REPUBLIC OF THE PHILIPPINES VS GINGOYON [December 19, 2005]

FACTS:

The present controversy has its roots with the promulgation of the Court’s decision in Agan v. PIATCO, promulgated in 2003 (2003 Decision). This decision nullified the “Concession Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III” entered into between the Philippine Government(Government) and the Philippine International Air Terminals Co., Inc. (PIATCO), as well as the amendments and supplements thereto. The agreement had authorized PIATCO to build a new international airport terminal (NAIA 3), as well as a franchise to operate and maintain the said terminal during the concession period of 25 years. The contracts were nullified as the agreement was contrary to public policy.

At the time of the promulgation of the 2003 Decision, the NAIA 3 facilities had already been built by PIATCO and were nearing completion. However, the ponencia of the 2003 Resolution was silent as to the legal status of the NAIA 3 facilities following the nullification of the contracts, as well as whatever rights of PIATCO for reimbursement for its expenses in the construction of the facilities.

After the promulgation of the rulings in Agan, the NAIA 3 facilities have remained in the possession of PIATCO, despite the avowed intent of the Government to put the airport terminal into immediate operation. The Government and PIATCO conducted several rounds of negotiation regarding the NAIA 3 facilities.

In 2004, the Government filed a Complaint for expropriation with the Pasay RTC. The Government sought upon the filing of the complaint the issuance of a writ of possession authorizing it to take immediate possession and control over the NAIA 3 facilities. The Government also declared that it had deposited the amount of P3,002,125,000.00 (3 Billion) in Cash with the Land Bank of the Philippines, representing the NAIA 3 terminal’s assessed value for taxation purposes [as stated in Rule 67]. The Government insists that Rule 67 of the Rules of Court governs the expropriation proceedings in this case to the exclusion of all other laws. On the other hand, PIATCO claims that it is Rep. Act No. 8974 which does apply.

Three orders of the RTC [excluding the first order issuing a writ of possession] were elevated to the Supreme Court via a petition for certiorari under Rule 65 to wit:

1. Order to supplement the previous order issuing a writ of possession in favor of the government. It contains a statement from the RTC that RA 8974 should be applied.

2. This order contained a decision appointing 3 commissioners for the determination of just compensation for the NAIA 3 Complex.

3. Order denying the motion for reconsideration filed by the government and the motion got inhibition of the RTC judge.

ISSUE: Whether or not the RTC was correct in issuing all the three orders? Only the first two are relevant to the topic. YES to both orders [num. 1 and 2].

HELD:

The 2004 Resolution In Agan sets the base requirement that has to be observed before the Government may take over the NAIA 3, that there must be payment to PIATCO of just compensation in accordance with law and equity. Any ruling in the present expropriation case must be conformable to the dictates of the Court as pronounced in the Agan cases.

RULE 67 OR RA 8974?

There are at least two crucial differences between the respective procedures under Rep. Act No. 8974 and Rule 67. Under the statute, the Government is required to make immediate payment to the property owner upon the filing of the complaint to be entitled to a writ of possession, whereas in Rule 67, the Government is required only to make an initial deposit with an authorized government depositary. Moreover, Rule 67 prescribes that the initial deposit be equivalent to the assessed value of the property for purposes of taxation, unlike Rep. Act No. 8974 which provides, as the relevant standard for initial compensation, the market value of the property as stated in the tax declaration or the current relevant zonal valuation of the Bureau of Internal Revenue (BIR), whichever is higher, and the value of the improvements and/or structures using the replacement cost method.

Further elaboration of the two follows. Rule 67 outlines the procedure under which eminent domain may be exercised by the Government. Yet by no means does it serve at present as the solitary guideline through which the State may expropriate private property. For example, Section 19 of the Local Government Code governs as to the exercise by local government units of the power of eminent domain through an enabling ordinance. And then there is Rep. Act No. 8974, which covers expropriation proceedings intended for national government infrastructure projects. Rep. Act No. 8974, which provides for a procedure eminently more favorable to the property owner than Rule 67, inescapably applies in instances when the national government expropriates property "for national government infrastructure projects."28 Thus, if expropriation is engaged in by the national government for purposes other than national infrastructure projects, the assessed value standard and the deposit mode prescribed in Rule 67 continues to apply. Under both Rule 67 and Rep. Act No. 8974, the

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Government commences expropriation proceedings through the filing of a complaint. Unlike in the case of local governments which necessitate an authorizing ordinance before expropriation may be accomplished, there is no need under Rule 67 or Rep. Act No. 8974 for legislative authorization before the Government may proceed with a particular exercise of eminent domain. The most crucial difference between Rule 67 and Rep. Act No. 8974 concerns the particular essential step the Government has to undertake to be entitled to a writ of possession.

