i) of R.A. No. 6395 (An Act Revising the Charter of the National Power Corporation), it is submitted that the same provision is not applicable. There is nothing in Section 3(i) of said law governing claims involving tunnels. The same provision is applicable to those

projects or facilities on the surface of the land, that can easily be discovered, without any mention about the claims involving tunnels, particularly those surreptitiously constructed beneath the surface of the land, as in the instant case.

Now, while it is true that Republic Act No. 6395 authorizes NAPOCOR to take water from any public stream, river, creek, lake, spring or waterfall in the Philippines for the realization of the purposes specified therein for its creation; to intercept and divert the flow of waters from lands of riparian owners (in this case, the Heirs), and from persons owning or interested in water which are or may be necessary to said purposes, the same Act expressly mandates the payment of just compensation.

WHEREFORE, premises considered, the instant appeal is hereby DENIED for lack of merit. Accordingly, the appealed Decision dated August 13, 1999, and the supplemental Decision dated August 18, 1999, are hereby AFFIRMED in toto.

SO ORDERED.

[12]

Issue

NPC has come to the Court, assigning the lone error that:

THE APPELLATE COURT ERRED ON A QUESTION OF LAW WHEN IT AFFIRMED THE DECISION AND SUPPLEMENTAL DECISION OF THE COURT A QUO DIRECTING AND ORDERING PETITIONER TO PAY JUST COMPENSATION TO RESPONDENTS.

NPC reiterates that witnesses Enterone and Sacedon lacked personal knowledge about the construction and existence of the tunnel and were for that reason not entitled to credence; and that the topographic and relocation maps prepared by Sacedon should not be a basis to prove the existence and location of the tunnel due to being self-serving.

NPC contends that the CA should have applied Section 3(i) of Republic Act No. 6395, which provided a period of only five years from the date of the construction within which the affected landowner could bring a claim against it; and that even if Republic Act No. 6395 should be inapplicable, the action of the Heirs of Macabangkit had already prescribed due to the underground tunnel being susceptible to acquisitive prescription after the lapse of 10 years pursuant to Article 620 of the Civil Code due to its being a continuous and apparent legal easement under Article 634 of the Civil Code.

The issues for resolution are, therefore, as follows:

(1) Whether the CA and the RTC erred in holding that there was an underground tunnel traversing the Heirs of Macabangkits land constructed by NPC; and

(2) Whether the Heirs of Macabangkits right to claim just compensation had prescribed under section 3(i) of Republic Act No. 6395, or, alternatively, under Article 620 and Article 646 of the Civil Code.

Ruling

We uphold the liability of NPC for payment of just compensation.

1. Factual findings of the RTC, when affirmed by the CA, are binding

The existence of the tunnel underneath the land of the Heirs of Macabangkit, being a factual matter, cannot now be properly reviewed by the Court, for questions of fact are beyond the pale of a petition for review on certiorari. Moreover, the factual findings and determinations by the RTC as the trial court are generally binding on the Court, particularly after the CA affirmed them. dismiss NPCs appeal.
[13]

Bearing these doctrines in mind, the Court should rightly

NPC argues, however, that this appeal should not be dismissed because the Heirs of Macabangkit essentially failed to prove the existence of the underground tunnel. It insists that the topographic survey map and the rightof-way map presented by the Heirs of Macabangkit did not at all establish the presence of any underground tunnel.

NPC still fails to convince.

Even assuming, for now, that the Court may review the factual findings of the CA and the RTC, for NPC to insist that the evidence on the existence of the tunnel was not adequate and incompetent remains futile. On the contrary, the evidence on the tunnel was substantial, for the significance of the topographic survey map and the sketch map (as indicative of the extent and presence of the tunnel construction) to the question on the existence of the tunnel was strong, as the CA correctly projected in its assailed decision, viz:

Among the pieces of documentary evidence presented showing the existence of the said tunnel beneath the subject property is the topographic survey map. The topographic survey map is one conducted to know about the location and elevation of the land and all existing structures above and underneath it. Another is the Sketch Map which shows the location and extent of the land traversed or affected by the said tunnel. These two (2) pieces of documentary evidence readily point the extent and presence of the tunnel construction coming from the power cavern near the small man-made lake which is the inlet and approach tunnel, or at a distance of about two (2) kilometers away from the land of the plaintiffs-appellees, and then traversing the entire and the whole length of the plaintiffs-appellees property, and the outlet channel of the tunnel is another small man-made lake. This is a sub-terrain construction, and considering that both inlet and outlet are bodies of water, the tunnel can hardly be noticed. All constructions done were beneath the surface of the plaintiffs-appellees property. This explains why they could never obtain any knowledge of the existence of such tunnel during the period that the same was [14] constructed and installed beneath their property.

