Eminent Domain.docx

MANILA MEMORIAL PARK, INC. AND LA FUNERARIA PAZ-SUCAT, INC., Petitioners, vs. SECRETARY OF THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT and THE SECRETARY OF THE DEPARTMENT OF FINANCE, Respondents. G.R. No. 175356 December 3, 2013 FACTS: Petitioners assail the constitutionality of Section 4 of Republic Act (RA) No. 7432, as amended by RA 9257, and the implementing rules and regulations issued by the DSWD and DOF insofar as these allow business establishments to claim the 20% discount given to senior citizens as a tax deduction. Revenue Regulations (RR) No. 02-94 was issued to implement RA 7432. Sections 2(i) and 4 of RR No. 02-94 provide that the discount shall be deducted by the said establishments from their gross income for income tax purposes and from their gross sales for value-added tax or other percentage tax purposes. To implement the tax provisions of RA 9257, the Secretary of Finance issued RR No. 4-2006, the pertinent provision of which provides that only the actual amount of the discount granted or a sales discount not exceeding 20% of the gross selling price can be deducted from the gross income, net of value added tax, if applicable, for income tax purposes, and from gross sales or gross receipts of the business enterprise concerned, for VAT or other percentage tax purposes. Petitioners posit that the tax deduction scheme contravenes Article III, Section 9 of the Constitution, which provides that: "[p]rivate property shall not be taken for public use without just compensation." Because the 20% discount privilege constitutes taking of private property for public use which requires the payment of just compensation. Under the tax deduction scheme, the private sector shoulders 65% of the discount because only 35% of it is actually returned by the government. It is apparent that what petitioners are ultimately questioning is the validity of the tax deduction scheme as a reimbursement mechanism for the twenty percent (20%) discount that they extend to senior citizens. Based on the afore-stated DOF Opinion, the tax deduction scheme does not fully reimburse petitioners for the discount privilege accorded to senior citizens. This is because the discount is treated as a deduction, a tax-deductible expense that is subtracted from the gross income and results in a lower taxable income. Stated otherwise, it is an amount that is allowed by law to reduce the income prior to the application of the tax rate to compute the amount of tax which is due. Being a tax deduction, the discount does not reduce taxes owed on a peso for peso basis but merely offers a fractional reduction in taxes owed. Theoretically, the treatment of the discount as a deduction reduces the net income of the private establishments concerned. ISSUE: Whether or not the 20% senior citizen discount is an exercise of the power of eminent domain that requires just compensation. HELD: NO. The 20% discount is a valid exercise of POLICE POWER. The law is a legitimate exercise of police power which, similar to the power of eminent domain, has general welfare for its object. Police power is not capable of an exact definition, but has been purposely veiled in general terms to underscore its comprehensiveness to meet all exigencies and provide enough room for an efficient and flexible response to conditions and circumstances, thus assuring the greatest benefits. Accordingly, it has been described as "the most essential, insistent and the least limitable of powers, extending as it does to all the great public needs." It is "[t]he power vested in the legislature by the constitution to make, ordain, and establish all manner of wholesome and reasonable laws, statutes, and ordinances, either with penalties or without, not repugnant to the constitution, as they shall judge to be for the good and welfare of the commonwealth, and of the subjects of the same." For this reason, when the conditions so demand as determined by the legislature, property rights must bow to the primacy of police power because property rights, though sheltered by due process, must yield to general welfare. Police power as an attribute to promote the common good would be diluted considerably if on the mere plea of petitioners that they will suffer loss of earnings and capital, the questioned provision is invalidated. While the Constitution protects property rights, petitioners must accept the realities of business and the State, in the exercise of police power, can intervene in the operations of a business which may result in an impairment of property rights in the process.

Various laws and jurisprudence, particularly on agrarian reform and the regulation of contracts and public utilities, continuously serve as x x x reminder[s] that the right to property can be relinquished upon the command of the State for the promotion of public good. Thus, even if the current law, through its tax deduction scheme (which abandoned the tax credit scheme under the previous law), does not provide for a peso for peso reimbursement of the 20% discount given by private establishments, no constitutional infirmity obtains because, being a valid exercise of police power, payment of just compensation is not warranted. As to why the 20% discount is a valid exercise of police power and why it may not, under the specific circumstances of this case, be considered as an exercise of the power of eminent domain: Police power versus eminent domain. Police power is the inherent power of the State to regulate or to restrain the use of liberty and property for public welfare. The only limitation is that the restriction imposed should be reasonable, not oppressive. In other words, to be a valid exercise of police power, it must have a lawful subject or objective and a lawful method of accomplishing the goal. Under the police power of the State, "property rights of individuals may be subjected to restraints and burdens in order to fulfill the objectives of the government." The State "may interfere with personal liberty, property, lawful businesses and occupations to promote the general welfare [as long as] the interference [is] reasonable and not arbitrary." Eminent domain, on the other hand, is the inherent power of the State to take or appropriate private property for public use. The Constitution, however, requires that private property shall not be taken without due process of law and the payment of just compensation. Traditional distinctions exist between police power and eminent domain. In the exercise of police power, a property right is impaired by regulation, or the use of property is merely prohibited, regulated or restricted to promote public welfare. In such cases, there is no compensable taking, hence, payment of just compensation is not required. It has, thus, been observed that, in the exercise of police power (as distinguished from eminent domain), although the regulation affects the right of ownership, none of the bundle of rights which constitute ownership is appropriated for use by or for the benefit of the public. On the other hand, in the exercise of the power of eminent domain, property interests are appropriated and applied to some public purpose which necessitates the payment of just compensation therefor. Normally, the title to and possession of the property are transferred to the expropriating authority. However, it is a settled rule that the acquisition of title or total destruction of the property is not essential for "taking" under the power of eminent domain to be present. The 20% senior citizen discount is an exercise of police power. The judicious approach is to look at the nature and effects of the challenged governmental act and decide, on the basis thereof, whether the act is the exercise of police power or eminent domain. The 20% discount is intended to improve the welfare of senior citizens who, at their age, are less likely to be gainfully employed, more prone to illnesses and other disabilities, and, thus, in need of subsidy in purchasing basic commodities. It may not be amiss to mention also that the discount serves to honor senior citizens who presumably spent the productive years of their lives on contributing to the development and progress of the nation. This distinct cultural Filipino practice of honoring the elderly is an integral part of this law. As to its nature and effects, the 20% discount is a regulation affecting the ability of private establishments to price their products and services relative to a special class of individuals, senior citizens, for which the Constitution affords preferential concern. In turn, this affects the amount of profits or income/gross sales that a private establishment can derive from senior citizens. In other words, the subject regulation affects the pricing, and, hence, the profitability of a private establishment. However, it does not purport to appropriate or burden specific properties, used in the operation or conduct of the business of private establishments, for the use or benefit of the public, or senior citizens for that matter, but merely regulates the pricing of goods and services relative to, and the amount of profits or income/gross sales that such private establishments may derive from, senior citizens. The subject regulation may be said to be similar to, but with substantial distinctions from, price control or rate of return on

investment control laws which are traditionally regarded as police power measures. The 20% discount may be properly viewed as belonging to the category of price regulatory measures which affect the profitability of establishments subjected thereto. The State can employ police power measures to regulate the pricing of goods and services, and, hence, the profitability of business establishments in order to pursue legitimate State objectives for the common good, provided that the regulation does not go too far as to amount to "taking." While property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. The impact or effect of a regulation, such as the one under consideration, must, thus, be determined on a case-to-case basis. Whether that line between permissible regulation under police power and "taking" under eminent domain has been crossed must, under the specific circumstances of this case, be subject to proof and the one assailing the constitutionality of the regulation carries the heavy burden of proving that the measure is unreasonable, oppressive or confiscatory. The time-honored rule is that the burden of proving the unconstitutionality of a law rests upon the one assailing it and "the burden becomes heavier when police power is at issue." The 20% senior citizen discount has not been shown to be unreasonable, oppressive or confiscatory.