Rule 67 merely requires the Government to deposit with an authorized government depositary the assessed value of the property for expropriation for it to be entitled to a writ of possession. On the other hand, Rep. Act No. 8974 requires that the Government make a direct payment to the property owner before the writ may issue. Moreover, such payment is based on the zonal valuation of the BIR in the case of land, the value of the improvements or structures under the replacement cost method, or if no such valuation is available and in cases of utmost urgency, the proffered value of the property to be seized.

RA 8974 is opted by the government since it would allow it to take over the NAIA 3 facilities in a fashion that directly rebukes the 2003 Resolution of the Agan case. It is the plain intent of RA 8974 to supersede the system of deposit under Rule 67 with the scheme of immediate payment in cases involving national government infrastructure projects.

There can be no doubt that PIATCO has ownership rights over the facilities which it had financed and constructed. The 2004 Resolution squarely recognized that right when it mandated the payment of just compensation to PIATCO prior to the takeover.

The NAIA 3 facilities are real property owned by PIATCO. This point is critical, considering the Government’s insistence that the NAIA 3 facilities cannot be deemed as the "right-of-way", "site" or "location" of a national government infrastructure project, within the coverage of Rep. Act No. 8974.

The court did not accept the government’s proposition that the only properties that may be expropriated under RA 8974 are parcels of land. Rep. Act No. 8974 contemplates within its coverage such real property constituting land, buildings, roads and constructions of all kinds adhered to the soil. Section 1 of Rep. Act No. 8974, which sets the declaration of the law’s policy, refers to "real property acquired for national government infrastructure projects are promptly paid just compensation." Section 4 is quite explicit in stating that the scope of the law relates to the acquisition of "real property," which under civil law includes buildings, roads and constructions adhered to the soil.

Even as the provisions of Rep. Act No. 8974 call for that law’s application in this case, the threshold test must still be met whether its implementation would conform to the dictates of the Court in the 2004 Resolution. Unlike in the case of Rule 67, the application of Rep. Act No. 8974 will not contravene the 2004 Resolution, which requires the payment of just compensation before any takeover of the NAIA 3 facilities by the Government.

Proper Amount to be Paid

Under Rep. Act No. 8974, the Government is required to "immediately pay" the owner of the property the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on the current relevant zonal valuation of the [BIR]; and (2) the value of the improvements and/or structures as determined under Section 7.

As stated above, the BIR zonal valuation cannot apply in this case, thus the amount subject to immediate payment should be limited to "the value of the improvements and/or structures as determined under Section 7," with Section 7 referring to the "implementing rules and regulations for the equitable valuation of the improvements and/or structures on the land." Under the present implementing rules in place, the valuation of the improvements/structures are to be based using "the replacement cost method." However, the replacement cost is only one of the factors to be considered in determining the just compensation.

In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also mandated that the payment of just compensation should be in accordance with equity as well. Thus, in ascertaining the ultimate amount of just compensation, the duty of the trial court is to ensure that such amount conforms not only to the law, such as Rep. Act No. 8974, but to principles of equity as well.

Section 4(c) of Rep. Act No. 8974 states that "in case the completion of a government infrastructure project is of utmost urgency and importance, and there is no existing valuation of the area concerned, the implementing agency shall immediately pay the owner of the property its proferred value, taking into consideration the standards prescribed in Section 5 [of the law]." The "proffered value" may strike as a highly subjective standard based solely on the intuition of the government, but Rep. Act No. 8974 does provide relevant standards by which "proffered value" should be based, as well as the certainty of judicial determination of the propriety of the proffered value

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The Court sees no impediment to recognize the sum of P3 Billion as the proffered value under Section 4(b) of Rep. Act No. 8974. After all, in the initial determination of the proffered value, the Government is not strictly required to adhere to any predetermined standards, although its proffered value may later be subjected to judicial review using the standards enumerated under Section 5 of Rep. Act No. 8974.

While the Court agrees that P3 Billion should be considered as the correct proffered value, still it cannot deem the Government as having faithfully complied with Rep. Act No. 8974. For the law plainly requires direct payment to the property owner, and not a mere deposit with the authorized government depositary. Without such direct payment, no writ of possession may be obtained.

Writ of Possession

The RTC authorized the issuance of the writ of possession to the Government notwithstanding the fact that no payment of any amount had yet been made to PIATCO, despite the clear command of Rep. Act No. 8974 that there must first be payment before the writ of possession can issue. While the RTC did direct the LBP-Baclaran to immediately release the amount of US$62 Million to PIATCO, it should have likewise suspended the writ of possession, nay, withdrawn it altogether, until the Government shall have actually paid PIATCO. This is the inevitable consequence of the clear command of Rep. Act No. 8974 that requires immediate payment of the initially determined amount of just compensation should be effected. Otherwise, the overpowering intention of Rep. Act No. 8974 of ensuring payment first before transfer of repossession would be eviscerated.