The power cavern and the inlet and outlet channels established the presence of the underground tunnel, based on the declaration in the RTC by Sacedon, a former employee of the NPC.
[15]

It is worthy to note that NPC

did not deny the existence of the power cavern, and of the inlet and outlet channels adverted to and as depicted in the topographic survey map and the sketch map. The CA cannot be faulted for crediting the testimony of Sacedon despite the effort of NPC to discount his credit due to his not being an expert witness, simply because Sacedon had

personal knowledge based on his being NPCs principal engineer and supervisor tasked at one time to lay out the tunnels and transmission lines specifically for the hydroelectric projects, the Agus 1 Hydroelectric Plant itself
[19] [17] [16]

and to supervise the construction of

[18]

from 1978 until his retirement from NPC.

Besides, he declared that he

personally experienced the vibrations caused by the rushing currents in the tunnel, particularly near the outlet channel. Under any circumstances, Sacedon was a credible and competent witness.

The ocular inspection actually confirmed the existence of the tunnel underneath the land of the Heirs of Macabangkit. Thus, the CA observed:

More so, the Ocular inspection conducted on July 23, 1998 further bolstered such claim of the existence and extent of such tunnel. This was conducted by a team composed of the Honorable Presiding Judge of the Regional Trial Court, Branch 01, Lanao del Norte, herself and the respective lawyers of both of the parties and found that, among others, said underground [20] tunnel was constructed beneath the subject property .

It bears noting that NPC did not raise any issue against or tender any contrary comment on the ocular inspection report.

2. Five-year prescriptive period under Section 3(i) of Republic Act No. 6395 does not apply to claims for just compensation

The CA held that Section 3(i) of Republic Act No. 6395 had no application to this action because it covered facilities that could be easily discovered, not tunnels that were inconspicuously constructed beneath the surface of the land.
[21]

NPC disagrees, and argues that because Article 635

[22]

of the Civil Code directs the application of special

laws when an easement, such as the underground tunnel, was intended for public use, the law applicable was

Section 3(i) of Republic Act No. 6395, as amended, which limits the action for recovery of compensation to five years from the date of construction. It posits that the five-year prescriptive period already set in due to the construction of the underground tunnel having been completed in 1979 yet.

Without necessarily adopting the reasoning of the CA, we uphold its conclusion that prescription did not bar the present action to recover just compensation.

Section 3 (i) of Republic Act No. 6395, the cited law, relevantly provides:

Section 3. Powers and General Functions of the Corporation . The powers, functions, rights and activities of the Corporation shall be the following:

xxx (i) To construct works across, or otherwise, any stream, watercourse, canal, ditch, flume, street, avenue, highway or railway of private and public ownership, as the location of said works may require:Provided, That said works be constructed in such a manner as not to endanger life or property; And provided, further, That the stream, watercourse, canal ditch, flume, street, avenue, highway or railway so crossed or intersected be restored as near as possible to their former state, or in a manner not to impair unnecessarily their usefulness. Every person or entity whose right of way or property is lawfully crossed or intersected by said works shall not obstruct any such crossings or intersection and shall grant the Board or its representative, the proper authority for the execution of such work. The Corporation is hereby given the right of way to locate, construct and maintain such works over and throughout the lands owned by the Republic of the Philippines or any of its branches and political subdivisions. The Corporation or its representative may also enter upon private property in the lawful performance or prosecution of its business and purposes, including the construction of the transmission lines thereon; Provided, that the owner of such property shall be indemnified for any actual damage caused thereby;Provided, further, That said action for damages is filed within five years after the rights of way, transmission lines, substations, plants or other facilities shall have been established; Provided, finally, That after said period, no suit shall be brought to question the said rights of way, transmission lines, substations, plants or other facilities;

