Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 173085 January 19, 2011

PHILIPPINE VETERANS BANK, Petitioner,

vs.
BASES CONVERSION DEVELOPMENT AUTHORITY, LAND BANK OF THE PHILIPPINES,
ARMANDO SIMBILLO, CHRISTIAN MARCELO, ROLANDO DAVID, RICARDO BUCUD,
PABLO SANTOS, AGRIFINA ENRIQUEZ, CONRADO ESPELETA, CATGERUBE CASTRO,
CARLITO MERCADO and ALFREDO SUAREZ,Respondents.

DECISION

ABAD, J.:

This case is about the authority of the court in an expropriation case to adjudicate questions of ownership
of the subject properties where such questions involve the determination of the validity of the issuance to
the defendants of Certificates of Land Ownership Awards (CLOAs) and Emancipation Patents (EPs),
questions that fall within the jurisdiction of the Department of Agrarian Reform Adjudication Board
(DARAB).

The Facts and the Case

In late 2003 respondent Bases Conversion Development Authority (BCDA), a government corporation,
filed several expropriation actions before the various branches of the Regional Trial Court (RTC) of
Angeles City, for acquisition of lands needed for the construction of the Subic-Clark-Tarlac Expressway
Project. Ten of these cases were raffled to Branch 58 of the court1 and it is these that are the concern of
the present petition.

The defendants in Branch 58 cases were respondents Armando Simbillo, Christian Marcelo, Rolando
David, Ricardo Bucud, Pablo Santos, Agrifina Enriquez, Conrado Espeleta, Catgerube Castro, Carlito
Mercado, and Alfredo Suarez. They were the registered owners of the expropriated lands that they
acquired as beneficiaries of the comprehensive agrarian reform program. Another defendant was Land
Bank of the Philippines, the mortgagee of the lands by virtue of the loans it extended for their acquisition.
The lands in these cases were located in Porac and Floridablanca, Pampanga.

On learning of the expropriation cases before Branch 58, petitioner Philippine Veterans Bank (PVB) filed
motions to intervene in all the cases with attached complaints-in-intervention, a remedy that it adopted in
similar cases with the other branches. PVB alleged that the covered properties actually belonged to
Belmonte Agro-Industrial Development Corp. which mortgaged the lands to PVB in 1976. PVB had
since foreclosed on the mortgages and bought the same at public auction in 1982. Unfortunately, the bank
had been unable to consolidate ownership in its name.

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But, in its order of August 18, 2004,2 Branch 58 denied PVB’s motion for intervention on the ground that
the intervention amounts to a third-party complaint that is not allowed in expropriation cases and that the
intervention would delay the proceedings in the cases before it. Besides, said Branch 58, PVB had a
pending action for annulment of the titles issued to the individual defendants and this was pending before
Branch 62 of the court.

PVB filed its motion for reconsideration but Branch 58 denied the same, prompting the bank to file a
petition for certiorari with the Court of Appeals (CA).3 On January 26, 2006 the CA rendered a decision,
dismissing the petition for lack of merit.4 It also denied in a resolution dated June 2, 20065 PVB’s motion
for reconsideration.

Meanwhile, on April 3, 2006 Branch 58 issued separate decisions in all 10 cases before it, granting the
expropriation of the subject properties. The court noted the uncertainty as to the ownership of such
properties but took no action to grant BCDA’s prayer in its complaint that it determine the question of
ownership of the same pursuant to Section 9, Rule 67 of the Revised Rules of Civil Procedure.6

The Issue Presented

The issue presented in this case is whether or not the CA erred in holding that PVB was not entitled to
intervene in the expropriation cases before Branch 58 of the Angeles City RTC.

The Court’s Ruling

PVB maintains that in deciding the case, the RTC and the CA ignored Section 9, Rule 67 of the 1997
Rules of Civil Procedure, which authorizes the court adjudicating the expropriation case to hear and
decide conflicting claims regarding the ownership of the properties involved while the compensation for
the expropriated property is in the meantime deposited with the court. Section 9 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 court for the benefit of the person 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 court before the plaintiff can enter upon the property, or retain it for the
public use or purpose if entry has already been made.

PVB’s point regarding the authority of the court in expropriation cases to hear and adjudicate conflicting
claims over the ownership of the lands involved in such cases is valid. But such rule obviously cannot
apply to PVB for the following reasons:

1. At the time PVB tried to intervene in the expropriation cases, its conflict with the farmer beneficiaries
who held CLOAs, EPs, or TCTs emanating from such titles were already pending before Angeles City
RTC Branch 62, a co-equal branch of the same court. Branch 58 had no authority to pre-empt Branch 62
of its power to hear and adjudicate claims that were already pending before it.

2. Of course, subsequently, after the CA dismissed PVB’s petition on January 26, 2006, the latter filed a
motion for reconsideration, pointing out that it had in the meantime already withdrawn the actions it filed
with Branch 62 after learning from the decision of the Supreme Court in Department of Agrarian Reform

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v. Cuenca,7 that jurisdiction over cases involving the annulment of CLOAs and EPs were vested by
Republic Act 6657 in the DARAB.8

PVB now points out that, since there was no longer any impediment in RTC Branch 58 taking
cognizance of its motion for intervention and adjudicating the parties’ conflicting claims over the
expropriated properties, the CA was in error in not reconsidering its decision.

But PVB’s withdrawal of its actions from Branch 62 cannot give Branch 58 comfort. As PVB itself
insists, jurisdiction over the annulment of the individual defendants’ CLOAs and EPs (which titles if
annulled would leave PVB’s titles to the lands unchallenged) lies with the DARAB. Branch 58 would
still have no power to adjudicate the issues of ownership presented by the PVB’s intervention.

Actually, PVB’s remedy was to secure an order from Branch 58 to have the proceeds of the expropriation
deposited with that branch in the meantime, pending adjudication of the issues of ownership of the
expropriated lands by the DARAB. Section 9 above empowers the court to order payment to itself of the
proceeds of the expropriation whenever questions of ownership are yet to be settled. There is no reason
why this rule should not be applied even where the settlement of such questions is to be made by another
tribunal.1avvphi1

WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals
dated January 26, 2006 and its resolution dated June 2, 2006 in CA-G.R. SP 88144.

SO ORDERED.

ROBERTO A. ABAD
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice

ANTONIO EDUARDO B. NACHURA DIOSDADO M. PERALTA

Associate Justice Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION

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Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA
Chief Justice

DIGEST

FACTS:

BCDA filed several expropriation actions before the branches of the RTC of Angeles City for the
acquisition of lands needed to construct the Subic-Clark-Tarlac Expressway (SCTEX). The defendants in
this case are the registered owners of the expropriated lands that they acquired as beneficiaries of the
Comprehensive Agrarian Reform Program (CARP). Ten of these cases were raffled off to Branch 58 of
the RTC of Angeles City.

Upon learning of the expropriation cases filed, PVB filed a motion to intervene and alleged that the
properties actually belonged to Belmonte Agro-Industrial Development Corp. which mortgaged the lands
to PVB in 1976. PVB bought the land upon foreclosure but was not able to consolidate ownership in its
name. PVB's motion was denied on the ground that the intervetion amounted to a third-party complaint
that is not allowed in expropriation cases and that it will only serve to delay the proceedings. PVB's
motion for reconsideration was also denied by the CA.

ISSUE:

Whether or not PVB is entitled to intervene in expropriation cases.

HELD:

No. Sec 9, Rule 67 of the Rules of Civil Procedure empowers the court to order payment to itself of the
proceeds of the expropriation whenever questions of ownership are yet to be settled. At the time PVB
tried to intervene, its conflict with the farmer beneficiaries were already pending before another branch of
RTC Angeles City. Branch 58 had no authority to pre-empt the other branch of its power to hear and
adjudicate claims before it.

PVB's withdrawal of its actions in the other branch because it was found that jurisdiction lies with the
Department of Agrarian Reform Adjudication Board (DARAB) will still leave Branch 58 with no power
to adjudicate the issues of ownership presented by PVB's intervention. PVB's remedy is to secure an
order from Branch 58 to have the proceeds of the expropriation deposited with that branch, pending the
adjudication of ownership by the DARAB.

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G.R. No. 138896 June 20, 2000

BARANGAY SAN ROQUE, TALISAY, CEBU, petitioner,

vs.
Heirs of FRANCISCO PASTOR namely: EUGENIO SYLIANCO, TEODORO SYLIANCO,
TEODORO SYLIANCO, ISABEL SYLIANCO, EUGENIA S. ONG, LAWRENCE SYLIANCO,
LAWSON SYLIANCO, LAWINA S. NOTARIO, LEONARDO SYLIANCO JR. and LAWFORD
SYLIANCO, respondents.

PANGANIBAN, J.:

An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls within the jurisdiction of
the regional trial courts, regardless of the value of the subject property.

The Case

Before us is a Petition for Review on Certiorari assailing the March 29, 1999 Order1 of the Regional
Trial Court (RTC) of Cebu City (Branch 58) in Civil Case No. CEB-21978, in which it dismissed a
Complaint for eminent domain. It ruled as follows:

Premises considered, the motion to dismiss is hereby granted on the ground that this Court has no
jurisdiction over the case. Accordingly, the Orders dated February 19, 1999 and February 26, 1999, as
well as the Writ of Possession issued by virtue of the latter Order are hereby recalled for being without
force and effect.2

Petitioner also challenges the May 14, 1999 Order of the RTC denying reconsideration.