Rights of the Government Upon the Issuance of a Writ of Possession

Rep. Act No. 8974 provides the appropriate answer for the standard that governs the extent of the acts the Government may be authorized to perform upon the issuance of the writ of possession. Section 4 states that "the court shall immediately issue to the implementing agency an order to take possession of the property and start the implementation of the project." accordingly, once the Writ of Possession is effective, the Government itself is authorized to perform the acts that are essential to the operation of the NAIA 3 as an international airport terminal upon the effectivity of the Writ of Possession. These would include the repair, reconditioning and improvement of the complex, maintenance of the existing facilities and equipment, installation of new facilities and equipment, provision of services and facilities pertaining to the facilitation of air traffic and transport, and other services that are integral to a modern-day international airport.

In addition, based on jurisprudence, there is no transfer of ownership as of yet by virtue of the writ of possession. The recognized rule is that title to the property expropriated shall pass from the owner to the expropriator only upon full payment of the just compensation.

Final Determination of Just Compensation within 60 days

The issuance of the writ of possession does not write finis to the expropriation proceedings. As earlier pointed out, expropriation is not completed until payment to the property owner of just compensation. The proffered value stands as merely a provisional determination of the amount of just compensation, the payment of which is sufficient to transfer possession of the property to the Government. However, to effectuate the transfer of ownership, it is necessary for the Government to pay the property owner the final just compensation.

Rep. Act No. 8974 mandates a speedy method by which the final determination of just compensation may be had.

Section 4 provides: In the event that the owner of the property contests the implementing agency’s proffered value, the court shall determine the just compensation to be paid the owner within sixty (60) days from the date of filing of the expropriation case. When the decision of the court becomes final and executory, the implementing agency shall pay the owner the difference between the amount already paid and the just compensation as determined by the court.

This provision should apply in this case. The sixty (60)-day period prescribed in Rep. Act No. 8974 gives teeth to the law’s avowed policy "to ensure that owners of real property acquired for national government infrastructure projects are promptly paid just compensation. In this case, there already has been irreversible delay in the prompt payment of PIATCO of just compensation, and it is no longer possible for the RTC to determine the just compensation due PIATCO within sixty (60) days from the filing of the complaint last year 2004, as contemplated by the law. Still, it is feasible to effectuate the spirit of the law by requiring the trial court to make such determination within sixty (60) days from finality of this decision, in accordance with the guidelines laid down in Rep. Act No. 8974 and its Implementing Rules

Appointment of Commissioners

It must be noted that Rep. Act No. 8974 is silent on the appointment of commissioners tasked with the ascertainment of just compensation. This protocol though is sanctioned under Rule 67. We rule that the appointment

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of commissioners under Rule 67 may be resorted to, even in expropriation proceedings under Rep. Act No. 8974, since the application of the provisions of Rule 67 in that regard do not conflict with the statute.

Nothing in Rule 67 or Rep. Act No. 8974 requires that the RTC consult with the parties in the expropriation case on who should be appointed as commissioners. Neither does the Court feel that such a requirement should be imposed in this case. There is nothing to prevent the trial court from seeking the recommendations of the parties on the matter of appointment of commissioners, to better ensure their fair representation.

What Rule 67 does allow though is for the parties to protest the appointment of any of these commissioners, as provided under Section 5 of the Rule. These objections though must be made filed within ten (10) days from service of the order of appointment of the commissioners. In this case, the proper recourse of the Government to challenge the choice of the commissioners is to file an objection with the trial court, conformably with Section 5, Rule 67, and not as it has done, assail the same through a special civil action for certiorari.

CONCLUSION

(1) The 2004 Resolution in Agan sets the base requirement that has to be observed before the Government may take over the NAIA 3, that there must be payment to PIATCO of just compensation in accordance with law and equity. Any ruling in the present expropriation case must be conformable to the dictates of the Court as pronounced in the Agan cases.

(2) Rep. Act No. 8974 applies in this case, particularly insofar as it requires the immediate payment by the Government of at least the proffered value of the NAIA 3 facilities to PIATCO and provides certain valuation standards or methods for the determination of just compensation.

(3) Applying Rep. Act No. 8974, the implementation of Writ of Possession in favor of the Government over NAIA 3 is held in abeyance until PIATCO is directly paid the amount of P3 Billion, representing the proffered value of NAIA 3 under Section 4(c) of the law.