A cursory reading shows that Section 3(i) covers the construction of works across, or otherwise, any stream, watercourse, canal, ditch, flume, street, avenue, highway or railway of private and public ownership, as the location of said works may require. It is notable that Section 3(i) includes no limitation except those enumerated after the termworks. Accordingly, we consider the term works as embracing all kinds of constructions, facilities, and other developments that can enable or help NPC to meet its objectives of developing hydraulic power expressly provided under paragraph (g) of Section 3.
[23]

The CAs restrictive construal of Section 3(i) as exclusive of

tunnels was obviously unwarranted, for the provision applies not only to development works easily discoverable or on the surface of the earth but also to subterranean works like tunnels. Such interpretation accords with the fundamental guideline in statutory construction that when the law does not distinguish, so must we not.
[24]

Moreover, when the language of the statute is plain and free from ambiguity, and expresses a single,
[25]

definite, and sensible meaning, that meaning is conclusively presumed to be the meaning that the Congress intended to convey.

Even so, we still cannot side with NPC.

We rule that the prescriptive period provided under Section 3(i) of Republic Act No. 6395 is applicable only to an action for damages, and does not extend to an action to recover just compensation like this case. Consequently, NPC cannot thereby bar the right of the Heirs of Macabangkit to recover just compensation for their land.

The action to recover just compensation from the State or its expropriating agency differs from the action for damages. The former, also known as inverse condemnation, 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.
[26]

Just compensation is the full and fair equivalent of the property taken

from its owner by the expropriator. The measure is not the takers gain, but the owners loss. The word just is used to intensify the meaning of the word compensation in order to convey the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full, and ample.
[27]

On the other hand, the latter action seeks

[28]

to vindicate a legal wrong through damages, which may be actual, moral, nominal, temperate, liquidated, or exemplary. When a right is exercised in a manner not conformable with the norms enshrined in Article 19
[29]

and

like provisions on human relations in the Civil Code,and the exercise results to the damage of another, a legal wrong is committed and the wrongdoer is held responsible.

The two actions are radically different in nature and purpose. The action to recover just compensation is based on the Constitution
[30]

while the action for damages is predicated on statutory enactments. Indeed, the

former arises from the exercise by the State of its power of eminent domain against private property for public use, but the latter emanates from the transgression of a right. The fact that the owner rather than the expropriator brings the former does not change the essential nature of the suit as an inverse condemnation,
[32] [31]

for the suit is

not based on tort, but on the constitutional prohibition against the taking of property without just compensation. It would very well be contrary to the clear language of the Constitution to bar the recovery of

just compensation for private property taken for a public use solely on the basis of statutory prescription.

Due to the need to construct the underground tunnel, NPC should have first moved to acquire the land from the Heirs of Macabangkit either by voluntary tender to purchase or through formal expropriation proceedings. In either case, NPC would have been liable to pay to the owners the fair market value of the land, for Section 3(h) of Republic Act No. 6395 expressly requires NPC to pay the fair market value of such property at the time of the taking, thusly:

(h) To acquire, promote, hold, transfer, sell, lease, rent, mortgage, encumber and otherwise dispose of property incident to, or necessary, convenient or proper to carry out the purposes for which the Corporation was created: Provided, That in case a right of way is necessary for its transmission lines, easement of right of way shall only be sought: Provided, however, That in case the property itself shall be acquired by purchase, the cost thereof shall be the fair market value at the time of the taking of such property.