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH), Petitioner, v. HON. ROSA SAMSON-TATAD, as Presiding Judge of the Regional Trial Court, Branch 105, Quezon City, and SPOUSES WILLIAM AND REBECCA GENATO, Respondents. G.R. No. 187677 April 17, 2013 FACTS: Petitioner Republic of the Philippines, represented by the Department of Public Works and Highways (DPWH), filed a Complaint against several defendants, including private respondents, for the expropriation of several parcels of land affected by the construction of the EDSA-Quezon Avenue Flyover. Private respondents, Spouses William and Rebecca Genato, are the registered owners of a piece of land ("subject property") covered by Transfer Certificate of Title (TCT) No. RT-11603 (383648) and having an area of 460 square meters. During the pendency of the proceedings, petitioner received a letter dated 14 June 2002 from Engr. Patrick B. Gatan, Project Manager IV of the DPWH-NCR, reporting that the subject property was "government land and that the transfer certificate of title of the said claimant respondent x x x is of dubious origin and of fabrication as it encroached or overlapped on a government property." On 18 July 2002, petitioner filed a Manifestation and Motion9 to have the subject property "declared or considered of uncertain ownership or subject to conflicting claims." While petitioner was presenting evidence to show that the subject property actually belonged to the Government, private respondents interposed objections saying that petitioner was barred from presenting the evidence, as it constituted a collateral attack on the validity of their TCT No. RT-11603 (383648). ISSUE: Whether or not the court that hears the expropriation case has also jurisdiction to determine, in the same proceeding, the issue of ownership of the land sought to be condemned . HELD: YES. The right to eminent domain has always been considered as a fundamental state power that is inseparable from sovereignty. It is described as the State’s inherent power that need not be granted even by the Constitution, and as the government's right to appropriate, in the nature of compulsory sale to the State, private property for public use or purpose. Expropriation, or the exercise of the State’s right to eminent domain, is proscribed by the restraints of public use and just compensation. It is governed by Rule 67 of the Rules of Court, which presents procedural guidelines for the court to ensure that due process is observed and just compensation rightly paid to the private owners. The court is empowered to entertain the conflicting claims of ownership of the condemned or sought to be condemned property and adjudge the rightful owner thereof, in the same expropriation case, is evident from Section 9 of the Revised Rule 69, which provides: SEC. 9. Uncertain ownership. Conflicting claims. — If the ownership of the property taken is uncertain, or there are conflicting claims to any part thereof, the court may order any sum or sums awarded as compensation for the property to be paid to the clerk of court for the benefit of the persons adjudged in the same proceeding to be entitled thereto. But the judgment shall require the payment of the sum or sums awarded to either the defendant or the clerk before the plaintiff can enter upon the property, or retain it for the public use or purpose if entry has already been made. Thus, such findings of ownership in an expropriation proceeding should not be construed as final and binding on the parties. By filing an action for expropriation, the condemnor (petitioner), merely serves notice that it is taking title to and possession of the property, and that the defendant is asserting title to or interest in the property, not to prove a right to possession, but to prove a right to compensation for the taking. 30

If at all, this situation is akin to ejectment cases in which a court is temporarily authorized to determine ownership, if only to determine who is entitled to possession. This is not conclusive, and it remains open to challenge through proper actions.31 The consequences of Sec. 9, Rule 67 cannot be avoided, as they are due to the intimate relationship of the issue of ownership with the claim for the expropriation payment. 32 An action or proceeding is deemed an attack on a title when its objective is to nullify the title, thereby challenging the judgment pursuant to which the title was decreed. The attack is direct when the objective is to annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof. Here, the attempt of petitioner to present evidence cannot be characterized as an "attack." It must be emphasized that the objective of the case is to appropriate private property, and the contest on private respondents' title arose only as an incident to the issue of whom should be rightly compensated.

DEVORAH E. BARDILLON, petitioner, vs. BARANGAY MASILI of Calamba, Laguna, respondent. G.R. No. 146886. April 30, 2003 FACTS: At the root of this present [P]etition is the controversy surrounding the two (2) [C]omplaints for eminent domain which were filed by herein respondent for the purpose of expropriating a ONE HUNDRED FORTY FOUR (144) square meter-parcel of land, otherwise known as Lot 4381-D situated in Barangay Masili, Calamba, Laguna and owned by herein petitioner. The first [C]omplaint for eminent domain was filed before the Municipal Trial Court of Calamba, Laguna (MTC) in view of providing Barangay Masili a multi-purpose hall for the use and benefit of its constituents. The MTC dismissed the case for failure of the respondent to appear at the pre-trial. The second [C]omplaint for eminent domain was filed before Branch 37 of the Regional Trial Court of Calamba, Laguna (RTC) for the same purpose and by which petitioner prayed for the dimissal of the case as it was barred by prior judgment of the MTC, pursuant to the doctrine of res judicata and that the value of the land is only P11,448, the MTC had jurisdiction over the case. The case was dismissed and herein respondents are issued the corresponding [W]rit of [P]ossession over Lot 4381-D. The CA also dismissed the petition holding that the RTC did not commit grave abuse of discretion in issuing the assailed Orders. It ruled that the second Complaint for eminent domain was not barred by res judicata. The reason is that the MTC, which dismissed the first Complaint for eminent domain, had no jurisdiction over the action. It also held that the assessed value of the property was P28,960. Thus, the MTC did not have jurisdiction over the expropriation proceedings, because the amount involved was beyond the P20,000 jurisdictional amount cognizable by MTCs. ISSUE: Who has jurisdiction of the case. Whether or not the issuance of the Writ of Possession is proper in this case. HELD: 1. An expropriation suit does not involve the recovery of a sum of money. Rather, it deals with the exercise by the government of its authority and right to take property for public use. As such, it is incapable of pecuniary estimation and should be filed with the regional trial courts. It should be stressed that the primary consideration in an expropriation suit is whether the government or any of its instrumentalities has complied with the requisites for the taking of private property. Hence, the courts determine the authority of the government entity, the necessity of the expropriation, and the observance of due process. In the main, the subject of an expropriation suit is the governments exercise of eminent domain, a matter that is incapable of pecuniary estimation. True, the value of the property to be expropriated is estimated in monetary terms, for the court is duty-bound to determine the just compensation for it. This, however, is merely incidental to the expropriation suit. Indeed, that amount is determined only after the court is satisfied with the propriety of the expropriation. To reiterate, an expropriation suit is within the jurisdiction of the RTC regardless of the value of the land, because the subject of the action is the governments exercise of eminent domain -- a matter that is incapable of pecuniary estimation. 2. On the part of local government units, expropriation is also governed by Section 19 of the Local Government Code. Accordingly, in expropriation proceedings, the requisites for authorizing immediate entry are as follows: (1) the filing of a complaint for expropriation sufficient in form and substance; and (2) the deposit of the amount equivalent to 15 percent of the fair market value of the property to be expropriated based on its current tax declaration. In the instant case, the issuance of the Writ of Possession in favor of respondent after it had filed the Complaint for expropriation and deposited the amount required was proper, because it had complied with the foregoing requisites.