(4) Applying Rep. Act No. 8974, the Government is authorized to start the implementation of the NAIA 3 Airport terminal project by performing the acts that are essential to the operation of the NAIA 3 as an international airport terminal upon the effectivity of the Writ of Possession, subject to the conditions above-stated. As prescribed by the Court, such authority encompasses "the repair, reconditioning and improvement of the complex, maintenance of the existing facilities and equipment, installation of new facilities and equipment, provision of services and facilities pertaining to

the facilitation of air traffic and transport, and other services that are integral to a modern-day international airport."

(5) The RTC is mandated to complete its determination of the just compensation within sixty (60) days from finality of this Decision. In doing so, the RTC is obliged to comply with "law and equity" as ordained in Again and the standard set under Implementing Rules of Rep. Act No. 8974 which is the "replacement cost method" as the standard of valuation of structures and improvements.

(6) There was no grave abuse of discretion attending the RTC Order appointing the commissioners for the purpose of determining just compensation. The provisions on commissioners under Rule 67 shall apply insofar as they are not inconsistent with Rep. Act No. 8974, its Implementing Rules, or the rulings of the Court in Agan.

(7) The Government shall pay the just compensation fixed in the decision of the trial court to PIATCO immediately upon the finality of the said decision.

(8) There is no basis for the Court to direct the inhibition of Hon. Gingoyon.

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NATIONAL POWER COPROATION VS MANUBAY AGRO-INDUSTRIAL DEVELOPMENT CORPORATION [August 18, 2004]

FACTS:

NPC commences its 350 KV Leyte Luzon HVDC Power transmission Project. The project aims to transmit the excess electrical generating capacity coming from Leyte Geothermal Plant to Luzon and various load centers in its vision to interconnect the entire country into a single power grid. Apparently, the project is for a public purpose. To carry out such purpose, NPC must cross over certain lands owned by private individuals and entities, including that owned by respondent Agro Industrial for an easement of right of way, hence the filing of an expropriation proceeding with the RTC of Naga City.

RTC of Naga City issued an order authorizing immediate issuance of a writ of possession and directing the sheriff to immediately place petition in possession of the subject land.

Subsequently, it issued a writ of condemnation in favor of the petitioner at the same time appointing 3 commissioners, one from petitioner, one from respondent and the other one appointed by the court.

Commissioner of petitioner: Php 115 per square meter

Commissioner of Respondent: Php 550 per square meter –commissioner of the court agreed with this estimation.

RTC approved Php 550 per square meters as the basis for just compensation. It stated that it was not bound by the special law cited by the petitioner for determination of just compensation is a judicial function.

CA affirmed the ruling of the RTC.

ISSUE: Whether or not the actions of the RTC and CA were proper? YES.

HELD: petition is unmeritorious.

Petitioner claims that the valuation was too high considering that the expropriation was only for an easement of right of way. The SC cited that petitioner was not merely asking for a right of way but in fact, it made use of the land itself and sought for the demolition of all improvements existing thereon, on order to commence and undertake construction of its project.

Granting arguendo that what petitioner acquired over respondent’s property was purely an easement of a right of way, still, the court cannot sustain its view that it should pay only an easement fee, and not the full

value of the property. The acquisition of such an easement falls within the purview of the power of eminent domain.

Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated property; but no cogent reason appears why the said power may not be availed of to impose only a burden upon the owner of condemned property, without loss of title and possession. It is unquestionable that real property may, through expropriation, be subjected to an easement of right of way.

True, an easement of a right of way transmits no rights except the easement itself, and respondent retains full ownership of the property. The acquisition of such easement is, nevertheless, not gratis. As correctly observed by the CA, considering the nature and the effect of the installation power lines, the limitations on the use of the land for an indefinite period would deprive respondent of normal use of the property. For this reason, the latter is entitled to payment of a just compensation, which must be neither more nor less than the monetary equivalent of the land.

Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. The measure is not the taker’s gain, but the owner’s loss. The word "just" is used to intensify the meaning of the word "compensation" and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full and ample.

In eminent domain or expropriation proceedings, the just compensation to which the owner of a condemned property is entitled is generally the market value. Market value is "that sum of money which a person desirous but not compelled to buy, and an owner willing but not compelled to sell, would agree on as a price to be given and received therefor." Such amount is not limited to the assessed value of the property or to the schedule of market values determined by the provincial or city appraisal committee. However, these values may serve as factors to be considered in the judicial valuation of the property.

The nature and character of the land at the time of its taking is the principal criterion for determining how much just compensation should be given to the landowner. All the facts as to the condition of the property and its surroundings, as well as its improvements and capabilities, should be considered.