This was what NPC was ordered to do in National Power Corporation v. Ibrahim,

[33]

where NPC had denied

the right of the owners to be paid just compensation despite their land being traversed by the underground tunnels for siphoning water from Lake Lanao needed in the operation of Agus II, Agus III, Agus IV, Agus VI and Agus VII Hydroelectric Projects in Saguiran, Lanao del Sur, in Nangca and Balo-I in Lanao del Norte and in Ditucalan and Fuentes in Iligan City. There, NPC similarly argued that the underground tunnels constituted a mere easement that did not involve any loss of title or possession on the part of the property owners, but the Court resolved against NPC, to wit:

Petitioner contends that the underground tunnels in this case constitute an easement upon the property of the respondents which does not involve any loss of title or possession. The

manner in which the easement was created by petitioner, however, violates the due process rights of respondents as it was without notice and indemnity to them and did not go through proper expropriation proceedings. Petitioner could have, at any time, validly exercised the power of eminent domain to acquire the easement over respondents property as this power encompasses not only the taking or appropriation of title to and possession of the expropriated property but likewise covers even the imposition of a mere burden upon the owner of the condemned property. Significantly, though, landowners cannot be deprived of their right over their land until expropriation proceedings are instituted in court. The court must then see to it that the taking is for public use, that there is payment of just compensation and that there is due [34] process of law.

3. NPCs construction of the tunnel constituted taking of the land, and entitled owners to just compensation

The Court held in National Power Corporation v. Ibrahim that NPC was liable to pay not merely an easement fee but rather the full compensation for land traversed by the underground tunnels, viz:

In disregarding this procedure and failing to recognize respondents ownership of the sub terrain portion, petitioner took a risk and exposed itself to greater liability with the passage of time. It must be emphasized that the acquisition of the easement is not without expense. The underground tunnels impose limitations on respondents use of the property for an indefinite period and deprive them of its ordinary use. Based upon the foregoing, 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. This is so because in this case, the nature of the easement practically deprives the owners of its normal beneficial use. Respondents, as the owner of the property thus expropriated, are entitled to a just compensation which should be neither more nor less, whenever it is possible to make the assessment, than the money equivalent of said [35] property.

Here, like in National Power Corporation v. Ibrahim, NPC constructed a tunnel underneath the land of the Heirs of Macabangkit without going through formal expropriation proceedings and without procuring their consent or at least informing them beforehand of the construction. NPCs construction adversely affected the owners rights and interests because the subterranean intervention by NPC prevented them from introducing any developments on the surface, and from disposing of the land or any portion of it, either by sale or mortgage.

Did such consequence constitute taking of the land as to entitle the owners to just compensation?

We agree with both the RTC and the CA that there was a full taking on the part of NPC, notwithstanding that the owners were not completely and actually dispossessed. It is settled that the taking of private property for public use, to be compensable, need not be an actual physical taking or appropriation.
[37] [36]

Indeed, the

expropriators action may be short of acquisition of title, physical possession, or occupancy but may still amount to a taking. Compensable taking includes destruction, restriction, diminution, or interruption of the rights of
[38] [39]

ownership or of the common and necessary use and enjoyment of the property in a lawful manner, lessening or destroying its value. It is neither necessary that the owner be wholly deprived of the use of his property, nor
[40]

material whether the property is removed from the possession of the owner, or in any respect changes hands.

As a result, NPC should pay just compensation for the entire land. In that regard, the RTC pegged just compensation at P500.00/square meter based on its finding on what the prevailing market value of the property was at the time of the filing of the complaint, and the CA upheld the RTC.

We affirm the CA, considering that NPC did not assail the valuation in the CA and in this Court. NPCs silence was probably due to the correctness of the RTCs valuation after careful consideration and weighing of the parties evidence, as follows:

The matter of what is just compensation for these parcels of land is a matter of evidence. These parcels of land is (sic) located in the City of Iligan, the Industrial City of the South. Witness Dionisio Banawan, OIC- City Assessors Office, testified, Within that area, that area is classified as industrial and residential. That plaintiffs land is adjacent to many subdivisions and that is within the industrial classification. He testified and identified Exhibit AA and AA -1, a Certification, dated April 4, 1997, showing that the appraised value of plaintiffs land ranges from P400.00 to P500.00 per square meter (see, TSN, testimony of Dionisio Banawan, pp. 51, 57,

and 71, February 9, 1999). Also, witness Banawan, testified and identified Two (2) Deeds of Sale, marked as Exhibit AA-2 and AA-3,*+ showing that the appraised value of the land adjoining or adjacent to plaintiff land ranges from P700.00 to P750.00 per square meter. As between the much lower price of the land as testified by defendants witness Gregorio Enterone, and that of the City Assessor of Iligan City, the latter is more credible. Considering however, that the appraised value of the land in the area as determined by the City Assessors Office is not uniform, this Court, is of the opinion that the reasonable amount of just compensation of plaintiffs land [41] should be fixed at FIVE HUNDRED (500.00) PESOS, per square meter. xxx.