DIOSDADO LAGCAO, DOROTEO LAGCAO and URSULA LAGCAO v. JUDGE GENEROSA G. LABRA, Branch 23, Regional Trial Court, Cebu, and the CITY OF CEBU, G.R. No. 155746 October 13, 2004 FACTS: The province of Cebu donated certain parcels of land to the City of Ceby. In 1965, petitioners purchased Lot 1029 on installment basis from the City of Cebu. But then, in late 1965, the 210 lots, including Lot 1029, reverted to the Province of Cebu. Consequently, the province tried to annul the sale of Lot 1029 by the City of Cebu to the petitioners. The Court of First Instance and the CA ruled in favor of the petitioners. Pursuant to the ruling of the appellate court, the Province of Cebu executed on June 17, 1994 a deed of absolute sale over Lot 1029 in favor of petitioners. After acquiring title, petitioners tried to take possession of the lot only to discover that it was already occupied by squatters. Thus, on June 15, 1997, petitioners instituted ejectment proceedings against the squatters. The MTCC ordered the squatters to vacate the lot which was affirmed by the RTC. However, when the demolition order was about to be implemented, Cebu City Mayor Alvin Garcia wrote two letters to the MTCC, requesting the deferment of the demolition on the ground that the City was still looking for a relocation site for the squatters. Acting on the mayors request, the MTCC issued two orders suspending the demolition for a period of 120 days from February 22, 1999. Unfortunately for petitioners, during the suspension period, the Sangguniang Panlungsod (SP) of Cebu City passed a resolution which identified Lot 1029 as a socialized housing site pursuant to RA 7279. Then, on June 30, 1999, the SP of Cebu City passed Ordinance No. 1772 which included Lot 1029 among the identified sites for socialized housing. On July, 19, 2000, Ordinance No. 1843 was enacted by the SP of Cebu City authorizing the mayor of Cebu City to initiate expropriation proceedings for the acquisition of Lot 1029 which was registered in the name of petitioners. The intended acquisition was to be used for the benefit of the homeless after its subdivision and sale to the actual occupants thereof. Petitioners filed with the RTC an action for declaration of nullity of Ordinance No. 1843 for being unconstitutional. The trial court rendered its decision on July 1, 2002 dismissing the complaint filed by petitioners whose subsequent motion for reconsideration was likewise denied on August 26, 2002. On appeal to the Supreme Court, petitioners argue that Ordinance No. 1843 is unconstitutional as it sanctions the expropriation of their property for the purpose of selling it to the squatters, an endeavor contrary to the concept of public use contemplated in the Constitution. They allege that it will benefit only a handful of people. The ordinance, according to petitioners, was obviously passed for politicking, the squatters undeniably being a big source of votes. ISSUE: Whether or not the intended expropriation by the City of Cebu of a 4,048-square-meter parcel of land owned by petitioners contravenes the Constitution and applicable laws. HELD: Local government units have no inherent power of eminent domain and can exercise it only when expressly authorized by the legislature. By virtue of RA 7160, Congress conferred upon local government units the power to expropriate. Ordinance No. 1843 was enacted pursuant to Section 19 of RA 7160: 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 xxx. However, there are two legal provisions which limit the exercise of the power of eminent domain: (1) no person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws; and (2) private property shall not be taken for public use without just compensation.

The exercise of the power of eminent domain drastically affects a landowners right to private property, which is as much a constitutionally-protected right necessary for the preservation and enhancement of personal dignity and intimately connected with the rights to life and liberty. Whether directly exercised by the State or by its authorized agents, the exercise of eminent domain is necessarily in derogation of private rights. For this reason, the need for a painstaking scrutiny cannot be overemphasized. The due process clause cannot be trampled upon each time an ordinance orders the expropriation of a private individuals property. The courts cannot even adopt a hands-off policy simply because public use or public purpose is invoked by an ordinance, or just compensation has been fixed and determined. The foundation of the right to exercise eminent domain is genuine necessity and that necessity must be of public character. Government may not capriciously or arbitrarily choose which private property should be expropriated. In this case, there was no showing at all why petitioners property was singled out for expropriation by the city ordinance or what necessity impelled the particular choice or selection. Ordinance No. 1843 stated no reason for the choice of petitioners property as the site of a socialized housing project. Condemnation of private lands in an irrational or piecemeal fashion or the random expropriation of small lots to accommodate no more than a few tenants or squatters is certainly not the condemnation for public use contemplated by the Constitution. This is depriving a citizen of his property for the convenience of a few without perceptible benefit to the public. RA 7279 is the law that governs the local expropriation of property for purposes of urban land reform and housing. Sections 9 and 10 thereof provide: SEC 9. Priorities in the Acquisition of Land. − Lands for socialized housing shall be acquired in the following order: (a) Those owned by the Government or any of its subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations and their subsidiaries; (b) Alienable lands of the public domain; (c) Unregistered or abandoned and idle lands; (d) Those within the declared Areas or Priority Development, Zonal Improvement Program sites, and Slum Improvement and Resettlement Program sites which have not yet been acquired; (e) Bagong Lipunan Improvement of Sites and Services or BLISS which have not yet been acquired; and (f) Privately-owned lands. SEC. 10 xxx expropriation shall be resorted to only when other modes of acquisition have been exhausted. Private lands rank last in the order of priority for purposes of socialized housing. In the same vein, expropriation proceedings may be resorted to only after the other modes of acquisition are exhausted. Compliance with these conditions is mandatory because these are the only safeguards of oftentimes helpless owners of private property against what may be a tyrannical violation of due process when their property is forcibly taken from them allegedly for public use. The court have found nothing in the records indicating that the City of Cebu complied strictly with Sections 9 and 10 of RA 7279. Ordinance No. 1843 sought to expropriate petitioners property without any attempt to first acquire the lands listed in (a) to (e) of Section 9 of RA 7279. Likewise, Cebu City failed to establish that the other modes of acquisition in Section 10 of RA 7279 were first exhausted. Moreover, prior to the passage of Ordinance No. 1843, there was no evidence of a valid and definite offer to buy petitioners property as required by Section 19 of RA 7160. The court therefore find Ordinance No. 1843 to be constitutionally infirm for being violative of the petitioners right to due process.

For an ordinance to be valid, it must not only be within the corporate powers of the city or municipality to enact but must also be passed according to the procedure prescribed by law. It must be in accordance with certain well-established basic principles of a substantive nature. These principles require that an ordinance (1) must not contravene the Constitution or any statute (2) must not be unfair or oppressive (3) must not be partial or discriminatory (4) must not prohibit but may regulate trade (5) must be general and consistent with public policy, and (6) must not be unreasonable. Ordinance No. 1843 failed to comply with the foregoing substantive requirements.