The price of P550 per square meter appears to be the closest approximation of the market value of the lots in the adjoining, fully developed San Francisco Village Subdivision. Considering that the parcels of land in question are still undeveloped raw land, it appears to the Court

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that the just compensation of P550 per square meter is justified. Inasmuch as the determination of just compensation in eminent domain cases is a judicial function, and the trial court apparently did not act capriciously or arbitrarily in setting the price at P550 per square meter -- an award affirmed by the CA – the SC sees no reason to disturb the factual findings as to the valuation of the property. Both the Report of Commissioner Bulao and the commissioners’ majority Report were based on uncontroverted facts supported by documentary evidence and confirmed by their ocular inspection of the property. As can be gleaned from the records, they did not abuse their authority in evaluating the evidence submitted to them; neither did they misappreciate the clear preponderance of evidence. The amount fixed and agreed to by the trial court and respondent appellate court has not been grossly exorbitant or otherwise unjustified.

petitioner’s contention that the Report adopted by the RTC and affirmed by the CA was not the same one submitted by the board of commissioners, but was only that of its chairperson. the commissioner’s Report was actually a decision of the majority of the board. Note that after reviewing the Reports of the other commissioners, Chairperson Teoxon opted to adopt the recommendation of Commissioner Bulao. There has been no claim that fraud or prejudice tainted the majority Report.

Under Section 8 of Rule 67 of the Rules of Court, the court may "accept the report and render judgment in accordance therewith; or for cause shown, it may recommit the same to the commissioners for further report of facts, or it may set aside the report and appoint new commissioners, or it may accept the report in part and reject it in part; x x x." In other words, the reports of commissioners are merely advisory and recommendatory in character, as far as the courts are concerned.

Thus, it hardly matters whether the commissioners have unanimously agreed on their recommended valuation of the property. It has been held that the report of only two commissioners may suffice, even if the third commissioner dissents. As a court is not bound by commissioners’ reports it may make such order or render such judgment as shall secure for the plaintiff the property essential to the exercise of the latter’s right of condemnation; and for the defendant, just compensation for the property expropriated. For that matter, the court may even substitute its own estimate of the value as gathered from the evidence on record

Petition is denied.

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REPUBLIC OF THE PHILIPPINES VS CA AND HEIRS OF LUIS SANTOS

[July 2, 2002]

FACTS:

Petitioners instituted an expropriation proceeding before the RTC of Bulacan. The property sought to be taken was to be utilized for the continued broadcast operation and use of radio transmitter facilities for the "Voice of the Philippines" project.

Petitioner, through the Philippine Information Agency ("PIA"), took over the premises after the previous lessee, the "Voice of America," had ceased its operations thereat. Petitioner made a deposit of P517,558.80, the sum provisionally fixed as being the reasonable value of the property.

More than 9 years after the institution of the case, the RTC issued an order condemning the properties of the defendants and ordered petitioners to pay just compensation.

Bone of contention in the instant controversy is the property owned by Luis Santos, predecessor in interest of the respondents which forms part of the expropriated area.

The national government failed to pay pursuant to the decision of the RTC, such that a little over five years later, the respondents filed a manifestation with a motion seeking payment for the expropriated property. Writ issued. No payment.

Respondents filed another motion to direct the provincial treasurer to release the amount deposited by petitioner at the inception of the expropriation proceedings, corresponding to their share in the deposit.

President Estrada issued a Proclamation transferring 20 hectares of the expropriated property to the Bulacan State University for the expansion of its facilities and another 5 hectares to be used exclusively for the propagation of the Philippine carabao. The remaining portion was retained by the PIA. This fact notwithstanding, and despite the 1984 court order, the Santos heirs remained unpaid, and no action was taken on their case until petitioner filed a manifestation to permit the deposit in court of the amount of 4million plus by way of just compensation for the expropriated property of the late Luis Santos.

Respondents filed a counter motion to adjust the valuation for just compensation to its current zonal value. RTC rules in favor of the respondents. CA denied appeal.

ISSUE: Whether or not just compensation should be adjusted to its current zonal value? NO.

HELD:

RTC claimed unenforceability of the decision based on the lapse of the five year period. Petitioner claimed that the period was interrupted by the filing of the motions of the respondents and their receipt of the money deposited by the treasurer. However, according to rule 39, the motion to revive the judgment must be made by the winning party, the petitioner and not the respondent.

The right of eminent domain is usually understood to be an ultimate right of the sovereign power to appropriate any property within its territorial sovereignty for a public purpose. Fundamental to the independent existence of a State, it requires no recognition by the Constitution, whose provisions are taken as being merely confirmatory of its presence and as being regulatory, at most, in the due exercise of the power.