The RTC based its fixing of just compensation ostensibly on the prevailing market value at the time of the filing of the complaint, instead of reckoning from the time of the taking pursuant to Section 3(h) of Republic Act No. 6395. The CA did not dwell on the reckoning time, possibly because NPC did not assign that as an error on the part of the RTC.

We rule that the reckoning value is the value at the time of the filing of the complaint, as the RTC provided in its decision. Compensation that is reckoned on the market value prevailing at the time either when NPC entered or when it completed the tunnel, as NPC submits, would not be just, for it would compound the gross unfairness already caused to the owners by NPCs entering without the intention of formally expropriating the land, and without the prior knowledge and consent of the Heirs of Macabangkit. NPCs entry denied elementary due process of law to the owners since then until the owners commenced the inverse condemnation proceedings . The Court is more concerned with the necessity to prevent NPC from unjustly profiting from its deliberate acts of denying due process of law to the owners. As a measure of simple justice and ordinary fairness to them, therefore, reckoning just compensation on the value at the time the owners commenced these inverse condemnation proceedings is entirely warranted.

In National Power Corporation v. Court of Appeals,

[42]

a case that involved the similar construction of an

underground tunnel by NPC without the prior consent and knowledge of the owners, and in which we held that the basis in fixing just compensation when the initiation of the action preceded the entry into the property was the time of the filing of the complaint, not the time of taking,
[43]

we pointed out that there was no taking when the

entry by NPC was made without intent to expropriate or was not made under warrant or color of legal authority.

4. Awards for rentals, moral damages, exemplary

damages, and attorneys fees are deleted for insufficiency of factual and legal bases

The CA upheld the RTCs granting to the Heirs of Macabangkit of rentals of P 30,000.00/month from 1979 up to July 1999 with 12% interest per annum by finding NPC guilty of bad faith in taking possession of the land to construct the tunnel without their knowledge and consent.

Granting rentals is legally and factually bereft of justification, in light of the taking of the land being already justly compensated. Conformably with the ruling in Manila International Airport Authority v. Rodriguez,
[44]

in which the award of interest was held to render the grant of back rentals unwarranted, we delete

the award of back rentals and in its place prescribe interest of 12% interest per annum from November 21, 1997, the date of the filing of the complaint, until the full liability is paid by NPC. The imposition ofinterest of 12% interest per annum follows a long line of pertinent jurisprudence,
[45]

whereby the Court has fixed the rate of

interest on just compensation at 12% per annumwhenever the expropriator has not immediately paid just compensation.

The RTC did not state any factual and legal justifications for awarding to the Heirs of Macabangkit moral and exemplary damages each in the amount of P200,000.00. The awards just appeared in the fallo of its decision. Neither did the CA proffer any justifications for sustaining the RTC on the awards. We consider the omissions of the lower courts as pure legal error that we feel bound to correct even if NPC did not submit that for our consideration. There was, to begin with, no factual and legal bases mentioned for the awards. It is never trite to remind that moral and exemplary damages, not by any means liquidated or assessed as a matter of routine, always require evidence that establish the circumstances under which the claimant is entitled to them. Moreover, the failure of both the RTC and the CA to render the factual and legal justifications for the moral and exemplary damages in the body of their decisions immediately demands the striking out of the awards for being in violation of the fundamental rule that the decision must clearly state the facts and the law on which it is based. Without the factual and legal justifications, the awards are exposed as the product of conjecture and speculation, which have no place in fair judicial adjudication.

We also reverse and set aside the decree of the RTC for NPC to pay to the Heirs of Macabangkit the sum equivalent to 15% of the total amount awarded, as attorneys fees, and to pay the cost. The body of the decision did not state the factual and legal reasons why NPC was liable for attorneys fees. The terse statement found at the end of the body of the RTCs decision, stating: xxx The contingent attorneys fee is hereby reduced from 20% to only 15% of the total amount of the claim that may be awarded to plaintiffs, without more, did not indicate or explain why and how the substantial liability of NPC for attorneys fees could have arisen and been determined.