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH) v. ORTIGAS AND COMPANY LIMITED PARTNERSHIP G.R. No.171496 March 3, 2014 FACTS: Respondent, Ortigas and Company Limited Partnership, is the owner of a parcel of land known as Lot 5-B-2 with an area of 70,278 square meters in Pasig City. Upon the request of the Department of Public Works and Highways, respondent Ortigas caused the segregation of its property into five lots and reserved one portion for road widening for the C-5 flyover project. On February 14, 2001, respondent Ortigas filed with the Regional Trial Court of Pasig a petition for authority to sell to the government Lot 5-B-2-A-1 and to facilitate the processing of its compensation. Respondent Ortigas alleged that the Department of Public Works and Highways requested the conveyance of the property for road widening purposes. On June 27, 2001, petitioner Republic of the Philippines, represented by the Office of the Solicitor General, filed an opposition, alleging that respondent Ortigas' property can only be conveyed by way of donation to the government, citing Section 50 of Presidential Decree No. 1529, also known as the Property Registration Decree which provides that delineated boundaries, streets, passageways, and waterways of a subdivided land may not be closed or disposed of by the owner except by donation to the government. ISSUE: Whether respondent Ortigas may not sell and may only donate its property to the government in accordance with Section 50 of Presidential Decree No. 1529. HELD: Respondent Ortigas may sell its property to the government. It must be compensated because its property was taken and utilized for public road purposes. When there is taking of private property for some public purpose, the owner of the property taken is entitled to be compensated. There is taking when the following elements are present: 1. The government must enter the private property; 2. The entrance into the private property must be indefinite or permanent; 3. There is color of legal authority in the entry into the property; 4. The property is devoted to public use or purpose; 5. The use of property for public use removed from the owner all beneficial enjoyment of the property. All of the above elements are present in this case. Petitioner Republic of the Philippines’ construction of a road — a permanent structure — on respondent Ortigas’ property for the use of the general public is an obvious permanent entry on petitioner Republic of the Philippines’ part. Given that the road was constructed for general public use stamps it with public character, and coursing the entry through the Department of Public Works and Highways gives it a color of legal authority. As a result of petitioner Republic of the Philippines’ entry, respondent Ortigas may not enjoy the property as it did before. It may not anymore use the property for whatever legal purpose it may desire. Neither may it occupy, sell, lease, and receive its proceeds. It cannot anymore prevent other persons from entering or using the property. In other words, respondent Ortigas was effectively deprived of all the bundle of rights attached to ownership of property. Moreover, petitioner Republic of the Philippines’ intention to take the property for public use was obvious from the completion of the road widening for the C-5 flyover project and from the fact that the general public was already taking advantage of the thoroughfare.

In contrast, when the road or street was delineated upon government request and taken for public use, as in this case, the government has no choice but to compensate the owner for his or her sacrifice, lest it violates the constitutional provision against taking without just compensation, thus: Section 9. Private property shall not be taken for public use without just compensation. The right to compensation under Article III, Section 9 of the Constitution was put in place to protect the individual from and restrain the State’s sovereign power of eminent domain, which is the government’s power to condemn private properties within its territory for public use or purpose. This power is inherent and need not be granted by law. Thus, while the government’s power to take for public purpose is inherent, immense, and broad in scope, it is delimited by the right of an individual to be compensated. In a nutshell, the government may take, but it must pay. Respondent Ortigas, immediately upon the government’s suggestion that it needed a portion of its property for road purposes, went so far as to go through the process of annotating on its own title that the property was reserved for road purposes. Without question, respondent Ortigas allowed the government to construct the road and occupy the property when it could have compelled the government to resort to expropriation proceedings and ensure that it would be compensated. Now, the property is being utilized, not for the benefit of respondent Ortigas as a private entity but by the public. Respondent Ortigas remains uncompensated. Instead of acknowledging respondent Ortigas’ obliging attitude, however, petitioner Republic of the Philippines refuses to pay, telling instead that the property must be given to it at no cost. This is unfair. Title to the subject lot remains under respondent Ortigas’ name. The government is already in possession of the property but is yet to acquire title to it. To legitimize such possession, petitioner Republic of the Philippines must acquire the property from respondent Ortigas by instituting expropriation proceedings or through negotiated sale, which has already been recognized in law as a mode of government acquisition of private property for public purpose. In a negotiated sale, the government offers to acquire for public purpose a private property, and the owner may accept or reject it. A rejection of the offer, however, would most likely merely result in the commencement of an expropriation proceeding that would eventually transfer title to the government. Hence, the government's offer to acquire for public purpose a private property may be considered as an act preparatory to an expropriation proceeding. Therefore, a private owner's initiative to segregate a property to accommodate government needs saves the government from a long and arduous expropriation proceeding. This is a commendable act on the part of the owner. It must be encouraged, not dampened by threats of property deprivation without compensation. Taking of private property without just compensation is a violation of a person's property right. In situations where the government does not take the trouble of initiating an expropriation proceeding, the private owner has the option to compel payment of the property taken, when justified. The trial court should continue to proceed with this case to determine just compensation in accordance with law.

HACIENDA LUISITA, INCORPORATED, LUISITA INDUSTRIAL PARK CORPORATION and RIZAL COMMERCIAL BANKING CORPORATION v. PRESIDENTIAL AGRARIAN REFORM COUNCIL; SECRETARY NASSER PANGANDAMAN OF THE DEPARTMENT OF AGRARIAN REFORM; ALYANSA NG MGA MANGGAGAWANG BUKID NG HACIENDA LUISITA, RENE GALANG, NOEL MALLARI, and JULIO SUNIGA[1] and his SUPERVISORY GROUP OF THE HACIENDA LUISITA, INC. and WINDSOR ANDAYA, G.R. No. 171101 November 22, 2011 FACTS: RA 6657 was enacted to provide a more equitable distribution and ownership of land, with due regard to the rights of landowners to just compensation and to the ecological needs of the nation, shall be undertaken to provide farmers and farm workers with the opportunity to enhance their dignity and improve the quality of their lives through greater productivity of agricultural lands. The agrarian reform program is founded on the right of farmers and regular farm workers, who are landless, to own directly or collectively the lands they till or, in the case of other farm workers, to receive a share of the fruits thereof. RA 6657 provides two (2) alternative modalities, i.e., land or stock transfer, pursuant to either of which the corporate landowner can comply with CARP. Pursuant to the mandate of RA No. 6657, Tarlac Development Corporation submitted for approval a stock distribution plan on the basis of all the benefits that the farmworker-beneficiaries of Hacienda Luisita will receive under its provisions in addition to their regular compensation as farmhands in the agricultural enterprise and the fringe benefits granted to them by their collective bargaining agreement with management which was approved on November 21, 1989. However, the SDP was revoked because of: (1) failure of HLI to fully comply with its undertaking to distribute homelots to the FWBs under the SDP; (2) distribution of shares of stock to the FWBs based on the number of man days or number of days worked by the FWB in a years time; and (3) 30-year timeframe for the implementation or distribution of the shares of stock to the FWBs. Thus, the court ordered the distribution of the HLI land to the FWBs ISSUE: What is the reckoning period for purposes of just compensation to be given to HLI. HELD: The court maintained that the date of taking is November 21, 1989, the date when PARC approved HLIs SDP per PARC Resolution No. 89-12-2, in view of the fact that this is the time that the FWBs were considered to own and possess the agricultural lands in Hacienda Luisita. To be precise, these lands became subject of the agrarian reform coverage through the stock distribution scheme only upon the approval of the SDP, that is, November 21, 1989. Thus, such approval is akin to a notice of coverage ordinarily issued under compulsory acquisition. Further, any doubt should be resolved in favor of the FWBs. It should be noted that it is precisely because the stock distribution option is a distinctive mechanism under RA 6657 that it cannot be treated similarly with that of compulsory land acquisition as these are two (2) different modalities under the agrarian reform program. In this regard, it should be noted that when HLI submitted the SDP to DAR for approval, it cannot be gainsaid that the stock distribution scheme is clearly HLIs preferred modality in order to comply with CARP. And when the SDP was approved, stocks were given to the FWBs in lieu of land distribution. As aptly observed by the minority itself, [i]nstead of expropriating lands, what the government took and distributed to the FWBs were shares of stock of petitioner HLI in proportion to the value of the agricultural lands that should have been expropriated and turned over to the FWBs. It cannot, therefore, be denied that upon the approval of the SDP submitted by HLI, the agricultural lands of Hacienda Luisita became subject of CARP coverage. Evidently, the approval of the SDP took the place of a notice of coverage issued under compulsory acquisition. Also, it is surprising that while the minority opines that under the stock distribution option, title to the property remains with the corporate landowner, which should presumably be dominated by farmers with majority stockholdings in the corporation, it still insists that the just compensation that should be given to HLI is to be reckoned on January 2, 2006, the date of the issuance of the notice of coverage, even after it found that the