In the hands of the legislature, the power is inherent, its scope matching that of taxation, even that of police power itself, in many respects. It reaches to every form of property the State needs for public use and, as an old case so puts it, all separate interests of individuals in property are held under a tacit agreement or implied reservation vesting upon the sovereign the right to resume the possession of the property whenever the public interest so requires it. The ubiquitous character of eminent domain is manifest in the nature of the expropriation proceedings. Expropriation proceedings are not adversarial in the conventional sense, for the condemning authority is not required to assert any conflicting interest in the property. Thus, by filing the action, the condemnor in effect merely serves notice that it is taking title and possession of the property, and the defendant asserts title or interest in the property, not to prove a right to possession, but to prove a right to compensation for the taking.

Obviously, however, the power is not without its limits: first, the taking must be for public use, and second, that just compensation must be given to the private owner of the property. These twin proscriptions have their origin in the recognition of the necessity for achieving balance between the State interests, on the one hand, and private rights, upon the other hand, by effectively restraining the former and affording protection to the latter.

In determining "public use," two approaches are utilized - the first is public employment or the actual use by the public, and the second is public advantage or benefit. It is also useful to view the matter as being subject to constant growth, which is to say that as society advances, its demands upon the individual so increases, and each demand is a new use to which the resources of the individual may be devoted.

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The expropriated property has been shown to be for the continued utilization by the PIA, a significant portion thereof being ceded for the expansion of the facilities of the Bulacan State University and for the propagation of the Philippine carabao, themselves in line with the requirements of public purpose. Respondents question the public nature of the utilization by petitioner of the condemned property, pointing out that its present use differs from the purpose originally contemplated in the 1969 expropriation proceedings. The argument is of no moment. The property has assumed a public character upon its expropriation. Surely, petitioner, as the condemnor and as the owner of the property, is well within its rights to alter and decide the use of that property, the only limitation being that it be for public use, which, decidedly, it is.

Respondents, in arguing laches against petitioner did not take into account that the same argument could likewise apply against them. Consistently with the rule that one should take good care of his own concern, respondents should have commenced the proper action upon the finality of the judgment which, indeed, resulted in a permanent deprivation of their ownership and possession of the property.

The constitutional limitation of "just compensation" is considered to be the sum equivalent to the market value of the property, broadly described to be the price fixed by the seller in open market in the usual and ordinary course of legal action and competition or the fair value of the property as between one who receives, and one who desires to sell, it fixed at the time of the actual taking by the government.

Between the taking of the property and the actual payment, legal interests accrue in order to place the owner in a position as good as (but not better than) the position he was in before the taking occurred

The Bulacan trial court, in its 1979 decision, was correct in imposing interests on the zonal value of the property to be computed from the time petitioner instituted condemnation proceedings and "took" the property in September 1969. This allowance of interest on the amount found to be the value of the property as of the time of the taking computed, being an effective forbearance, at 12% per annum28 should help eliminate the issue of the constant fluctuation and inflation of the value of the currency over time

Private respondents, although not entitled to the return of the expropriated property, deserve to be paid promptly on the yet unpaid award of just compensation already fixed by final judgment of the Bulacan RTC on 26 February 1979 at P6.00 per square meter, with legal interest thereon at

12% per annum computed from the date of "taking" of the property, i.e., 19 September 1969, until the due amount shall have been fully paid

Petition is GRANTED.

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JESUS IS LORD CHRISTIAN SCHOOL FOUNDATION VS MUNICIPALITY (NOW CITY) OF PASIG [August 9, 2005]

FACTS:

Respondent needed an access road from E. R. Santos Street, a municipal road near the Pasig Public Market, to Barangay Sto. Tomas Bukid, Pasig, where 60 to 70 houses, mostly made of light materials, were located. The road had to be at least three meters in width, as required by the Fire Code, so that fire trucks could pass through in case of conflagration. Likewise, the residents in the area needed the road for water and electrical outlets. The municipality then decided to acquire 51 square meters out of the 1,791-square meter property of Lorenzo Ching Cuanco, Victor Ching Cuanco and Ernesto Ching Cuanco Kho.

the Sangguniang Bayan of Pasig approved an Ordinance authorizing the municipal mayor to initiate expropriation proceedings to acquire the said property and appropriate the fund therefor. The ordinance stated that the property owners were notified of the municipality’s intent to purchase the property for public use as an access road but they rejected the offer.

the municipality filed a complaint, amended on August 6, 1993, against the Ching Cuancos for the expropriation of the property under Section 19 of Republic Act (R.A.) No. 7160, otherwise known as the Local Government Code. The plaintiff alleged therein that it notified the defendants, by letter, of its intention to construct an access road on a portion of the property but they refused to sell the same portion.