In assessing attorneys fees against NPC and in favor of the respondents, the RTC casually disregarded the fundamental distinction between the two concepts of attorneys fees the ordinary and the extraordinary. These concepts were aptly distinguished in Traders Royal Bank Employees Union-Independent v. NLRC,
[46]

thuswise:

There are two commonly accepted concepts of attorneys fees, the so -called ordinary and extraordinary. In its ordinary concept, an attorneys fee is the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his agreement with the client. In its extraordinary concept, an attorneys fee is an indemnity for damages ordered by the court to be paid by the losing party in a litigation. The basis of this is any of the cases provided by law where such award can be made, such as those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof.

By referring to the award as contingency fees, and reducing the award from 20% to 15%, the RTC was really referring to a supposed agreement on attorneys fees between the Heirs of Macabangkit and their counsel. As such, the concept of attorneys fees involved was the ordinary. Yet, the inclusion of the attorneys fees in the judgment among the liabilities of NPC converted the fees to extraordinary. We have to disagree with the RTC thereon, and we express our discomfort that the CA did not do anything to excise the clearly erroneous and unfounded grant.

An award of attorneys fees has always been the exception rather than the rule. To start with, attorneys fees are not awarded every time a party prevails in a suit. facto justify an award of attorneys fees to the winning party. should be placed on the right to litigate.
[49] [50] [48] [47]

Nor should an adverse decision ipso

The policy of the Court is that no premium

Too, such fees, as part of damages, are assessed only in the Indeed, attorneys fees are in the nature of actual

instances specified in Art. 2208, Civil Code.

damages.

[51]

But even when a claimant is compelled to litigate with third persons or to incur expenses to

protect his rights, attorneys fees may still be withheld where no sufficient showing of bad faith could be reflected in a partys persistence in a suit other than an erroneous conviction of the righteousness of his cause.
[52]

And, lastly, the trial court must makeexpress findings of fact and law that bring the suit within the

exception. What this demands is that the factual, legal or equitable justifications for the award must be set forth

not only in the fallo but also in the text of the decision, or else, the award should be thrown out for being speculative and conjectural.
[53]

Sound policy dictates that even if the NPC failed to raise the issue of attorneys fees, we are not precluded from correcting the lower courts patently erroneous application of the law.
[54]

Indeed, the Court, in

supervising the lower courts, possesses the ample authority to review legal matters like this one even if not specifically raised or assigned as error by the parties. 5. Attorneys fees under quantum meruit principle are fixed at 10% of the judgment award

Based on the pending motions of Atty. Macarupung Dibaratun and Atty. Manuel D. Ballelos to assert their respective rights to attorneys fees, both contending that they represented the Heirs of Macabangkit in this case, a conflict would ensue from the finality of the judgment against NPC.

A look at the history of the legal representation of the Heirs of Macabangkit herein provides a helpful predicate for resolving the conflict.

Atty. Dibaratun was the original counsel of the Heirs of Macabangkit. When the appeal was submitted for decision in the CA,
[55]

Atty. Ballelos filed his entry of appearance,

[58]

[56]

and a motion for early decision.

[59]

[57]

Atty.

Ballelos subsequently filed also a manifestation,

supplemental manifestation,

reply,

[60]

and ex parte motion reiterating the motion for early decision.

[62]

[61]

It appears that a copy of the CAs

decision was furnished solely to Atty. Ballelos. However, shortly before the rendition of the decision, Atty. Dibaratun filed in the CA a motion to register attorneys lien, alleging that he had not withdrawn his appearance
[63] [64]

and had not been aware of the entry of appearance by Atty. Ballelos. A similar motion was also received by the Court from Atty. Dibaratun a few days after the petition for review was filed. Thus, on February 14, 2005,
[65]

the

Court directed Atty. Dibaratun to enter his appearance herein. He complied upon filing the comment.