The Facts

Petitioner filed before the Municipal Trial Court (MTC) of Talisay, Cebu (Branch 1)3 a Complaint to
expropriate a property of the respondents. In an Order dated April 8, 1997, the MTC dismissed the
Complaint on the ground of lack of jurisdiction. It reasoned that "[e]minent domain is an exercise of the
power to take private property for public use after payment of just compensation. In an action for eminent
domain, therefore, the principal cause of action is the exercise of such power or right. The fact that the
action also involves real property is merely incidental. An action for eminent domain is therefore within
the exclusive original jurisdiction of the Regional Trial Court and not with this Court."4

Assailed RTC Ruling

The RTC also dismissed the Complaint when filed before it, holding that an action for eminent domain
affected title to real property; hence, the value of the property to be expropriated would determine
whether the case should be filed before the MTC or the RTC. Concluding that the action should have
been filed before the MTC since the value of the subject property was less than P20,000, the RTC
ratiocinated in this wise:

The instant action is for eminent domain. It appears from the current Tax Declaration of the land involved
that its assessed value is only One Thousand Seven Hundred Forty Pesos (P1,740.00). Pursuant to
Section 3, paragraph (3), of Republic Act No. 7691, all civil actions involving title to, or possession of,

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real property with an assessed value of less than P20,000.00 are within the exclusive original jurisdiction
of the Municipal Trial Courts. In the case at bar, it is within the exclusive original jurisdiction of the
Municipal Trial Court of Talisay, Cebu, where the property involved is located.

The instant action for eminent domain or condemnation of real property is a real action affecting title to
or possession of real property, hence, it is the assessed value of the property involved which determines
the jurisdiction of the court. That the right of eminent domain or condemnation of real, property is
included in a real action affecting title to or possession of real property, is pronounced by retired Justice
Jose Y. Feria, thus, "Real actions are those affecting title to or possession of real property. These include
partition or condemnation of, or foreclosures of mortgage on, real property. . . ."5

Aggrieved, petitioner appealed directly to this Court, raising a pure question of law.6 In a Resolution
dated July 28, 1999, the Court denied the Petition for Review "for being posted out of time on July 2,
1999, the due date being June 2, 1999, as the motion for extension of time to file petition was denied in
the resolution of July 14, 1999."7 In a subsequent Resolution dated October 6, 1999, the Court reinstated
the Petition.8

Issue

In its Memorandum, petitioner submits this sole issue for the consideration of this Court:

Which court, MTC or RTC, has jurisdiction over cases for eminent domain or expropriation where the
assessed value of the subject property is below Twenty Thousand (P20,000.00) Pesos?9

This Court's Ruling

The Petition is meritorious.

Main Issue:

Jurisdiction over an Expropriation Suit

In support of its appeal, petitioner cites Section 19 (1) of BP 129, which provides that RTCs shall
exercise exclusive original jurisdiction over "all civil actions in which the subject of the litigation is
incapable of pecuniary estimation; . . . . ." It argues that the present action involves the exercise of the
right to eminent domain, and that such right is incapable of pecuniary estimation.

Respondents, on the other hand, contend that the Complaint for Eminent Domain affects the title to or
possession of real property. Thus, they argue that the case should have been brought before the MTC,
pursuant to BP 129 as amended by Section 3 (3) of RA 7691. This law provides that MTCs shall have
exclusive original jurisdiction over all civil actions that involve title to or possession of real property, the
assessed value of which does not exceed twenty thousand pesos or, in civil actions in Metro Manila, fifty
thousand pesos exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and
costs.

We agree with the petitioner that an expropriation suit is incapable of pecuniary estimation. The test to
determine whether it is so was laid down by the Court in this wise:

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 A review of the jurisprudence of this Court indicates that in determining whether an action is one
the subject matter of which is not capable of pecuniary estimation, this Court has adopted the
criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily
for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and
whether jurisdiction is in the municipal courts or in the courts of first instance would depend on
the amount of the claim. However, where the basic issue is something other than the right to
recover a sum of money, or where the money claim is purely incidental to, or a consequence of,
the principal relief sought, like in suits to have the defendant perform his part of the contract
(specific performance) and in actions for support, or for annulment of a judgment or to foreclose a
mortgage, this Court has considered such actions as cases where the subject of the litigation may
not be estimated in terms of money, and are cognizable exclusively by courts of first instance.
The rationale of the rule is plainly that the second class cases, besides the determination of
damages, demand an inquiry into other factors which the law has deemed to be more within the
competence of courts of first instance, which were the lowest courts of record at the time that the
first organic laws of the Judiciary were enacted allocating jurisdiction (Act 136 of the Philippine
Commission of June 11, 1901). 10

In the present case, 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 private property for public
use. 11 In National Power Corporation v. Jocson, 12 the Court ruled that expropriation proceedings have
two phases:

The first is concerned with the determination of the authority of the plaintiff to exercise the power
of eminent domain and the propriety of its exercise in the context of the facts involved in the suit.
It ends with an order, if not of dismissal of the action, "of condemnation declaring that the
plaintiff has a lawful right to take the property sought to be condemned, for the public use or
purpose described in the complaint, upon the payment of just compensation to be determined as
of the date of the filing of the complaint." An order of dismissal, if this be ordained, would be a
final one, of course, since it finally disposes of the action and leaves nothing more to be done by
the Court on the merits. So, too, would an order of condemnation be a final one, for thereafter as
the Rules expressly state, in the proceedings before the Trial Court, "no objection to the exercise
of the right of condemnation (or the propriety thereof) shall be filed or heard."

The second phase of the eminent domain action is concerned with the determination by the court
of "the just compensation for the property sought to be taken." This is done by the Court with the
assistance of not more than three (3) commissioners. The order fixing the just compensation on
the basis of the evidence before, and findings of, the commissioners would be final, too. It would
finally dispose of the second stage of the suit, and leave nothing more to be done by the Court
regarding the issue. . . .

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. 1 In the main, the subject of an expropriation suit is the government's 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.1avvphi1 This, however, is merely incidental to the

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expropriation suit. Indeed, that amount is determined only after the court is satisfied with the propriety of
the expropriation.

Verily, the Court held in Republic of the Philippines v. Zurbano that "condemnation proceedings are
within the jurisdiction of Courts of First Instance," 14 the forerunners of the regional trial courts. The said
case was decided during the effectivity of the Judiciary Act of 1948 which, like BP 129 in respect to
RTCs, provided that courts of first instance had original jurisdiction over "all civil actions in which the
subject of the litigation is not capable of pecuniary estimation." 15 The 1997 amendments to the Rules of
Court were not intended to change these jurisprudential precedents.

We are not persuaded by respondents' argument that the present action involves the title to or possession
of a parcel of land. They cite the observation of retired Justice Jose Y. Feria, an eminent authority in
remedial law, that condemnation or expropriation proceedings are examples of real actions that affect the
title to or possession of a parcel of land. 16

Their reliance is misplaced. Justice Feria sought merely to distinguish between real and personal actions.
His discussion on this point pertained to the nature of actions, not to the jurisdiction of courts. In fact, in
his pre-bar lectures, he emphasizes that jurisdiction over eminent domain cases is still within the RTCs
under the 1997 Rules.

To emphasize, the question in the present suit is whether the government may expropriate private
property under the given set of circumstances. The government does not dispute respondents' title to or
possession of the same. Indeed, it is not a question of who has a better title or right, for the government
does not even claim that it has a title to the property. It merely asserts its inherent sovereign power to
"appropriate and control individual property for the public benefit, as the public necessity, convenience
or welfare may demand." 17

WHEREFORE, the Petition is hereby GRANTED and the assailed Orders SET ASIDE. The Regional
Trial Court is directed to HEAR the case. No costs.

SO ORDERED.

Melo, Purisima and Gonzaga-Reyes, JJ., concur.

Vitug, J., abroad — on official business.

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 DIGEST

FACT:
In 1997, Brgy. San Roque of Talisay, Cebu filed for an expropriation suit before the MTC of Talisay
against the heirs of Franco Pastor. The MTC denied the suit because apparently under BP 129, MTCs do
not have jurisdiction over expropriation cases as it is the RTCs that are lodged with the power to try such
cases. So Brgy. San Roque filed it before RTC Talisay but then Judge Jose Soberano, Jr. denied the suit
as he ruled that the action for eminent domain affected title to real property; hence, the value of the
property to be expropriated would determine whether the case should be filed before the MTC or the
RTC. The judge also concluded that the action should have been filed before the MTC since the value of
the subject property was less than P20,000.

ISSUE: Whether or not the RTC should take cognizance of the expropriation case.