The plaintiff appended to the complaint a photocopy of the letter addressed to defendant Lorenzo Ching Cuanco

The plaintiff deposited with the RTC 15% of the market value of the property based on the latest tax declaration covering the property. On plaintiff’s motion, the RTC issued a writ of possession over the property sought to be expropriated. It caused the annotation of notice of lis pendens on the TCT of the properties under the name of petitioner who had purchased the property. Thereafter respondent plaintiff constructed the cemented road it had planned.

Petitioner filed a motion to intervene as defendant. Granted. It claimed that the expropriation was only for a particular class and not for the benefit of the poor and the landless. Further, it was not the best portion for the road and the least burdensome to it.

RTC issued an order in favor of the plaintiff-respondent. Elevated the case to the CA.

Court of Appeals affirmed the lower court’s decision of declaring respondent municipality (now city) as having the right to expropriate petitioner’s property for the construction of an access road.

Petitioner argues that there was no valid and definite offer made before a complaint for eminent domain was filed as the law requires (Art. 35, Rules and Regulations Implementing the Local Government Code). Respondent contends that a letter to purchase was offered to the previous owners and the same was not accepted.

ISSUE: Whether or not the requirements under the LGC have been followed by the respondent? NO. no valid offer.

HELD:

The right of eminent domain is usually understood to be an ultimate right of the sovereign power to appropriate any property within its territorial sovereignty for a public purpose. The nature and scope of such power has been comprehensively described as follows:

… It is an indispensable attribute of sovereignty; a power grounded in the primary duty of government to serve the common need and advance the general welfare. Thus, the right of eminent domain appertains to every independent government without the necessity for constitutional recognition. The provisions found in modern constitutions of civilized countries relating to the taking of property for the public use do not by implication grant the power to the government, but limit the power which would, otherwise, be without limit. Thus, our own Constitution provides that "[p]rivate property shall not be taken for public use without just compensation." Furthermore, the due process and equal protection clauses act as additional safeguards against the arbitrary exercise of this governmental power.

The exercise of the right of eminent domain, whether directly by the State or by its authorized agents, is necessarily in derogation of private rights. It is one of the harshest proceedings known to the law. Consequently, when the sovereign delegates the power to a political unit or agency, a strict construction will be given against the agency asserting the power. The authority to condemn is to be strictly construed in favor of the owner and against the condemnor. When the power is granted, the extent to which it may be exercised is limited to the express terms or clear implication of the statute in which the grant is contained. Corollarily, the respondent, which is the condemnor, has the burden of proving all the essentials necessary to show the right of condemnation. It has the burden of proof to establish that it has complied with all the requirements provided by law for the valid exercise of the power of eminent domain.

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See Section 19 RA 7610.

The Court declared that the following requisites for the valid exercise of the power of eminent domain by a local government unit must be complied with:

1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the local government unit, to exercise the power of eminent domain or pursue expropriation proceedings over a particular private property.

2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and the landless.

3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and other pertinent laws.

4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but said offer was not accepted

The respondent was burdened to prove the mandatory requirement of a valid and definite offer to the owner of the property before filing its complaint and the rejection thereof by the latter. It is incumbent upon the condemnor to exhaust all reasonable efforts to obtain the land it desires by agreement. Failure to prove compliance with the mandatory requirement will result in the dismissal of the complaint.

An offer is a unilateral proposition which one party makes to the other for the celebration of a contract. It creates a power of acceptance permitting the offeree, by accepting the offer, to transform the offeror’s promise into a contractual obligation. Corollary, the offer must be complete, indicating with sufficient clearness the kind of contract intended and definitely stating the essential conditions of the proposed contract. An offer would require, among other things, a clear certainty on both the object and the cause or consideration of the envisioned contract.

The purpose of the requirement of a valid and definite offer to be first made to the owner is to encourage settlements and voluntary acquisition of property needed for public purposes in order to avoid the expense and delay of a court action. The law is designed to give to the owner the opportunity to sell his land without the expense and inconvenience of a protracted and expensive litigation. This is a substantial right which should be protected in every instance. It encourages acquisition without litigation and spares not only the landowner but also the condemnor, the expenses

and delays of litigation. It permits the landowner to receive full compensation, and the entity acquiring the property, immediate use and enjoyment of the property. A reasonable offer in good faith, not merely perfunctory or pro forma offer, to acquire the property for a reasonable price must be made to the owner or his privy. A single bona fide offer that is rejected by the owner will suffice.