FWBs did not have the majority stockholdings in HLI contrary to the supposed avowed policy of the law. In effect, what the minority wants is to prejudice the FWBs twice. Given that the FWBs should have had majority stockholdings in HLI but did not, the minority still wants the government to pay higher just compensation to HLI. Even if it is the government which will pay the just compensation to HLI, this will also affect the FWBs as they will be paying higher amortizations to the government if the taking will be considered to have taken place only on January 2, 2006. The foregoing notwithstanding, it bears stressing that the DAR's land valuation is only preliminary and is not, by any means, final and conclusive upon the landowner. The landowner can file an original action with the RTC acting as a special agrarian court to determine just compensation. The court has the right to review with finality the determination in the exercise of what is admittedly a judicial function. A view has also been advanced that HLI should pay the qualified FWBs rental for the use and possession of the land up to the time it surrenders possession and control over these lands. What this view fails to consider is the fact that the FWBs are also stockholders of HLI prior to the revocation of PARC Resolution No. 89-12-2. Also, the income earned by the corporation from its possession and use of the land ultimately redounded to the benefit of the FWBs based on its business operations in the form of salaries, benefits voluntarily granted by HLI and other fringe benefits under their Collective Bargaining Agreement. That being so, there would be unjust enrichment on the part of the FWBs if HLI will still be required to pay rent for the use of the land in question.

Reyes v. NHA, G.R. No. 147511. January 20, 2003

FACTS: Records show that in 1977, respondent National Housing Authority (NHA) filed separate complaints for the expropriation of sugarcane lands, particularly Lot Nos. 6450, 6448-E, 6198-A and 6199 of the cadastral survey of Dasmarias, Cavite belonging to the petitioners, before the then Court of First Instance of Cavite. The stated public purpose of the expropriation was the expansion of the Dasmarias Resettlement Project to accommodate the squatters who were relocated from the Metropolitan Manila area. The trial court rendered judgment ordering the expropriation of these lots and the payment of just compensation. This was affirmed by the Supreme Court in a decision rendered on October 29, 1987 in the case of NHA vs. Zaballero and which became final on November 26, 1987. For the alleged failure of respondent NHA to comply with the above order, petitioners filed on April 28, 1992 a complaint for forfeiture of rights before the Regional Trial Court of Quezon City. They alleged that respondent NHA had not relocated squatters from the Metropolitan Manila area on the expropriated lands in violation of the stated public purpose for expropriation and had not paid the just compensation fixed by the court. They prayed that respondent NHA be enjoined from disposing and alienating the expropriated properties and that judgment be rendered forfeiting all its rights and interests under the expropriation judgment. In its Answer, respondent NHA averred that it had already paid a substantial amount to herein petitioners and that the expropriation judgment could not be executed in view of several issues raised by respondent NHA before the expropriation court concerning capital gains tax, registration fees and other expenses for the transfer of title to respondent NHA, as well as the claims for attorneys fees of Atty. Joaquin Yuseco, Jr., collaborating counsel for petitioners. Petitioners contend that respondent NHA violated the stated public purpose for the expansion of the Dasmarias Resettlement Project when it failed to relocate the squatters from the Metro Manila area, as borne out by the ocular inspection conducted by the trial court which showed that most of the expropriated properties remain unoccupied. Petitioners likewise question the public nature of the use by respondent NHA when it entered into a contract for the construction of low cost housing units, which is allegedly different from the stated public purpose in the expropriation proceedings. Hence, it is claimed that respondent NHA has forfeited its rights and interests by virtue of the expropriation judgment and the expropriated properties should now be returned to herein petitioners.

ISSUE: Whether or not respondents violated the stated public purpose of the expansion. Whether or not the properties can be returned to the respondents.

HELD: The 1987 Constitution explicitly provides for the exercise of the power of eminent domain over private properties upon payment of just compensation. More specifically, section 9, Article III states that private property shall not be taken for public use without just compensation. The constitutional restraints are public use and just compensation. Petitioners cannot insist on a restrictive view of the eminent domain provision of the Constitution by contending that the contract for low cost housing is a deviation from the stated public use. It is now settled doctrine that the concept of public use is no longer limited to traditional purposes. Here, as elsewhere, the idea that public use is strictly limited to clear cases of use by the public has been abandoned. The term public use has now been held to be synonymous with public interest, public benefit, public welfare, and public