HELD:
Yes. Under Section 19 (1) of BP 129, which provides that RTCs shall exercise exclusive original
jurisdiction over “all civil actions in which the subject of the litigation is incapable of pecuniary
estimation; . . . . .” The present action involves the exercise of the right to eminent domain, and that such
right is incapable of pecuniary estimation.
What are the two phases of expropriation cases?
The first is concerned with the determination of the authority of the plaintiff to exercise the power of
eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends
with an order, if not of dismissal of the action, “of condemnation declaring that the plaintiff has a lawful
right to take the property sought to be condemned, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as of the date of the filing of the
complaint.” An order of dismissal, if this be ordained, would be a final one, of course, since it finally
disposes of the action and leaves nothing more to be done by the Court on the merits. So, too, would an
order of condemnation be a final one, for thereafter as the Rules expressly state, in the proceedings before
the Trial Court, “no objection to the exercise of the right of condemnation (or the propriety thereof) shall
be filed or heard.”
The second phase of the eminent domain action is concerned with the determination by the court of “the
just compensation for the property sought to be taken.” This is done by the Court with the assistance of
not more than three (3) commissioners. The order fixing the just compensation on the basis of the
evidence before, and findings of, the commissioners would be final, too. It would finally dispose of the
second stage of the suit, and leave nothing more to be done by the Court regarding the issue. . . .
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 government’s exercise
of eminent domain, a matter that is incapable of pecuniary estimation.

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 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 179334 July 1, 2013

SECRETARY OF THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS and

DISTRICT ENGINEER CELESTINO R. CONTRERAS, Petitioners,
vs.
SPOUSES HERACLEO and RAMONA TECSON, Respondents.

DECISION

PERALTA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Court of
Appeals (CA) Decision1 dated July 31, 2007 in CA-G.R. CV No. 77997. The assailed decision affirmed
with modification the Regional Trial Court (RTC)2 Decision3 dated March 22, 2002 in Civil Case No.
208-M-95.

The case stemmed from the following factual and procedural antecedents:

Respondent spouses Heracleo and Ramona Tecson (respondents) are co-owners of a parcel of land with
an area of 7,268 square meters located in San Pablo, Malolos, Bulacan and covered by Transfer
Certificate of Title (TCT) No. T-430064 of the Register of Deeds of Bulacan. Said parcel of land was
among the properties taken by the government sometime in 1940 without the owners’ consent and
without the necessary expropriation proceedings and used for the construction of the MacArthur
Highway.5

In a letter6 dated December 15, 1994, respondents demanded the payment of the fair market value of the
subject parcel of land. Petitioner Celestino R. Contreras (petitioner Contreras), then District Engineer of
the First Bulacan Engineering District of petitioner Department of Public Works and Highways (DPWH),
offered to pay the subject land at the rate of ₱0.70 per square meter per Resolution of the Provincial
Appraisal Committee (PAC) of Bulacan.7Unsatisfied with the offer, respondents demanded for the return
of their property or the payment of compensation at the current fair market value.8

As their demand remained unheeded, respondents filed a Complaint9 for recovery of possession with
damages against petitioners, praying that they be restored to the possession of the subject parcel of land
and that they be paid attorney’s fees.10 Respondents claimed that the subject parcel of land was assessed
at ₱2,543,800.00.11

Instead of filing their Answer, petitioners moved for the dismissal of the complaint on the following
grounds: (1) that the suit is against the State which may not be sued without its consent; (2) that the case
has already prescribed; (3) that respondents have no cause of action for failure to exhaust administrative
remedies; and (4) if respondents are entitled to compensation, they should be paid only the value of the
property in 1940 or 1941.12

10 | P a g e
On June 28, 1995, the RTC issued an Order13 granting respondents’ motion to dismiss based on the
doctrine of state immunity from suit. As respondents’ claim includes the recovery of damages, there is no
doubt that the suit is against the State for which prior waiver of immunity is required. When elevated to
the CA,14 the appellate court did not agree with the RTC and found instead that the doctrine of state
immunity from suit is not applicable, because the recovery of compensation is the only relief available to
the landowner. To deny such relief would undeniably cause injustice to the landowner. Besides,
petitioner Contreras, in fact, had earlier offered the payment of compensation although at a lower
rate.Thus, the CA reversed and set aside the dismissal of the complaint and, consequently, remanded the
case to the trial court for the purpose of determining the just compensation to which respondents are
entitled to recover from the government.15 With the finality of the aforesaid decision, trial proceeded in
the RTC.

The Branch Clerk of Court was initially appointed as the Commissioner and designated as the Chairman
of the Committee that would determine just compensation,16 but the case was later referred to the PAC
for the submission of a recommendation report on the value of the subject property.17 In PAC Resolution
No. 99-007,18 the PAC recommended the amount of ₱1,500.00 per square meter as the just compensation
for the subject property.

On March 22, 2002, the RTC rendered a Decision,19 the dispositive portion of which reads:

WHEREFORE, premises considered, the Department of Public Works and Highways or its duly assigned
agencies are hereby directed to pay said Complainants/Appellants the amount of One Thousand Five
Hundred Pesos (₱1,500.00) per square meter for the lot subject matter of this case in accordance with the
Resolution of the Provincial Appraisal Committee dated December 19, 2001.

SO ORDERED.20

On appeal, the CA affirmed the above decision with the modification that the just compensation stated
above should earn interest of six percent (6%) per annum computed from the filing of the action on
March 17, 1995 until full payment.21

In its appeal before the CA, petitioners raised the issues of prescription and laches, which the CA brushed
aside on two grounds: first, that the issue had already been raised by petitioners when the case was
elevated before the CA in CA-G.R. CV No. 51454. Although it was not squarely ruled upon by the
appellate court as it did not find any reason to delve further on such issues, petitioners did not assail said
decision barring them now from raising exactly the same issues; and second, the issues proper for
resolution had been laid down in the pre-trial order which did not include the issues of prescription and
laches. Thus, the same can no longer be further considered. As to the propriety of the property’s
valuation as determined by the PAC and adopted by the RTC, while recognizing the rule that the just
compensation should be the reasonable value at the time of taking which is 1940, the CA found it
necessary to deviate from the general rule. It opined that it would be obviously unjust and inequitable if
respondents would be compensated based on the value of the property in 1940 which is ₱0.70 per sq m,
but the compensation would be paid only today. Thus, the appellate court found it just to award
compensation based on the value of the property at the time of payment. It, therefore, adopted the RTC’s
determination of just compensation of ₱1,500.00 per sq m as recommended by the PAC. The CA further
ordered the payment of interest at the rate of six percent (6%) per annum reckoned from the time of
taking, which is the filing of the complaint on March 17, 1995.

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Aggrieved, petitioners come before the Court assailing the CA decision based on the following grounds:

I.

THE COURT OF APPEALS GRAVELY ERRED IN GRANTING JUST COMPENSATION TO

RESPONDENTS CONSIDERING THE HIGHLY DUBIOUS AND QUESTIONABLE
CIRCUMSTANCES OF THEIR ALLEGED OWNERSHIP OF THE SUBJECT PROPERTY.

II.

THE COURT OF APPEALS GRAVELY ERRED IN AWARDING JUST COMPENSATION TO

RESPONDENTS BECAUSE THEIR COMPLAINT FOR RECOVERY OF POSSESSION AND
DAMAGES IS ALREADY BARRED BY PRESCRIPTION AND LACHES.

III.

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURT’S DECISION
ORDERING THE PAYMENT OF JUST COMPENSATION BASED ON THE CURRENT MARKET
VALUE OF THE ALLEGED PROPERTY OF RESPONDENTS.22

Petitioners insist that the action is barred by prescription having been filed fifty-four (54) years after the
accrual of the action in 1940. They explain that the court can motu proprio dismiss the complaint if it
shows on its face that the action had already prescribed. Petitioners likewise aver that respondents slept
on their rights for more than fifty years; hence, they are guilty of laches. Lastly, petitioners claim that the
just compensation should be based on the value of the property at the time of taking in 1940 and not at
the time of payment.23

The petition is partly meritorious.

The instant case stemmed from an action for recovery of possession with damages filed by respondents
against petitioners. It, however, revolves around the taking of the subject lot by petitioners for the
construction of the MacArthur Highway. There is taking when the expropriator enters private property
not only for a momentary period but for a permanent duration, or for the purpose of devoting the property
to public use in such a manner as to oust the owner and deprive him of all beneficial enjoyment thereof.24

It is undisputed that the subject property was taken by petitioners without the benefit of expropriation
proceedings for the construction of the MacArthur Highway. After the lapse of more than fifty years, the
property owners sought recovery of the possession of their property. Is the action barred by prescription
or laches? If not, are the property owners entitled to recover possession or just compensation?