The expropriating authority is burdened to make known its definite and valid offer to all the owners of the property. However, it has a right to rely on what appears in the certificate of title covering the land to be expropriated. Hence, it is required to make its offer only to the registered owners of the property. After all, it is well-settled that persons dealing with property covered by a Torrens certificate of title are not required to go beyond what appears on its face.

In the present case, the respondent failed to prove that before it filed its complaint, it made a written definite and valid offer to acquire the property for public use as an access road. The only evidence adduced by the respondent to prove its compliance with Section 19 of the Local Government Code is the photocopy of the letter purportedly bearing the signature of Engr. Jose Reyes, to only one of the co-owners, Lorenzo Ching Cuanco.

It bears stressing, however, that the respondent offered the letter only to prove its desire or intent to acquire the property for a right-of-way. The document was not offered to prove that the respondent made a definite and valid offer to acquire the property. Moreover, the RTC rejected the document because the respondent failed to adduce in evidence the original copy thereof. The respondent, likewise, failed to adduce evidence that copies of the letter were sent to and received by all the co-owners of the property, namely, Lorenzo Ching Cuanco, Victor Ching Cuanco and Ernesto Kho.

Even if the letter was, indeed, received by the co-owners, the letter is not a valid and definite offer to purchase a specific portion of the property for a price certain. It is merely an invitation for only one of the co-owners, Lorenzo Ching Cuanco, to a conference to discuss the project and the price that may be mutually acceptable to both parties.

There is no legal and factual basis to the CA’s ruling that the annotation of a notice of lis pendens at the dorsal portion of petitioner’s TCT is a substantial compliance with the requisite offer. A notice of lis pendens is a notice to the whole world of the pendency of an action involving the title to or possession of real property and a warning that those who acquire an interest in the property do so at their own risk and that they gamble on the result of the litigation over it. The lis pendens was annotated at the dorsal

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portion of the title long after the complaint had been filed in the RTC against the Ching Cuancos.

Neither is the declaration in one of the whereas clauses of the ordinance that "the property owners were already notified by the municipality of the intent to purchase the same for public use as a municipal road," a substantial compliance with the requirement of a valid and definite offer under Section 19 of R.A. No. 7160. Presumably, the Sangguniang Bayan relied on the erroneous premise that the letter of Engr. Reyes reached the co-owners of the property. In the absence of competent evidence that, indeed, the respondent made a definite and valid offer to all the co- owners of the property, aside from the letter of Engr. Reyes, the declaration in the ordinance is not a compliance with Section 19 of R.A. No. 7160.

The court also rejects the contention of the petitioner that its property can no longer be expropriated by the respondent because it is intended for the construction of a place for religious worship and a school for its members.

The taking to be valid must be for public use. There was a time when it was felt that a literal meaning should be attached to such a requirement. Whatever project is undertaken must be for the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It is not so any more. As long as the purpose of the taking is public, then the power of eminent domain comes into play. As just noted, the constitution in at least two cases, to remove any doubt, determines what is public use. One is the expropriation of lands to be subdivided into small lots for resale at cost to individuals. The other is the transfer, through the exercise of this power, of utilities and other private enterprise to the government. It is accurate to state then that at present whatever may be beneficially employed for the general welfare satisfies the requirements of public use.

The subject property is expropriated for the purpose of constructing a road. The respondent is not mandated to comply with the essential requisites for an easement of right-of-way under the New Civil Code. Case law has it that in the absence of legislative restriction, the grantee of the power of eminent domain may determine the location and route of the land to be taken unless such determination is capricious and wantonly injurious. Expropriation is justified so long as it is for the public good and there is genuine necessity of public character. Government may not capriciously choose what private property should be taken.

The respondent has demonstrated the necessity for constructing a road from E. R. Santos Street to Sto. Tomas Bukid. Nonetheless, the respondent failed to show the necessity for constructing the road particularly in the petitioner’s property and not elsewhere. The respondent’s complaint alleged that the said portion of the petitioner’s lot has been surveyed as

the best possible ingress and egress. However, the respondent failed to adduce a preponderance of evidence to prove its claims.

Further, as correctly pointed out by the petitioner, there is no showing in the record that an ocular inspection was conducted during the trial. If, at all, the trial court conducted an ocular inspection of the subject property during the trial, the petitioner was not notified thereof. The petitioner was, therefore, deprived of its right to due process. It bears stressing that an ocular inspection is part of the trial as evidence is thereby received and the parties are entitled to be present at any stage of the trial. Consequently, where, as in this case, the petitioner was not notified of any ocular inspection of the property, any factual finding of the court based on the said inspection has no probative weight. The findings of the trial court based on the conduct of the ocular inspection must, therefore, be rejected.

Petition is GRANTED.

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