convenience. It is accurate to state then that at present whatever may be beneficially employed for the general welfare satisfies the requirement of public use. The act of respondent NHA in entering into a contract with a real estate developer for the construction of low cost housing on the expropriated lots to be sold to qualified low income beneficiaries cannot be taken to mean as a deviation from the stated public purpose of their taking. Jurisprudence has it that the expropriation of private land for slum clearance and urban development is for a public purpose even if the developed area is later sold to private homeowners, commercials firms, entertainment and service companies, and other private concerns. Moreover, the Constitution itself allows the State to undertake, for the common good and in cooperation with the private sector, a continuing program of urban land reform and housing which will make at affordable cost decent housing and basic services to underprivileged and homeless citizens in urban centers and resettlement areas. The expropriation of private property for the purpose of socialized housing for the marginalized sector is in furtherance of the social justice provision under Section 1, Article XIII of the Constitution. It follows that the low cost housing project of respondent NHA on the expropriated lots is compliant with the public use requirement. The court likewise did not subscribe to petitioners contention that the stated public purpose was abandoned when respondent NHA failed to occupy the expropriated lots by relocating squatters from the Metro Manila area. The expropriation judgment declared that respondent NHA has a lawful right to take petitioners properties for the public use or purpose of expanding the Dasmarias Resettlement Project. The taking here is absolute, without any condition, restriction or qualification. When land has been acquired for public use in fee simple unconditionally, either by the exercise of eminent domain or by purchase, the former owner retains no rights in the land, and the public use may be abandoned, or the land may be devoted to a different use, without any impairment of the estate or title acquired, or any reversion to the former owner. Petitioners further aver that the continued failure of respondent NHA to pay just compensation for a long period of time justifies the forfeiture of its rights and interests over the expropriated lots. They demand the return of the expropriated lots. Respondent NHA justifies the delay to pay just compensation by reason of the failure of petitioners to pay the capital gains tax and to surrender the owners duplicate certificates of title. In the recent case of Republic of the Philippines vs. Court of Appeals, et al., the Court ruled that nonpayment of just compensation does not entitle the private landowners to recover possession of their expropriated lots. It follows that both by virtue of the judgment, long final, in the expropriation suit, as well as the annotations upon their title certificates, plaintiffs are not entitled to recover possession of their expropriated lots which are still devoted to the public use for which they were expropriated but only to demand the market value of the same. In arguing for the return of their property on the basis of non-payment, respondents ignore the fact that the right of the expropriating authority is far from that of an unpaid seller in ordinary sales, to which the remedy of rescission might perhaps apply. An in rem proceeding, condemnation acts upon the property. After condemnation, the paramount title is in the public under a new and independent title; thus, by giving notice to all claimants to a disputed title, condemnation proceedings provide a judicial process for securing better title against all the world than may be obtained by voluntary conveyance.

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH) v. ASIA PACIFIC INTEGRATED STEEL CORPORATION, G.R. No. 192100 March 12, 2014 FACTS: Asia Pacific Integrated Steel Corporation (respondent) is the registered owner of a 17,175-square meter property situated in Barangay Sta. Monica, Municipality of San Simon, Province of Pampanga. On March 1, 2002, the Republic of the Philippines (petitioner) through the Toll Regulatory Board (TRB) instituted expropriation proceedings against the respondent over a portion of their property. The affected area, consisting of 2,024 square meters, shall be traversed by the expansion of the San Simon Interchange, an integral component of the construction, rehabilitation and expansion of the North Luzon Expressway (NLEX Project). Subsequently, petitioner filed an urgent ex-parte motion for issuance of writ of possession, stating that it deposited with the Land Bank of the Philippines (LBP) the amount of ₱607,200.00 (100% of the value of the property based on current zonal valuation of the Bureau of Internal Revenue [BIR]) in accordance with Section 4(a) of Republic Act No. 89746 (R.A. 8794), and hence the court has the ministerial duty to place petitioner in possession pursuant to Section 2, Rule 67 of the Rules of Civil Procedure. In its Answer with Opposition to the Motion for Issuance of Writ of Possession, respondent questioned the TRB’s authority to expropriate the subject property and objected to petitioner’s offered compensation which respondent deems unjust because the basis thereof - the BIR zonal valuation - was an unofficial valuation, being merely based on an internal memorandum issued by BIR Revenue District No. 21, not by the Asset Valuation Department of the BIR National Office. Respondent asserted that just compensation should be at ₱3,036,000.00 or at ₱1,500.00 per square meter plus consequential damages, considering the fair market value and the industrial classification of the subject property. The parties eventually agreed to submit the issue of just compensation to three Commissioners composed of the Municipal Assessor of San Simon as Chairman, and the RTC Branch Clerk of Court and the Register of Deeds for the Province of Pampanga as Members.10 Appraisal conducted by the Assessor of San Simon, Pampanga for various properties within the area, recommended an amount ranging from ₱1,000.00 to ₱1,500.00, Philippine currency, per square meter, depending on their proximity to the national roads, municipal roads, and barangay roads, and the improvement/development put in place. Upon the recommendation of the commissioners, the trial court finds the amount of ONE THOUSAND THREE HUNDRED PESOS (Php1,300.00) per square meter as just compensation for the property subject of expropriation which was affirmed by the CA. ISSUE: Whether or not the courts should follow the valuation of the commissioners. HELD: Section 5 of R.A. 8974 enumerates the standards for assessing the value of expropriated land taken for national government infrastructure projects, thus: SECTION 5. Standards for the Assessment of the Value of the Land Subject of Expropriation Proceedings or Negotiated Sale. – In order to facilitate the determination of just compensation, the court may consider, among other well-established factors, the following relevant standards: (a) The classification and use for which the property is suited; (b) The developmental costs for improving the land;

(c) The value declared by the owners; (d) The current selling price of similar lands in the vicinity; (e) The reasonable disturbance compensation for the removal and/or demolition of certain improvements on the land and for the value of the improvements thereon; (f) The size, shape or location, tax declaration and zonal valuation of the land; (g) The price of the land as manifested in the ocular findings, oral as well as documentary evidence presented; and (h) Such facts and events as to enable the affected property owners to have sufficient funds to acquire similarly-situated lands of approximate areas as those required from them by the government, and thereby rehabilitate themselves as early as possible. In this case, the trial court considered only (a) and (d): (1) the classification of the subject property which is located in an area with mixed land use (commercial, residential and industrial) and the property’s conversion from agricultural to industrial land, and (2) the current selling price of similar lands in the vicinity – the only factors which the commissioners included in their Report. It also found the commissioners’ recommended valuation of ₱1,000.00 to ₱1,500.00 per square to be fair and just despite the absence of documentary substantiation as said prices were based merely on the opinions of bankers and realtors. The trial court did not judiciously determine the fair market value of the subject property as it failed to consider other relevant factors such as the zonal valuation, tax declarations and current selling price supported by documentary evidence. Indeed, just compensation must not be arrived at arbitrarily, but determined after an evaluation of different factors.23 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. Such "just"-ness of the compensation can only be attained by using reliable and actual data as bases in fixing the value of the condemned property.24 Trial courts are required to be more circumspect in its evaluation of just compensation due the property owner, considering that eminent domain cases involve the expenditure of public funds.25 The court agrees with the trial court that it was not bound by the assessment report of the commissioners and that it had the discretion to reject the same and substitute its own judgment on its value as gathered from the record, or it may accept the report/recommendation of the commissioners in toto and base its judgment thereon. However, the decision of the court must be based on all established rules, upon correct legal principles and competent evidence.26The court is proscribed from basing its judgment on speculations and surmises. The Republic is incorrect, however, in alleging that the values were exorbitant, merely because they exceeded the maximum zonal value of real properties in the same location where the subject properties were located. The zonal value may be one, but not necessarily the sole, index of the value of a realty. [Market value] 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."