As aptly noted by the CA, the issues of prescription and laches are not proper issues for resolution as they
were not included in the pre-trial order. We quote with approval the CA’s ratiocination in this wise:

Procedurally, too, prescription and laches are no longer proper issues in this appeal. In the pre-trial order
issued on May 17, 2001, the RTC summarized the issues raised by the defendants, to wit: (a) whether or
not the plaintiffs were entitled to just compensation; (b) whether or not the valuation would be based on
the corresponding value at the time of the taking or at the time of the filing of the action; and (c) whether

12 | P a g e
or not the plaintiffs were entitled to damages. Nowhere did the pre-trial order indicate that prescription
and laches were to be considered in the adjudication of the RTC.25

To be sure, the pre-trial order explicitly defines and limits the issues to be tried and controls the
subsequent course of the action unless modified before trial to prevent manifest injustice.26

Even if we squarely deal with the issues of laches and prescription, the same must still fail. Laches is
principally a doctrine of equity which is applied to avoid recognizing a right when to do so would result
in a clearly inequitable situation or in an injustice.27 This doctrine finds no application in this case, since
there is nothing inequitable in giving due course to respondents’ claim. Both equity and the law direct
that a property owner should be compensated if his property is taken for public use.28 Neither shall
prescription bar respondents’ claim following the long-standing rule "that where private property is taken
by the Government for public use without first acquiring title thereto either through expropriation or
negotiated sale, the owner’s action to recover the land or the value thereof does not prescribe."29

When a property is taken by the government for public use, jurisprudence clearly provides for the
remedies available to a landowner. The owner may recover his property if its return is feasible or, if it is
not, the aggrieved owner may demand payment of just compensation for the land taken.30 For failure of
respondents to question the lack of expropriation proceedings for a long period of time, they are deemed
to have waived and are estopped from assailing the power of the government to expropriate or the public
use for which the power was exercised. What is left to respondents is the right of compensation.31 The
trial and appellate courts found that respondents are entitled to compensation. The only issue left for
determination is the propriety of the amount awarded to respondents.

Just compensation is "the fair value of the property as between one who receives, and one who desires to
sell, x x x fixed at the time of the actual taking by the government." This rule holds true when the
property is taken before the filing of an expropriation suit, and even if it is the property owner who brings
the action for compensation.32

The issue in this case is not novel.

In Forfom Development Corporation [Forfom] v. Philippine National Railways [PNR],33 PNR entered
the property of Forfom in January 1973 for public use, that is, for railroad tracks, facilities and
appurtenances for use of the Carmona Commuter Service without initiating expropriation
proceedings.34 In 1990, Forfom filed a complaint for recovery of possession of real property and/or
damages against PNR. In Eusebio v. Luis,35 respondent’s parcel of land was taken in 1980 by the City of
Pasig and used as a municipal road now known as A. Sandoval Avenue in Pasig City without the
appropriate expropriation proceedings. In 1994, respondent demanded payment of the value of the
property, but they could not agree on its valuation prompting respondent to file a complaint for
reconveyance and/or damages against the city government and the mayor. In Manila International Airport
Authority v. Rodriguez,36in the early 1970s, petitioner implemented expansion programs for its runway
necessitating the acquisition and occupation of some of the properties surrounding its premises. As to
respondent’s property, no expropriation proceedings were initiated.1âwphi1 In 1997, respondent
demanded the payment of the value of the property, but the demand remained unheeded prompting him
to institute a case for accion reivindicatoria with damages against petitioner. In Republic v.
Sarabia,37 sometime in 1956, the Air Transportation Office (ATO) took possession and control of a
portion of a lot situated in Aklan, registered in the name of respondent, without initiating expropriation
proceedings. Several structures were erected thereon including the control tower, the Kalibo crash fire

13 | P a g e
rescue station, the Kalibo airport terminal and the headquarters of the PNP Aviation Security Group. In
1995, several stores and restaurants were constructed on the remaining portion of the lot. In 1997,
respondent filed a complaint for recovery of possession with damages against the storeowners where
ATO intervened claiming that the storeowners were its lessees.

The Court in the above-mentioned cases was confronted with common factual circumstances where the
government took control and possession of the subject properties for public use without initiating
expropriation proceedings and without payment of just compensation, while the landowners failed for a
long period of time to question such government act and later instituted actions for recovery of
possession with damages. The Court thus determined the landowners’ right to the payment of just
compensation and, more importantly, the amount of just compensation. The Court has uniformly ruled
that just compensation is the value of the property at the time of taking that is controlling for purposes of
compensation. In Forfom, the payment of just compensation was reckoned from the time of taking in
1973; in Eusebio, the Court fixed the just compensation by determining the value of the property at the
time of taking in 1980; in MIAA, the value of the lot at the time of taking in 1972 served as basis for the
award of compensation to the owner; and in Republic, the Court was convinced that the taking occurred
in 1956 and was thus the basis in fixing just compensation. As in said cases, just compensation due
respondents in this case should, therefore, be fixed not as of the time of payment but at the time of taking,
that is, in 1940.

The reason for the rule has been clearly explained in Republic v. Lara, et al.,38 and repeatedly held by the
Court in recent cases, thus:

x x x "The value of the property should be fixed as of the date when it was taken and not the date of the
filing of the proceedings." For where property is taken ahead of the filing of the condemnation
proceedings, the value thereof may be enhanced by the public purpose for which it is taken; the entry by
the plaintiff upon the property may have depreciated its value thereby; or, there may have been a natural
increase in the value of the property from the time it is taken to the time the complaint is filed, due to
general economic conditions. The owner of private property should be compensated only for what he
actually loses; it is not intended that his compensation shall extend beyond his loss or injury. And what
he loses is only the actual value of his property at the time it is taken x x x.39

Both the RTC and the CA recognized that the fair market value of the subject property in 1940 was
₱0.70/sq m.40Hence, it should, therefore, be used in determining the amount due respondents instead of
the higher value which is ₱1,500.00. While disparity in the above amounts is obvious and may appear
inequitable to respondents as they would be receiving such outdated valuation after a very long period, it
is equally true that they too are remiss in guarding against the cruel effects of belated claim. The concept
of just compensation does not imply fairness to the property owner alone. Compensation must be just not
only to the property owner, but also to the public which ultimately bears the cost of expropriation.41

Clearly, petitioners had been occupying the subject property for more than fifty years without the benefit
of expropriation proceedings. In taking respondents’ property without the benefit of expropriation
proceedings and without payment of just compensation, petitioners clearly acted in utter disregard of
respondents’ proprietary rights which cannot be countenanced by the Court.42 For said illegal taking,
respondents are entitled to adequate compensation in the form of actual or compensatory damages which
in this case should be the legal interest of six percent (6%) per annum on the value of the land at the time
of taking in 1940 until full payment.43 This is based on the principle that interest runs as a matter of law

14 | P a g e
and follows from the right of the landowner to be placed in as good position as money can accomplish, as
of the date of taking.44

WHEREFORE, premises considered, the pet1t10n is PARTIALLY GRANTED. The Court of Appeals
Decision dated July 31, 2007 in CAG.R. CV No. 77997 is MODIFIED, in that the valuation of the
subject property owned by respondents shall be F0.70 instead of ₱1,500.00 per square meter, with
interest at six percent ( 6o/o) per annum from the date of taking in 1940 instead of March 17, 1995, until
full payment.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:

(Dissenting and Concurring Opinion)

PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson

ROBERTO A. ABAD JOSE CATRAL MENDOZA

Associate Justice Associate Justice

See separate opinion

MARVIC MARIO VICTOR F. LEONEN
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Acting Chairperson's
Attestation, I certify that the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice

15 | P a g e
 DIGEST

Facts:

Respondent spouses Heracleo and Ramona Tecson are co-owners of a parcel of land with an area of
7,268 square meters located in San Pablo, Malolos, Bulacan and covered by Transfer Certificate of Title
(TCT) No. T-43006 of the Register of Deeds of Bulacan. Said parcel of land was among the properties
taken by the government sometime in 1940 without the owners’ consent and without the necessary
expropriation proceedings and used for the construction of the MacArthur Highway.

In a letter dated December 15, 1994, respondents demanded the payment of the fair market value of the
subject parcel of land. Petitioner Celestino R. Contreras, then District Engineer of the First Bulacan
Engineering District of DPWH, offered to pay the subject land at the rate of P0.70 per square meter per
Resolution of the Provincial Appraisal Committee (PAC) of Bulacan. Unsatisfied with the offer,
respondents demanded for the return of their property or the payment of compensation at the current fair
market value.

As their demand remained unheeded, respondents filed a Complaint for recovery of possession with
damages against petitioners, praying that they be restored to the possession of the subject parcel of land
and that they be paid attorney’s fees.

Instead of filing their Answer, petitioners moved for the dismissal of the complaint on the following
grounds: (1) that the suit is against the State which may not be sued without its consent; (2) that the case
has already prescribed; (3) that respondents have no cause of action for failure to exhaust administrative
remedies; and (4) if respondents are entitled to compensation, they should be paid only the value of the
property in 1940 or 1941.

On June 28, 1995, the RTC issued an Order granting the motion to dismiss based on the doctrine of state
immunity from suit.

The CA reversed and set aside the dismissal of the complaint and consequently remanded the case to the
trial court for the purpose of determining the just compensation because the doctrine of state immunity
from suit is not applicable and the recovery of compensation is the only relief available. To deny such
relief would undeniably cause injustice to the landowner.

The trial proceeded in the RTC with the Branch Clerk of Court appointed as the Commissioner and
designated as the Chairman of the Committee that would determine just compensation.

Later the case was referred to the PAC for the submission of a recommendation report on the value of the
subject property. The PAC recommended the amount of P1,500.00 per square meter as the just
compensation for the subject property per PAC Resolution No. 99- 007 dated December 19, 2001.

16 | P a g e
On March 22, 2002, the RTC rendered a Decision directing DPWH to pay the amount of One Thousand
Five Hundred Pesos (P1,500.00) per square meter for the subject lot in accordance with PAC Resolution.

The CA affirmed the above decision with the modification that the just compensation stated above should
earn interest of six percent (6%) per annum computed from the filing of the action on March 17, 1995
until full payment.

Hence, this petition.