Amir Macabangkit confirmed Atty. Dibaratuns representation through an ex parte manifestation that he filed in his own behalf and on behalf of his siblings Mongkoy and Putri. March 6, 2006,
[67] [66]

Amir reiterated his manifestation on

and further imputed malpractice to Atty. Ballelos for having filed an entry of appearance bearing
[68]

Amirs forged signature and for plagiarism, i.e., copying verbatim the arguments contained in the pleadings previously filed by Atty. Dibaratun.

On September 11, 2008, Atty. Ballelos submitted two motions, to wit: (a) a manifestation and motion authorizing a certain Abdulmajeed Djamla to receive his attorneys fees equivalent of 15% of the judgment award,
[69] [70]

and (b) a motion to register his attorneys lien that he claimed was contingent.

Both Atty. Dibaratun and Atty. Ballelos posited that their entitlement to attorneys fees was co ntingent. Yet, a contract for a contingent fees is an agreement in writing by which the fees, usually a fixed percentage of what may be recovered in the action, are made to depend upon the success in the effort to enforce or defend a supposed right. Contingent fees depend upon an express contract, without which the attorney can only recover on the basis of quantum meruit.
[71]

With neither Atty. Dibaratun nor Atty. Ballelos presenting a written agreement

bearing upon their supposed contingent fees, the only way to determine their right to appropriate attorneys fees is to apply the principle of quantum meruit.

Quantum meruit literally meaning as much as he deserves is used as basis for determining an attorneys professional fees in the absence of an express agreement.
[72]

The recovery of attorneys fees on the basis

of quantum meruit is a device that prevents an unscrupulous client from running away with the fruits of the legal services of counsel without paying for it and also avoids unjust enrichment on the part of the attorney

himself.

[73]

An attorney must show that he is entitled to reasonable compensation for the effort in pursuing the
[74]

clients cause, taking into account certain factors in fixing the amoun t of legal fees.

Rule 20.01 of the Code of Professional Responsibility lists the guidelines for determining the proper amount of attorney fees, to wit:

Rule 20.1 A lawyer shall be guided by the following factors in determining his fees: a) b) c) d) e) case; f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs; g) The amount involved in the controversy and the benefits resulting to the client from the service; h) i) j) The contingency or certainty of compensation; The character of the employment, whether occasional or established; and The professional standing of the lawyer. The time spent and the extent of the services rendered or required; The novelty and difficult of the questions involved; The important of the subject matter; The skill demanded; The probability of losing other employment as a result of acceptance of the proffered

In the event of a dispute as to the amount of fees between the attorney and his client, and the intervention of the courts is sought, the determination requires that there be evidence to prove the amount of fees and the extent and value of the services rendered, taking into account the facts determinative thereof.
[75]

Ordinarily, therefore, the determination of the attorneys fees on quantum meruit is remanded to the

lower court for the purpose. However, it will be just and equitable to now assess and fix the attorneys fees of both attorneys in order that the resolution of a comparatively simple controversy, as Justice Regalado put it in Traders Royal Bank Employees Union-Independent v. NLRC,
[76]

would not be needlessly prolonged, by taking into due

consideration the accepted guidelines and so much of the pertinent data as are extant in the records.

Atty. Dibaratun and Atty. Ballelos each claimed attorneys fees equivalent to 15% of the principal award of P113,532,500.00, which was the amount granted by the RTC in its decision. Considering that the attorneys fees will be defrayed by the Heirs of Macabangkit out of their actual recovery from NPC, giving to each of the two attorneys 15% of the principal award as attorneys fees would b e excessive and unconscionable from the point of view of the clients. Thus, the Court, which holds and exercises the power to fix attorneys fees on a quantum meruit basis in the absence of an express written agreement between the attorney and the client, now fixes attorneys fees at 10% of the principal award of P113,532,500.00. Whether it is Atty. Dibaratun or Atty. Ballelos, or both, who should receive attorneys fees from the Heirs of Macabangkit is a question that the Court must next determine and settle by considering the amount and quality of the work each performed and the results each obtained.