LAND BANK OF THE PHILIPPINES v. MANUEL O. GALLEGO, JR., VELASCO, JR., and JOSEPH L. GALLEGO and BRION, JJ. CHRISTOPHER GALLEGO G.R. No. 173226 January 20, 2009 FACTS: Respondents Manuel O. Gallego, Jr., Joseph L. Gallego and Christopher L. Gallego are the co-owners of several parcels of agricultural lands located in Barangay Sta. Rita and Barangay Concepcion in Cabiao, Nueva Ecija. Sometime in 1972, the DAR placed a portion of the property under the coverage of Presidential Decree No. 27 (P.D. No. 27). However, the DAR and respondents failed to agree on the amount of just compensation, prompting respondents to file on 10 December 1998 a petition before the RTC of Cabanatuan City. The petition, docketed as Agrarian Case No. 127-AF, named the DAR and herein petitioner Land Bank of the Philippines (LBP) as respondents and prayed that just compensation be fixed in accordance with the valuation formula under P.D. No. 27 based on an Average Gross Production of 109.535 cavans per hectare including interest at 6% compounded annually as provided under PARC Resolution No. 92-24-1 Petitioner LBP filed an answer, averring that just compensation should be determined based on an Average Gross Production of 65 cavans and/or 56.6 cavans per hectare which were the values at the time of taking of the property. On 14 March 2003, the trial court rendered a Decision, adopting respondents formula which was based on an Average Gross Production of 121.6 cavans per hectare. In arriving at the amount of just compensation, the trial court adopted the formula prescribed in P.D. No. 27. Applying Article 1958 of the Civil Code, the trial court also imposed interest in kind payable from 1972 to 2002 by multiplying by 1.8 the Average Gross Production of palay of 121.6 cavans per hectare multiplied by 2.5. Only petitioner LBP appealed from the trial courts Decision. According to petitioner LBP, the trial court erred in applying values that had no basis in law instead of adopting the Average Gross Production established by the Barangay Committee on Land Production under DAR Circular No. 26, series of 1973, and the mandated Government Support Price of P35 per cavan of palay under Section 2 of Executive Order (E.O.) No. 228. The Court of Appeals rendered the assailed Decision on 29 September 2005. The appellate court agreed that the values applied by the trial court in fixing just compensation had no legal basis because the formula under P.D. No. 27 and E.O. No. 228 mandated a Government Support Price of P35.00 per cavan of palay. It also held that the imposition of interest based on Article 1958 of the Civil Code was improper because said article does not apply to the expropriation of land but contemplates cases of simple loan or mutuum. The appellate court fixed the propertys value at the current market rate of P25.00 per square meter similar to that of other properties located in Barangay Sta. Rita and Barangay Concepcion. Petitioner LBP sought reconsideration but was denied in a Resolution dated 23 June 2006. Petitioner LBP argues that respondents property was acquired under the effectivity of P.D. No. 27 and E.O. No. 228; thus, the formula provided therein should apply in fixing just compensation. Petitioner also pointed out the trial courts failure to take judicial notice of the mandated Government Support Price of P35.00 per cavan for palay at the time of taking in 1972. ISSUE: Whether or not the trial court and the CA is correct in using the current market value of the property as a basis of just compensation which in effect, retroactively applies RA No. 6657 (Comprehensive Land Reform Code). HELD: The provisions of R.A. No. 6657 are also applicable to the agrarian reform process of lands placed under the coverage of P.D. No. 27/E.O. No. 228, which has not been completed upon the effectivity of R.A. No. 6657.

RA [No.] 6657 includes PD [No.] 27 lands among the properties which the DAR shall acquire and distribute to the landless. And to facilitate the acquisition and distribution thereof, Secs. 16, 17 and 18 of the Act should be adhered to. The retroactive application of R.A. No. 6657 is not only statutory[34] but is also founded on equitable considerations. In Lubrica v. Land Bank of the Philippines,[35] the Court declared that it would be highly inequitable on the part of the landowners therein to compute just compensation using the values at the time of taking in 1972, and not at the time of payment, considering that the government and the farmer-beneficiaries have already benefited from the land although ownership thereof has not yet been transferred in their names. The same equitable consideration is applicable to the factual milieu of the instant case. The records show that respondents property had been placed under the agrarian reform program in 1972 and had already been distributed to the beneficiaries but respondents have yet to receive just compensation due them.

For the purpose of determining just compensation, Section 17 of R.A. No. 6657 states: SECTION 17. Determination of Just Compensation.In determining just compensation, the cost of acquisition of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the assessment made by government assessors shall be considered. The social and economic benefits contributed by the farmers and the farmworkers and by the Government to the property as well as the 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.

TINIO V. NPC FACTS: The National Power Corporation (NPC) is a government-owned and controlled corporation created and existing by virtue of Republic Act No. 6395,3 as amended by Presidential Decree No. 938. The main purpose of the NPC, as stated in its charter, is to undertake the development of hydroelectric generation of power and the production of electricity from nuclear, geothermal and other sources, as well as the transmission of electric power on a nationwide basis. In order to accomplish its objectives, the NPC is granted the power, among others, to exercise the right of eminent domain. For purposes of constructing and maintaining its San Roque Multi-Purpose Project, the NPC filed on October 13, 1999 a complaint for eminent domain with the RTC of Urdaneta, Pangasinan against Moises Tinio, Jr. and Francis Tinio for the purpose of expropriating a parcel of land owned by the Tinios. (located at Barangay San Roque, San Manuel, Pangasinan) Prior to filing its complaint, the NPC took possession of the subject land on February 9, 1998 by virtue of a Permit to Enter signed by Moises. During the pre-trial conference, one of the stipulations proposed by the NPC and admitted by the Tinios is the authority of the NPC to expropriate the subject lot. Thus, the parties agreed that the only issue left for determination by the trial court is the just compensation to be paid to the Tinios. On January 22, 2001, the trial court issued a Resolution disposing of the case as follows: WHEREFORE, PREMISES CONSIDERED, the Court hereby orders the National Power Corporation to pay defendants Moises Tinio, Jr. and Francis Tinio the amount of ₱12,850,400.00, plus legal interest until fully paid as just compensation for Lot No. 14556 under TCT No. T-5775 with a total area of 52,710 sq.m. NPC filed a Motion for Reconsideration. On November 19, 2003, the CA rendered its presently assailed Decision, with the following dispositive portion: In view of the Foregoing, the resolution appealed from is MODIFIED, in that the NPC is ordered to pay the defendants as just compensation for the land taken from them, the amount of ₱2,343,900 with legal interest of 6 percent [per] annum from February 9, 1998 until paid. Feeling aggrieved, both the NPC and the Tinios are now before this Court arguing that the CA committed error in its judgment. ISSUE: whether ir not the CA was correct in its determination of just compensation as based on its findings on the time of taking of the subject property and the nature and character of the subject property at the time of such taking. HELD: The Court finds no error in the assailed Decision of the CA. As to the nature and character of the subject lot at the time of its taking, the Court takes exception to the contention of the NPC that the CA determined the value of just compensation on the basis of the subject lot's classification as industrial. It is settled that 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. Hence, the argument of the Tinios that the subject property should benefit from the subsequent classification of its adjoining properties as industrial lands is, likewise, untenable. The Court, in a number of cases,11 has enunciated the principle that it would be injustice on the part of the expropriator where the owner would be given undue incremental advantages arising from the use to which the government devotes the property expropriated.1âwphi1

In the instant case, it cannot be denied that prior to the NPC's introduction of improvements in the area where the subject parcel of land is located, the properties therein, including the disputed lot, remained agricultural and residential. It was only upon entry of the NPC in Barangay San Roque, and after constructing buildings and other facilities and bringing in various equipment for its multi-purpose project, that the lands in the said locality were later classified as commercial or industrial. Stated differently, to allow the Tinios to ask compensation on the basis of the subsequent classification of the contested lot as industrial would be to allow them to recover more than the value of the land at the time when it was taken, which is the true measure of the damages or just compensation.