Issues:

1. Whether or not the Court of Appeals gravely erred in granting just compensation to respondents
considering the highly dubious and questionable circumstances of their alleged ownership of the
subject property.
2. Whether or not the court of appeals gravely erred in awarding just compensation to respondents
because their complaint for recovery of possession and damages is already barred by prescription
and laches.
3. Whether or not the court of appeals gravely erred in affirming the trial court’s decision ordering
the payment of just compensation based on the current market value of the alleged property of
respondents.

Held:

It is undisputed that the subject property was taken by petitioners without the benefit of expropriation
proceedings for the construction of the MacArthur Highway. After the lapse of more than fifty years, the
property owners sought recovery of the possession of their property.

Both equity and the law direct that a property owner should be compensated if his property is taken for
public use. There is a long-standing rule that where private property is taken by the Government for
public use without first acquiring title thereto either through expropriation or negotiated sale, the owner’s
action to recover the land or the value thereof does not prescribe.

For failure of respondents to question the lack of expropriation proceedings for a long period of time,
they are deemed to have waived and are estopped from assailing the power of the government to
expropriate or the public use for which the power was exercised. What is left to respondents is the right
of compensation.

Just compensation is the fair value of the property as between one who receives, and one who desires to
sell fixed as of the date when it was taken and not the date of the filing of the proceedings. The owner of
private property should be compensated only for what he actually loses; it is not intended that his
compensation shall extend beyond his loss or injury. And what he loses is only the actual value of his
property at the time it is taken. The fair market value of the subject property in 1940 was P0.70/square
meter. Hence, it should therefore be used in determining the amount due respondents instead of the
higher value which is P1,500.00.

WHEREFORE, premises considered, the petition is partially granted. The decision of the Court of
Appeals is modified. The valuation of the subject property owned by respondents shall be P0.70 instead

17 | P a g e
of Pl,500.00 per square meter, with interest at six percent (6%) per annum from the date of taking in 1940
instead of March 17, 1995, until full payment.

So ordered.

18 | P a g e
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 202690 June 5, 2013

HENRY L. SY, Petitioner,

vs.
LOCAL GOVERNMENT OF QUEZON CITY, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the January 20, 2012 Decision2 and July 16, 2012
Resolution3of the Court of Appeals (CA) in CA-G.R. CV No. 91964 which affirmed with modification
the August 22, 2008 Order4of the Regional Trial Court of Quezon City, Branch 80 (RTC) in Civil Case
No. Q-96-29352, ordering respondent Local Government of Quezon City (the City) to pay petitioner
Henry L. Sy (Sy) just compensation set as ₱5,500.00 per square meter (sq. m.), including ₱200,000.00 as
exemplary damages and attorney’s fees equivalent to one percent (1%) of the total amount due.

The Facts

On November 7, 1996, the City, through then Mayor Ismael Mathay, Jr., filed a complaint for
expropriation with the RTC in order to acquire a 1,000 sq. m. parcel of land, owned and registered under
the name of Sy (subject property),5 which was intended to be used as a site for a multi-purpose barangay
hall, day-care center, playground and community activity center for the benefit of the residents of
Barangay Balingasa, Balintawak, Quezon City.6 The requisite ordinance to undertake the aforesaid
expropriation namely, Ordinance No. Sp-181, s-94, was enacted on April 12, 1994.7

On March 18, 1997, pursuant to Section 198 of Republic Act No. 7160 (RA 7160), otherwise known as
the "Local Government Code of 1991," the City deposited the amount of ₱241,090.00 with the Office of
the Clerk of Court, representing 15% of the fair market value of the subject property based on its tax
declaration.9

During the preliminary conference on November 8, 2006, Sy did not question the City’s right to
expropriate the subject property. Thus, only the amount of just compensation remained at issue.10

On July 6, 2006, the RTC appointed Edgardo Ostaco (Commissioner Ostaco), Engr. Victor Salinas
(Commissioner Salinas) and Atty. Carlo Alcantara (Commissioner Alcantara) as commissioners to
determine the proper amount of just compensation to be paid by the City for the subject property.
Subsequently, Commissioners Ostaco and Alcantara, in a Report dated February 11, 2008, recommended
the payment of ₱5,500.00 per sq. m., to be computed from the date of the filing of the expropriation
complaint, or on November 7, 1996. On the other hand, Commissioner Salinas filed a separate Report
dated March 7, 2008, recommending the higher amount of ₱13,500.00 per sq. m. as just compensation.11

19 | P a g e
 The RTC Ruling

In the Order dated August 22, 2008,12 the RTC, citing the principle that just compensation must be fair
not only to the owner but to the expropriator as well, adopted the findings of Commissioners Ostaco and
Alcantara and thus, held that the just compensation for the subject property should be set at ₱5,500.00 per
sq. m.13 Further, it found no basis for the award of damages and back rentals in favor of Sy.14 Finally,
while legal interest was not claimed, for equity considerations, it awarded six percent (6%) legal interest,
computed from November 7, 1996 until full payment of just compensation.15

Dissatisfied, Sy filed an appeal with the CA.16

The CA Ruling

In the Decision dated January 20, 2012,17 the CA affirmed the RTC’s ruling but modified the same,
ordering the City to pay Sy the amount of ₱200,000.00 as exemplary damages and attorney’s fees
equivalent to one percent (1%) of the total amount due.

It found the appraisal of Commissioners Ostaco and Alcantara for the subject property to be more
believable than the ₱13,000.00 per sq. m. valuation made by independent appraisers Cuervo and Asian
Appraisers in 1995 and 1996, respectively, considering that it was arrived at after taking into account: (a)
the fair market value of the subject property in the amount of ₱4,000.00 per sq. m. based on the
September 4, 1996 recommendation of the City Appraisal Committee;18 (b) the market value of the
subject lot in the amount of ₱2,000.00 per sq. m. based on several sworn statements made by Sy
himself;19 and (c) Sy’s own tax declaration for 1996,20 stating that the subject property has a total market
value of ₱2,272,050.00. Accordingly, it held that the fair market value of ₱5,500.00 per sq. m., or
₱5,500,000.00 in total, for the 1,000 sq. m. subject property arrived at by Commissioners Ostaco and
Alcantara was more than fair and reasonable.21

The CA also denied Sy’s assertion that he should be entitled to damages on account of the purported
shelving of his housing project, finding no sufficient evidence to support the same. Likewise, it observed
that the expropriation would not leave the rest of Sy’s properties useless as they would still be accessible
through a certain Lot 8 based on the Property Identification Map.22

Nonetheless, citing the case of Manila International Airport Authority v. Rodriguez (MIAA),23 it awarded
exemplary damages in the amount of ₱200,000.00 and attorney’s fees equivalent to one percent (1%) of
the amount due because of the City’s taking of the subject property without even initiating expropriation
proceedings.24 It, however, denied Sy’s claim of back rentals considering that the RTC had already
granted legal interest in his favor.25

Aggrieved, Sy moved for reconsideration which was denied in the Resolution dated July 16, 201226 for
being filed out of time.27 The City also filed a motion for reconsideration which was equally denied for
lack of merit.28

Hence, this petition.

Issues Before The Court

20 | P a g e
The present controversy revolves around the issue of whether the CA correctly: (a) dismissed Sy’s
motion for reconsideration for being filed out of time; (b) upheld the amount of just compensation as
determined by the RTC as well as its grant of six percent (6%) legal interest; and (c) awarded exemplary
damages and attorney’s fees.

The Court’s Ruling

The petition is partly meritorious.

A. Failure to seasonably move for

reconsideration; excusable
negligence; relaxation of procedural
rules

At the outset, the Court observes that Sy’s motion for reconsideration was filed out of time and thus, was
properly dismissed by the CA. Records show that, as per the Postmaster’s Certification, the CA’s January
20, 2012 Decision was received by Sy on January 26, 2012 and as such, any motion for reconsideration
therefrom should have been filed not later than fifteen (15) days from receipt,29 or on February 10,
2012.30 However, Sy filed his motion for reconsideration (subject motion) a day late, or on February 13,
2012,31 which thus, renders the CA decision final and executory.32

In this regard, it is apt to mention that Sy’s counsel, Atty. Tranquilino F. Meris (Atty. Meris), claims that
his secretary’s inadvertent placing of the date January 27, 2012, instead of January 26, 2012, on the
Notice of Decision33constitutes excusable negligence which should therefore, justify a relaxation of the
rules.

The assertion is untenable.

A claim of excusable negligence does not loosely warrant a relaxation of the rules. Verily, the party
invoking such should be able to show that the procedural oversight or lapse is attended by a genuine
miscalculation or unforeseen fortuitousness which ordinary prudence could not have guarded against so
as to justify the relief sought.34 The standard of carerequired is that which an ordinarily prudent man
bestows upon his important business.35 In this accord, the duty rests on every counsel to see to adopt and
strictly maintain a system that will efficiently take into account all court notices sent to him.36

Applying these principles, the Court cannot excuse Atty. Meris’ misstep based on his proffered reasons.
Evidently, the erroneous stamping of the Notice of Decision could have been averted if only he had
instituted a credible filing system in his office to account for oversights such as that committed by his
secretary. Indeed, ordinary prudence could have prevented such mistake.