Atty. Dibaratun, the attorney from the outset, unquestionably carried the bulk of the legal demands of the case. He diligently prepared and timely filed in behalf of the Heirs of Macabangkit every pleading and paper necessary in the full resolution of the dispute, starting from the complaint until the very last motion filed in this Court. He consistently appeared during the trial, and examined and cross-examined all the witnesses presented at that stage of the proceedings. The nature, character, and substance of each pleading and the motions he prepared for the Heirs of Macabangkit indicated that he devoted substantial time and energy in researching and preparing the case for the trial. He even advancedP250,000.00 out of his own pocket to defray expenses from the time of the filing of the motion to execute pending appeal until the case reached the Court. Heirs of Macabangkit was not denied by any of them.
[77]

His representation of all the

We note that Atty. Dibaratun possessed some standing in the legal profession and in his local community. He formerly served as a member of the Board of Director of the Integrated Bar of the Philippines (IBP), Lanao del Norte-Iligan City Chapter, and was an IBP national awardee as Best Legal Aid Committee Chairman. He taught at Mindanao State University College of Law Extension. He was a Municipal Mayor of Matungao, Lanao del Norte, and was enthroned Sultan a Gaus.

In contrast, not much about the character and standing of Atty. Ballelos, as well as the nature and quality of the legal services he rendered for the Heirs of Macabangkit are in the records. The motions he filed in the

Court and in the CA lacked enlightening research and were insignificant to the success of the clients cause. His legal service, if it can be called that, manifested no depth or assiduousness, judging from the quality of the pleadings from him. His written submissions in the case appeared either to have been lifted verbatim from the pleadings previously filed by Atty. Dibaratun, or to have been merely quoted from the decisions and resolutions of the RTC and the CA. Of the Heirs of Macabangkit, only Cebu, Batowa-an, Sayana, Nasser, Manta, Mongkoy
[78]

and

Edgar gave their consent to Atty. Ballelos to appear in their behalf in the CA, which he did despite Atty. Dibaratun not having yet filed any withdrawal of his appearance. The Court did not receive any notice of appearance for the Heirs of Macabangkit from Atty. Ballelos, but that capacity has meanwhile become doubtful in the face of Amirs strong denial of having retained him.

In fairness and justice, the Court accords full recognition to Atty. Dibaratun as the counsel de parte of the Heirs of Macabangkit who discharged his responsibility in the prosecution of the clients cause to its successful end. It is he, not Atty. Ballelos, who was entitled to the full amount of attorneys fees that the clients ought to pay to their attorney. Given the amount and quality of his legal work, his diligence and the time he expended in ensuring the success of his prosecution of the clients cause, he deserves the recognition, notwithstanding that some of the clients might appear to have retained Atty. Ballelos after the rendition of a favorable judgment.
[79]

Atty. Ballelos may claim only from Cebu, Batowa-an, Sayana, Nasser, Manta and Edgar, the only parties who engaged him. The Court considers his work in the case as very minimal. His compensation under the quantum meruit principle is fixed at P5,000.00, and only the Heirs of Macabangkit earlier named are liable to him.

WHEREFORE, the Court AFFIRMS the decision promulgated on October 5, 2004 by the Court of Appeals, subject to the following MODIFICATIONS, to wit:

(a) Interest

at

the

rate

of

12% per

annum is IMPOSED on

the

principal

amount

of P113,532,500.00 as just compensation, reckoned from the filing of the complaint on November 21, 1997 until the full liability is paid;

(b) The awards of P30,000.00 as rental fee, P200,000.00 as moral damages, and P200,000.00 as exemplary damages are DELETED; and

(c) The award of 15% attorneys fees decreed to be paid by National Power Corporation to the Heirs of Macabangkit is DELETED.

The Court PARTLY GRANTS the motion to register attorneys lien filed by Atty. Macarupung Dibaratun, and FIXES Atty. Dibaratuns attorneys fees on the basis of quantum meruit at 10% of the principal award of P113,532,500.00.

The motion to register attorneys lien of Atty. Manuel D. Ballelos is PARTLY GRANTED, and Atty. Ballelos is DECLARED ENTITLED TO RECOVER from Cebu, Batowa-an, Sayana, Nasser, Manta and Edgar, all surnamed Macabangkit, the amount of P5,000.00 as attorneys fees on the basis of quantum meruit. Costs of suit to be paid by the petitioner SO ORDERED.