LAND BANK OF THE PH V. EUSEBIO FACTS: Respondent Eusebio, Jr., owner of a 790.4-hectare parcel of land situated in Masbate, voluntarily offered to sell his land to the government through the Department of Agrarian Reform for P19.5 million. DAR offered to purchase the land for P3 million but it was rejected by respondent. Petitioner Land Bank made a revaluation of the land but was rejected again by respondent. Meanwhile, LBP opened a trust account in favor of Eusebio, and then the DAR immediately took physical possession of the property, had the TCT cancelled in favor of the Republic of the Philippines, and distributed the property to the farmerbeneficiaries. The parties then referred the determination of just compensation with the DARAB. Respondent still finding the valuation unacceptable, filed before the RTC-Special Agrarian Court an action for determination and payment of just compensation against DAR and LBP. During trial, separate valuation reports were submitted, with the DAR and LBP using the guidelines/formula under RA 6657 in their computation. In its judgment, the RTC-SAC brushed aside the valuations fixed by DAR and LBP, and found instead as considerable just compensation the amount (P25 million) prayed for by respondent. Both parties appealed, but CA affirmed the judgment in toto. ISSUE: Whether the RTC-SAC committed grave abuse of discretion in the determination of just compensation for the property.

HELD: The Court held yes. The determination of just compensation is essentially a judicial function that the Courts exercise within the parameters of the law; the RTC-SAC’s valuation in this case is erroneous for having been rendered outside the contemplation of the law. In the exercise of the essentially judicial function of determining just compensation, the RTC-SAC is not granted unlimited discretion. It must consider and apply the R.A. No. 6657-enumerated factors and the DAR formula (that reflects these factors) as they provide the uniform framework or structure by which just compensation for property subject to agrarian reform should be determined. A determination of just compensation based merely on “conscience” – a consideration entirely outside the contemplation of the law – is the precise situation that we find in this case. To be clear, other than in “conscience,” the RTC-SAC did not point to any particular consideration that impelled it to set the just compensation at ₱25 million. In fact, a reading of the RTC-SAC’s decision reveals a marked absence of any grounds by which it anchored its determination, more so of any explanation why it fixed the amount of ₱25 million. This marked absence of basis, taken together with these other considerations, convinced us that the RTC-SAC completely, even arbitrarily, relied on the amount that respondent prayed for in their complaint in fixing the property’s just compensation. This blind reliance on respondent’s prayer and the utter disregard of the prescribed factors and formula clearly amount to grave abuse of discretion for having been taken outside the contemplation of the law. Thus, the Court set aside, as grave abuse of discretion, the just compensation of ₱25 million that the RTCSAC fixed for Eusebio’s property. Accordingly, the Court likewise set aside, for grave error, the CA’s decision that affirmed in toto this RTC-SAC’s valuation.

AGAN V. PIATCO (en banc case) FACTS: In August 1989 the DOTC had a study conducted to determine whether or not the present Ninoy Aquino International Airport (NAIA) can cope with traffic development up to the year 2010. A draft final report was submitted to the DOTC in December 1989. Four years later, in 1993, six Filipino-Chinese business leaders met with then President Fidel Ramos to explore the possibility of investing in the construction and operation of a new international airport terminal. The six later formed the Asia’s Emerging Dragon Corp (AEDC) which submitted an unsolicited proposal for the development of NAIA International Passenger Terminal III more than a year after the first meeting with Ramos, in October 1994. In March 1995, the DOTC endorsed the AEDC proposal to the National Economic and Development Authority (NEDA). In January 1996, NEDA passed Board Resolution No. 2 which approved the NAIA IPT III project. On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of an invitation for competitive or comparative proposals on AEDC’s unsolicited proposal, in accordance with Sec. 4-A of RA 6957 as amended. On September 20, 1996, the consortium composed of People’s Air Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank) (collectively, Paircargo Consortium) submitted their competitive proposal to the PBAC. PBAC awarded the project to Paircargo Consortium. Because of that, it was incorporated into Philippine International Airport Terminals Co., Inc. AEDC subsequently protested the alleged undue preference given to PIATCO and reiterated its objections as regards the prequalification of PIATCO. On July 12, 1997, the Government and PIATCO signed the “Concession Agreement for the Build-OperateandTransfer Arrangement of the NAIA Passenger Terminal III” (1997 Concession Agreement). The Government granted PIATCO the franchise to operate and maintain the said terminal during the concession period and to collect the fees, rentals and other charges in accordance with the rates or schedules stipulated in the 1997 Concession Agreement. The Agreement provided that the concession period shall be for twenty-five (25) years commencing from the in-service date, and may be renewed at the option of the Government for a period not exceeding twenty-five (25) years. At the end of the concession period, PIATCO shall transfer the development facility to MIAA. Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA Terminals I and II, had existing concession contracts with various service providers to offer international airline airport services, such as in-flight catering, passenger handling, ramp and ground support, aircraft maintenance and provisions, cargo handling and warehousing, and other services, to several international airlines at the NAIA. On September 17, 2002, the workers of the international airline service providers, claiming that they would lose their job upon the implementation of the questioned agreements, filed a petition for prohibition. Several employees of MIAA likewise filed a petition assailing the legality of the various agreements. During the pendency of the cases, PGMA, on her speech, stated that she will not “honor (PIATCO) contracts which the Executive Branch’s legal offices have concluded (as) null and void.” ISSUE: Whether or not the State can temporarily take over a business affected with public interest. RULING:

The Court held yes. PIATCO cannot, by mere contractual stipulation, contravene the Constitutional provision on temporary government takeover and obligate the government to pay “reasonable cost for the use of the Terminal and/or Terminal Complex.” Article XII, Section 17 of the 1987 Constitution provides: Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately owned public utility or business affected with public interest. The above provision pertains to the right of the State in times of national emergency, and in the exercise of its police power, to temporarily take over the operation of any business affected with public interest. The duration of the emergency itself is the determining factor as to how long the temporary takeover by the government would last. The temporary takeover by the government extends only to the operation of the business and not to the ownership thereof. As such the government is not required to compensate the private entity-owner of the said business as there is no transfer of ownership, whether permanent or temporary. The private entity-owner affected by the temporary takeover cannot, likewise, claim just compensation for the use of the said business and its properties as the temporary takeover by the government is in exercise of its police power and not of its power of eminent domain. Article XII, section 17 of the 1987 Constitution envisions a situation wherein the exigencies of the times necessitate the government to “temporarily take over or direct the operation of any privately owned public utility or business affected with public interest.” It is the welfare and interest of the public which is the paramount consideration in determining whether or not to temporarily take over a particular business. Clearly, the State in effecting the temporary takeover is exercising its police power. Police power is the “most essential, insistent, and illimitable of powers.” Its exercise therefore must not be unreasonably hampered nor its exercise be a source of obligation by the government in the absence of damage due to arbitrariness of its exercise. Thus, requiring the government to pay reasonable compensation for the reasonable use of the property pursuant to the operation of the business contravenes the Constitution.

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