Be that as it may, procedural rules may, nonetheless, be relaxed for the most persuasive of reasons in
order to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not
complying with the procedure prescribed.37 Corollarily, the rule, which states that the mistakes of counsel
bind the client, may not be strictly followed where observance of it would result in the outright
deprivation of the client’s liberty or property, or where the interest of justice so requires.38

As applied in this case, the Court finds that the procedural consequence of the above-discussed one-day
delay in the filing of the subject motion – which, as a matter of course, should render the CA’s January

21 | P a g e
20, 2012 Decision already final and executory and hence, bar the instant petition – is incommensurate to
the injustice which Sy may suffer. This is in line with the Court’s observation that the amount of just
compensation, the rate of legal interest, as well as the time of its accrual, were incorrectly adjudged by
both the RTC and the CA, contrary to existing jurisprudence. In this respect, the Court deems it proper to
relax the rules of procedure and thus, proceed to resolve these substantive issues.

B. Rate of legal interest and time of accrual

Based on a judicious review of the records and application of jurisprudential rulings, the Court holds that
the correct rate of legal interest to be applied is twelve percent (12%) and not six percent (6%) per
annum, owing to the nature of the City’s obligation as an effective forbearance.

In the case of Republic v. CA,39 the Court ruled that the debt incurred by the government on account of
the taking of the property subject of an expropriation constitutes an effective forbearance which
therefore, warrants the application of the 12% legal interest rate, viz:

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. Thus, if
property is taken for public use before compensation is deposited with the court having jurisdiction over
the case, the final compensation must include interests on its just value to be computed from the time the
property is taken to the time when compensation is actually paid or deposited with the court. In fine,
between the taking of the property and the actual payment, legal 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 annum should
help eliminate the issue of the constant fluctuation and inflation of the value of the currency over time. x
x x (Emphasis and underscoring supplied)

In similar regard, the Court, in Land Bank of the Philippines v. Rivera,40 pronounced that:

In many cases decided by this Court,41 it has been repeated time and again that the award of 12% interest
is imposed in the nature of damages for delay in payment which in effect makes the obligation on the part
of the government one of forbearance. This is to ensure prompt payment of the value of the land and limit
the opportunity loss of the owner that can drag from days to decades. (Emphasis and underscoring
supplied)

As to the reckoning point on which the legal interest should accrue, the same should be computed from
the time of the taking of the subject property in 1986 and not from the filing of the complaint for
expropriation on November 7, 1996.

Records show that the City itself admitted in its Appellee’s Brief filed before the CA that as early as
1986, "a burden was already imposed upon the owner of the subject property x x x, considering that the
expropriated property was already being used as Barangay day care and office."42 Thus, the property was

22 | P a g e
actually taken during that time and from thereon, legal interest should have already accrued. In this light,
the Court has held that:43

x x x [T]he final compensation must include interests on its just value to be computed from the time the
property is taken to the time when compensation is actually paid or deposited with the court. x x x
(Emphasis supplied)

This is based on the principle that interest "runs as a matter of law and follows from the right of the
landowner to be placed in as good position as money can accomplish, as of the date of the taking."44

Notably, the lack of proper authorization, i.e., resolution to effect expropriation,45 did not affect the
character of the City’s taking of the subject property in 1986 as the CA, in its January 20, 2012 Decision,
suggests. Case law dictates that there is "taking" when the owner is actually deprived or dispossessed of
his property; when there is a practical destruction or a material impairment of the value of his property or
when he is deprived of the ordinary use thereof.46 Therefore, notwithstanding the lack of proper
authorization, the legal character of the City’s action as one of "taking" did not change. In this relation,
the CA noted that the City enacted Ordinance No. Sp-181, s-94, only on April 12, 1994 and filed its
expropriation complaint on November 7, 1996. However, as it previously admitted, it already
commenced with the taking of the subject property as early as 1986. Accordingly, interest must run from
such time.

This irregularity does not, however, proceed without any consequence.1âwphi1 As correctly observed by
the CA, citing as basis the MIAA case, exemplary damages and attorney’s fees should be awarded to the
landowner if the government takes possession of the property for a prolonged period of time without
properly initiating expropriation proceedings. The MIAA ruling was applied in the more recent case of
City of Iloilo v. Judge Lolita Contreras-Besana ,47 wherein the Court said:

We stress, however, that the City of Iloilo should be held liable for damages for taking private
respondent’s property without payment of just compensation. In Manila International Airport Authority
v. Rodriguez, the Court held that a government agency’s prolonged occupation of private property
without the benefit of expropriation proceedings undoubtedly entitled the landowner to damages:

Such pecuniary loss entitles him to adequate compensation in the form of actual or compensatory
damages, which in this case should be the legal interest (6%) on the value of the land at the time of
taking, from said point up to full payment by the MIAA. This is based on the principle that interest "runs
as a matter of law and follows from the right of the landowner to be placed in as good position as money
can accomplish, as of the date of the taking x x x.

xxxx

For more than twenty (20) years, the MIAA occupied the subject lot without the benefit of expropriation
proceedings and without the MIAA exerting efforts to ascertain ownership of the lot and negotiating with
any of the owners of the property. To our mind, these are wanton and irresponsible acts which should be
suppressed and corrected. Hence, the award of exemplary damages and attorneys fees is in order. x x x.
(Emphasis and underscoring supplied; citations omitted)

23 | P a g e
All told, the Court finds the grant of exemplary damages in the amount of ₱200,000.00 as well as
attorney’s fees equivalent to 1% of the total amount due amply justified, square as it is with existing
jurisprudence.

C. Amount of just compensation

Finally, the Court cannot sustain the amount of ₱5,500.00/sq. m. as just compensation which was set by
the RTC and upheld by the CA. The said valuation was actually arrived at after considering: (a) the
September 4, 1996 recommendation of the City Appraisal Committee; (b) several sworn statements made
by Sy himself; and (c) Sy’s own tax declaration for 1996.48

It is well-settled that the amount of just compensation is to be ascertained as of the time of the
taking.49 However, the above-stated documents do not reflect the value of the subject property at the time
of its taking in 1986 but rather, its valuation in 1996. Consequently, the case must be remanded to the
RTC in order to properly determine the amount of just compensation during such time the subject
property was actually taken.

WHEREFORE, the petition is PARTLY GRANTED. The January 20, 2012 Decision and July 16, 2012
Resolution of the Court of Appeals in CA-G.R. CV No. 91964 are hereby SET ASIDE. Accordingly, the
case is REMANDED to the trial court for the proper determination of the amount of just compensation in
accordance with this Decision. To forestall any further delay in the resolution of this case, the trial court
is hereby ordered to fix the just compensation for petitioner Henry L. Sy's property with dispatch and
report to the Court its compliance. Finally, respondent Local Government of Quezon City is ordered to
PAY exemplary damages in the amount of ₱200,000.00 and attorney's fees equivalent to one percent
(1%) of the amount due, after final determination of the amount of just compensation.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice

WE CONCUR:

ARTURO D. BRION*
Associate Justice
Acting Chairperson

MARIANO C. DEL CASTILLO JOSE PORTUGAL PEREZ

Associate Justice Associate Justice

MARVIC MARIO VICTOR F. LEONEN**

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

24 | P a g e
ARTURO D. BRION
Associate Justice
Acting Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Acting Chairperson's
Attestation, I certify that the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice

DIGEST

Facts:

November 7, 1996, the City through then Mayor Ismael Mathay, filed a complaint for expropriation with
the RTC in order to acquire a 1,000 sq. m. parcel of land, owned and registered under the name of Henry
Sy, which was intended to be used as a site for several government activities.

March 18,1997, pursuant to Section 19 of the Local Government Code of 1991 (LGC), the City deposited
the amount pf P241,090 with the Office of the Clerk of Court, representing 15% of the fair market value
of the subject property based on its tax declaration. Sy did not question the right to expropriate the
property but only the amount of just compensation. The RTC tasked 3 commissioners to determine the
proper amount of just compensation. It was decided by 2 of them that it should be P5, 500 per sq. m. to
be computed from the date of the filing of the expropriation complaint (November 7, 1996). On the other
hand, 1 said that the amount should be P13,500 per sq. m.

The RTC ruled that just compensation should be P5, 500 per sq. m. It also didn’t award damages and
back rentals in favor of Sy. For equity considerations, 6% legal interest was awarded computed from the
date of the filing of the expropriation until full payment of just compensation. The CA affirmed the
RTC’s ruling with the modification that the City should pay Sy the amount of P200, 000 as exemplary
damages (because the City took the property without even initiating expropriation proceedings) and
attorney’s fees equivalent to 1% of the total amount due. Sy was denied payment for back rentals and
damages for shelved plans of utilization.

Both Sy and the City’s motion for reconsiderations were denied. Hence, this petition.

Issue:

WON the CA erred in upholding the amount of just compensation, its grant of 6% legal interest,
exemplary damages and attorney’s fees-PARTLY

25 | P a g e
Ratio:

Rate of legal interest and time of accrual:

The correct legal interest is 12% owing to the nature of the City’s obligation as an effective forbearance.
It was held in Republic v. CA that “the debt incurred by the government on account of the taking of the
property subject of an expropriation constitutes and effective forbearance which therefore, warrants the
application of the 12% legal interest.” Also, legal interest should accrue from the time of the “taking” of
the property in 1986 (when the property was already used as a Barangay day care and office) and not
from the filing of the complaint for expropriation on November 7, 1996. The lack of proper authorization,
i.e. resolution to effect expropriation, did not affect the character of the City’s taking of the subject
property in 1986. There is “taking’ when the owner is actually deprived of the use of his property thus,
the legal character of the City’s action as one of “taking” did not change.

Because of such irregularity in the actual “taking” and filing of the expropriation proceedings, exemplary
damages and attorney’s fees should be awarded to the landowner for equity purposes. MIAA v. Rodriguez
states that “these are wanton and irresponsible acts which should be suppressed and corrected. Hence the
award of exemplary damages and attorney’s fees is in order.”

With regard to the amount of just compensation, the P5, 500 per sq. m. cannot be sustained. This was
derived from documents that were issued in 1996. Valuation should be based as of the time of the taking
which was in 1986. Thus, the case should be remanded to the RTC for proper assessment.

WHEREFORE, the petition is PARTLY GRANTED. The CA decision is SET ASIDE and the case is
REMANDED to the RTC.

26 | P a g e
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No.171496 March 3, 2014

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC WORKS

AND HIGHWAYS (DPWH), Petitioner,
vs.
ORTIGAS AND COMPANY LIMITED PARTNERSHIP, Respondents.

DECISION

LEONEN, J.:

Owners whose properties were taken for public use are entitled to just compensation.

This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to nullify and set
aside the Court of Appeals' resolution dated October 14, 2005. The Court of Appeals' resolution
dismissed petitioner Republic of the Philippines' appeal from the decision of the Regional Trial Court
granting private respondent Ortigas' petition for authority to sell. This petition also seeks to nullify the
Court of Appeals’ resolution dated February 9, 2006, which denied petitioner Republic of the Philippines'
motion for reconsideration.

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.1

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.2 It designated Lot 5-B-2-A, a 1,445-square-meter portion of its property, for the road widening of
Ortigas Avenue.3 Respondent Ortigas also caused the annotation of the term "road widening" on its title.
The title was then inscribed with an encumbrance that it was for road widening and subject to Section 50
of Presidential Decree No. 1529 or the Property Registration Decree.4

The C-5-Ortigas Avenue flyover was completed in 1999, utilizing only 396 square meters of the 1,445-
square-meter allotment for the project.5

Consequently, respondent Ortigas further subdivided Lot 5-B-2-A into two lots: Lot 5-B-2-A-1, which
was the portion actually used for road widening, and Lot 5-B-2-A-2, which was the unutilized portion of
Lot 5-B-2-A.6

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-1.7 Respondent Ortigas alleged that the Department of
Public Works and Highways requested the conveyance of the property for road widening purposes.8 The
case was raffled to Branch 267.9

27 | P a g e
In an order dated March 9, 2001,10 the Regional Trial Court set the case for hearing on April 27, 2001,
giving opportunity to any interested person to appear, oppose, and show cause why respondent Ortigas'
petition may not be granted. In the same order, respondent Ortigas was directed to cause the publication
of both the Regional Trial Court’s order and respondent Ortigas' petition. The trial court also directed the
Sheriff to serve copies of its order and respondent Ortigas' petition to the Office of the Solicitor General,
Office of the City Prosecutor, Department of Public Works and Highways, City Engineer of Pasig, and
the Register of Deeds of Pasig.

Despite due notice to the public, including the Office of the Solicitor General and the Department of
Public Works and Highways, no one appeared to oppose respondent Ortigas’ petition in the hearing on
April 27, 2001.11Respondent Ortigas was able to establish the jurisdictional facts of the case and was
allowed to present evidence ex parte before the appointed Commissioner, the Branch Clerk of Court,
Atty. Edelyn M. Murillo.12

Respondent Ortigas presented Mr. Romulo Rosete to support its allegations in its petition for authority to
sell to the government.13 Rosete was respondent Ortigas' liaison officer who represented respondent
Ortigas in government transactions.14 He testified that he was aware of respondent Ortigas' ownership of
the 70,278-square-meter property in Pasig and its subdivision for the purpose of designating an area for
the C-5-Ortigas Avenue flyover project.15 He also testified that only 396 square meters of the 1,445-
square-meter designated lot was actually utilized after the road had been finished being constructed in
1999.16 This caused respondent Ortigas to further subdivide the designated property into two
lots.17 Rosete presented a certified true copy of the title of the utilized portion of the lot to prove
respondent Ortigas' ownership.18 He also alleged that respondent Ortigas was not compensated for the use
of its property, and respondent Ortigas was requested by the Department of Public Works and Highways
to convey the utilized property to the government.19 Hence, to facilitate the processing of its
compensation, respondent Ortigas filed a petition with the Regional Trial Court.20

Finding merit in respondent Ortigas' petition, the Regional Trial Court issued an order on June 11, 2001,
authorizing the sale of Lot 5-B-2-A-1 to petitioner Republic of the Philippines.21

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.22

On June 29, 2001, petitioner Republic of the Philippines filed a motion for reconsideration of the
Regional Trial Court order dated June 11, 2001, reiterating its argument in its opposition.23

In an order dated October 3, 2001, the Regional Trial Court denied petitioner Republic of the Philippines'
motion for reconsideration.24

Petitioner Republic of the Philippines filed a notice of appeal on October 24, 2001, which reads:

The REPUBLIC OF THE PHILIPPINES, by counsel, hereby respectfully serves notice of appeal to the
Court of Appeals from this Honorable Court's Order dated October 3, 2001 (copy of which was received
by the Office of the Solicitor General on October 15, 2001) on the ground that said Order is contrary to
law and evidence.25 (Emphasis supplied)

28 | P a g e
In its appellant's brief, petitioner Republic of the Philippines argued that the Regional Trial Court erred in
granting respondent Ortigas the authority to sell its property to the government because the lot can only
be conveyed by donation to the government.26

In a resolution dated October 14, 2005, the Court of Appeals dismissed petitioner Republic of the
Philippines’ appeal on the ground that an order or judgment denying a motion for reconsideration is not
appealable.27

Petitioner Republic of the Philippines filed a motion for reconsideration of the Court of Appeals'
resolution. In its motion for reconsideration, petitioner Republic of the Philippines pointed out that its
reference in the notice of appeal to the October 3, 2001 order denying the motion for reconsideration of
the trial court’s decision was merely due to inadvertence. In any case, Rule 37, Section 9 of the Rules of
Procedure contemplates as non-appealable only those orders which are not yet final. The October 3, 2001
order was already final as it confirmed the June 11, 2001 judgment of the court.28

In its resolution dated February 9, 2006, the Court of Appeals denied the motion for reconsideration on
the ground of lack of jurisdiction. The Court of Appeals noted that even if the order denying the motion
for reconsideration was appealable, the appeal was still dismissible for lack of jurisdiction because
petitioner Republic of the Philippines raised only a question of law.29

The issues for our consideration are the following:30

a) Whether the Court of Appeals gravely erred in denying petitioner Republic of the Philippines’
appeal based on technicalities;

b) Whether the Court of Appeals gravely erred in dismissing the appeal from the trial court order
granting respondent Ortigas authority to sell the land to the Republic of the Philippines.

The Office of the Solicitor General argued that strict application of the rules of procedure overrides
substantial justice, in this case, to the detriment of petitioner Republic of the Philippines.31

On the trial court's grant of authority to respondent Ortigas to sell its property to the government, the
Office of the Solicitor General stated while citing Young v. City of Manila32 that respondent Ortigas'
subdivision of its land for road widening automatically withdrew the land from the commerce of
man.33 Further, a piece of land segregated by a private owner for public use may only be conveyed by
donation to the government based on Section 50 of Presidential Decree No. 1529.34 "Presently, said land
is already being used by the public as part of the ‘widened’ road beside the C-5 [flyover] x x x."35

In its comment dated July 25, 2006, respondent Ortigas argued that the Office of the Solicitor General
committed a fatal mistake when it brought by way of appeal the denial of its motion for reconsideration
before the Court of Appeals.36

This petition lacks merit.

Appeals from the Regional Trial Court to the Court of Appeals under Rule 41 must raise both questions
of fact and law

29 | P a g e
Section 2 of Rule 50 of the Rules of Court provides that appeals taken from the Regional Trial Court to
the Court of Appeals raising only pure questions of law are not reviewable by the Court of Appeals. In
which case, the appeal shall not be transferred to the appropriate court. Instead, it shall be dismissed
outright.

Appeals from the decisions of the Regional Trial Court, raising purely questions of law must, in all cases,
be taken to the Supreme Court on a petition for review on certiorari in accordance with Rule 45.37 An
appeal by notice of appeal from the decision of the Regional Trial Court in the exercise of its original
jurisdiction to the Court of Appeals is proper if the appellant raises questions of fact or both questions of
fact and questions of law.38

There is a question of law when the appellant raises an issue as to what law shall be applied on a given
set of facts.39 Questions of law do "not involve an examination of the probative value of the evidence
presented."40 Its resolution rests solely on the application of a law given the circumstances.41 There is a
question of fact when the court is required to examine the truth or falsity of the facts presented.42 A
question of fact "invites a review of the evidence."43

The sole issue raised by petitioner Republic of the Philippines to the Court of Appeals is whether
respondent Ortigas’ property should be conveyed to it only by donation, in accordance with Section 50 of
Presidential Decree No. 1529. This question involves the interpretation and application of the provision.
It does not require the Court of Appeals to examine the truth or falsity of the facts presented. Neither
does it invite a review of the evidence. The issue raised before the Court of Appeals was, therefore, a
question purely of law. The proper mode of appeal is through a petition for review under Rule 45. Hence,
the Court of Appeals did not err in dismissing the appeal on this ground.

Nevertheless, we take time to emphasize that Rule 41, Section 1, paragraph (a) of the Rules of Court,
which provides that "[n]o appeal may be taken from [a]n order denying a x x x motion for
reconsideration," is based on the implied premise in the same section that the judgment or order does not
completely dispose of the case. The pertinent portion of Rule 41, Section 1 provides:

Section 1. Subject of appeal. – An appeal may be taken from a judgment or final order that completely
disposes of the case, or of a particular matter therein when declared by these Rules to be appealable.

In other words, what Section 1 of Rule 41 prohibits is an appeal taken from an interlocutory order. An
interlocutory order or judgment, unlike a final order or judgment, does "not completely dispose of the
case [because it leaves to the court] something else to be decided upon."44 Appeals from interlocutory
orders are generally prohibited to prevent delay in the administration of justice and to prevent "undue
burden upon the courts."45

Orders denying motions for reconsideration are not always interlocutory orders. A motion for
reconsideration may be considered a final decision, subject to an appeal, if "it puts an end to a particular
matter,"46 leaving the court with nothing else to do but to execute the decision.

"An appeal from an order denying a motion for reconsideration of an order of dismissal of a complaint is
effectively an appeal of the order of dismissal itself."47 It is an appeal from a final decision or order.

The trial court’s order denying petitioner Republic of the Philippines’ motion for reconsideration of the
decision granting respondent Ortigas the authority to sell its property to the government was not an

30 | P a g e
interlocutory order because it completely disposed of a particular matter. An appeal from it would not
cause delay in the administration of justice. Petitioner Republic of the Philippines’ appeal to the Court of
Appeals, however, was properly dismissed because the former used the wrong mode of appeal.

In any event, we resolve the substantive issue on 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.

Section 50 of Presidential Decree No. 1529 does not apply in a case that is the proper subject of an
expropriation proceeding

Respondent Ortigas may sell its property to the government. It must be compensated because its property
was taken and utilized for public road purposes.

Petitioner Republic of the Philippines insists that the subject property may not be conveyed to the
government through modes other than by donation. It relies on Section 50 of 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. It reads:

Section 50. Subdivision and consolidation plans. Any owner subdividing a tract of registered land into
lots which do not constitute a subdivision project as defined and provided for under P.D. No. 957, shall
file with the Commissioner of Land Registration or the Bureau of Lands a subdivision plan of such land
on which all boundaries, streets, passageways and waterways, if any, shall be distinctly and accurately
delineated.

If a subdivision plan, be it simple or complex, duly approved by the Commissioner of Land Registration
or the Bureau of Lands together with the approved technical descriptions and the corresponding owner’s
duplicate certificate of title is presented for registration, the Register of Deeds shall, without requiring
further court approval of said plan, register the same in accordance with the provisions of the Land
Registration Act, as amended: Provided, however, that the Register of Deeds shall annotate on the new
certificate of title covering the street, passageway or open space, a memorandum to the effect that except
by way of donation in favor of the national government, province, city or municipality, no portion of any
street, passageway, waterway or open space so delineated on the plan shall be closed or otherwise
disposed of by the registered owner without the approval of the Court of First Instance of the province or
city in which the land is situated. (Emphasis supplied)

Petitioner Republic of the Philippines’ reliance on Section 50 of the Property Registration Decree is
erroneous. Section 50 contemplates roads and streets in a subdivided property, not public thoroughfares
built on a private property that was taken from an owner for public purpose. A public thoroughfare is not
a subdivision road or street.

More importantly, when there is taking of private property for some public purpose, the owner of the
property taken is entitled to be compensated.48

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;

31 | P a g e
 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.49

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 rights50 attached to ownership of property.

It is true that the lot reserved for road widening, together with five other lots, formed part of a bigger
property before it was subdivided. However, this does not mean that all lots delineated as roads and
streets form part of subdivision roads and streets that are subject to Section 50 of the Property
Registration Decree. Subdivision roads and streets are constructed primarily for the benefit of the owners
of the surrounding properties. They are, thus, constructed primarily for private use — as opposed to
delineated road lots taken at the instance of the government for the use and benefit of the general public.

In this case, the lot was reserved for road widening at the instance of petitioner Republic of the
Philippines. While the lot segregated for road widening used to be part of the subdivided lots, the
intention to separate it from the delineated subdivision streets was obvious from the fact that it was
located at the fringes of the original lot51 — exactly at petitioner Republic of the Philippines’ intended
location for the road widening project. 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.

Delineated roads and streets, whether part of a subdivision or segregated for public use, remain private
and will remain as such until conveyed to the government by donation or through expropriation
proceedings.52 An owner may not be forced to donate his or her property even if it has been delineated as
road lots because that would partake of an illegal taking.53 He or she may even choose to retain said
properties.54 If he or she chooses to retain them, however, he or she also retains the burden of maintaining
them and paying for real estate taxes.

An owner of a subdivision street which was not taken by the government for public use would retain such
burden even if he or she would no longer derive any commercial value from said street. To remedy such
burden, he or she may opt to donate it to the government. In such case, however, the owner may not force
the government to purchase the property. That would be tantamount to allowing the government to take
private property to benefit private individuals. This is not allowed under the Constitution, which requires
that taking must be for public use.55

32 | P a g e
Further, since the Constitution proscribes taking of private property without just compensation,56 any
taking must entail a corresponding appropriation for that purpose. Public funds, however, may only be
appropriated for public purpose.57 Employment of public funds to benefit a private individual constitutes
malversation.58 Therefore, private subdivision streets not taken for public use may only be donated to the
government.

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.59

As with all laws, Section 50 of the Property Registration Decree cannot be interpreted to mean a license
on the part of the government to disregard constitutionally guaranteed rights.

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,60 which is the government’s
power to condemn private properties within its territory for public use or purpose.61 This power is
inherent and need not be granted by law.62 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.

In the parallel case of Alfonso v. Pasay City63 wherein Alfonso was deprived of his property for road
purposes, was uncompensated, and was left without any expropriation proceeding undertaken, this court
said:

When a citizen, because of this practice loses faith in the government and its readiness and willingness to
pay for what it gets and appropriates, in the future said citizen would not allow the Government to even
enter his property unless condemnation proceedings are first initiated, and the value of the property, as
provisionally ascertained by the Court, is deposited, subject to his disposal. This would mean delay and
difficulty for the Government, but all of its own making.64

"There is nothing that can more speedily and effectively embitter a citizen and taxpayer against his
Government and alienate his faith in it, than an injustice and unfair dealing like the present case."65

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

33 | P a g e
or through negotiated sale, which has already been recognized in law as a mode of government
acquisition of private property for public purpose.66

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.

Respondent Ortigas, which merely accommodated petitioner Republic of the Philippines' request,
remains uncompensated for the taking of its property. Respondent Ortigas could have brought action to
recover possession of the property, but it instead chose to sell its property to petitioner Republic of the
Philippines. This is both fair and convenient as the road construction had long been completed, and the
road is already being utilized by the public.

Taking of private property without just compensation is a violation of a person's property

right.1âwphi1 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.

WHEREFORE, the petition is DENIED. The decision of the Court of Appeals is AFFIRMED. The trial
court is directed to proceed with the case with due and deliberate dispatch in accordance with this
decision.

SO ORDERED.

MARVIC MARIO VICTOR F. LEONEN

Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson

DIOSDADO M. PERALTA LUCAS P. BERSAMIN*

Associate Justice Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

ATTESTATION

34 | P a g e
I attest that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.

ANTONIO T. CARPIO
Acting Chief Justice

DIGEST

FACTS:

Respondent is the owner of a parcel of land in Pasig City. Upon the request of the Department of Public
Works and Highways (DPWH), respondent caused the segregation of its property into five lots and
reserved one portion for road widening for the C-5 flyover project. The C-5-Ortigas Avenue flyover was
completed in 1999, utilizing only 396 square meters of the 1,445-square-meter allotment for the project.
Consequently, respondent further subdivided the lot into the portion actually used for road widening, and
the unutilized portion, and filed with the Regional Trial Court (RTC) of Pasig a petition for authority to
sell to the government the portion of the lot actually used for the road widening. The RTC issued an order
authorizing the sale but 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. Petitioner filed a motion for reconsideration which was denied by the RTC.
Petitioner’s appeal was also dismissed by the Court of Appeals.

ISSUE:

Did the Court of Appeals gravely err in dismissing the appeal from the trial court order granting
respondent Ortigas authority to sell the land to the Republic of the Philippines?

35 | P a g e
HELD:

No. The owner of a property taken is entitled to be compensated when there is taking of private property
for some public purpose. Taking occurs 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. Moreover, since the Constitution proscribes taking of
private property without just compensation, any taking must entail a corresponding appropriation for that
purpose. 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

36 | P a g e