G.R. No. 197743 - Separate Opinion

G.R. No. 197743, October 18, 2022,
♦ Decision, Dimaampao, [J]
♦ Separate Opinion, Caguioa, [J]
♦ Concurring and Dissenting Opinion, Gaerlan, [J]
♦ Separate Opinion, Gesmundo, [CJ]
♦ Concurring and Dissenting Opinion, Lazaro-Javier, [J]
♦ Separate Opinion, Leonen, [J]

HEIRS OF JOSE MARIANO AND HELEN S. MARIANO, REPRESENTED BY DANILO DAVID S. MARIANO, MARY THERESE IRENE S. MARIANO, MA. CATALINA SOPHIA S. MARIANO, JOSE MARIO S. MARIANO, MA. LENOR S. MARIANO, MACARIO S. MARIANO AND HEIRS OF ERLINDA MARIANO VILLANUEVA, REPRESENTED IN THIS ACT BY IRENE LOURDES M. VILLANUEVA THROUGH HER ATTORNEY-IN-FACT EDITHA S. SANTUYO AND BENJAMIN B. SANTUYO, PETITIONERS, VS. CITY OF NAGA, RESPONDENT.

This case involves a parcel of land allegedly donated to the City of Naga. The City Mayor of Naga, Monico Imperial (Mayor Imperial), and the registered landowners, Macario Mariano (Macario) and Jose Gimenez (Gimenez), executed a Deed of Donation on August 16, 1954, whereby the latter donated five hectares of land (subject property) to the City of Naga. Two hectares of the subject property were to be used as the City Hall site; the other two hectares for the public plaza, and the remaining hectare for the public market.1 The City of Naga, however, did not comply with the requirements for a valid donation, hence, petitioners claim that the donation was void. The Court initially granted the petition because there was indeed an invalid transfer of land.

The ponencia partially denies the second motion for reconsideration declaring that petitioners' claim over the subject property is not barred by laches because they continuously assailed the validity of the donation of land. Thus, since there was an invalid donation, petitioners should reclaim the land given to the City of Naga. However, the ponencia proposes, in the same case, that if the properties are not anymore feasible to be returned to petitioners since government buildings are already erected thereon, the government should simply pay petitioners just compensation, citing the case of Secretary of DPWH v. Spouses Tecson2 (Secretary of DPWH). It was further stated that the case should be remanded to the Regional Trial Court (RTC) for the determination of just compensation.

While I agree with the ponencia that just compensation should be awarded to petitioners, I have some reservations whether the determination of just compensation should be conducted in the same case when remanded to the trial court, bearing in mind Forfom Development Corp. v. Philippine National Railways3 (Forfom).

One of the inherent powers of the State is the power of eminent domain. It has been defined as "the right of a government to take and appropriate private property for public use, whenever the public exigency requires it, which can be done only on condition of providing a reasonable compensation therefor." It has also been described as the power of the State or its instrumentalities to take private property for public use and is inseparable from sovereignty and inherent in government.4

Once the State decides to exercise its power of eminent domain, the power of judicial review becomes limited in scope, and the courts will be left to determine the appropriate amount of just compensation to be paid to the affected landowners.5 Pursuant thereto, Rule 67 of the Rules of Court (the "Rules") provides the manner by which the government may exercise its power of eminent domain. Notably, the Regional Trial Court has "original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners."6

In Metropolitan Cebu Water District v. J. King and Sons Co., Inc.,7 the Court explained the two stages in an expropriation proceeding under Rule 67 of the Rules of Court:

Nevertheless, even if the State does not institute an action for expropriation under Rule 67, the owner of the private property is still entitled to just compensation, as long the State took such private property. Article III, Section 9 of the 1987 Constitution provides that "private property shall not be taken for public use without just compensation." The fair market value of the property must be paid to the owners thereof, which has been defined as the full and fair equivalent of the property taken from its owner by the expropriator. The measure is not the taker's gain, but the owner's loss. The word "just" is used to intensify the meaning of the word "compensation" and to convey thereby the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full, and ample.9

Accordingly, if the State takes the land of a person under its power of eminent domain and the State did not institute an action for expropriation under Rule 67, the landowner's remedy is to institute an action for inverse condemnation proceeding. In said action, extensive presentation of evidence can be undertaken so that just compensation for petitioners are properly arrived at.

The action for inverse condemnation was explained in National Power Corp. v. Heirs of Sangkay:10

As explained above, inverse condemnation is an action instituted by a private individual to recover the value of property taken in fact by the government, even though no formal exercise of the power of eminent domain was attempted by the taking agency. The purpose of the action is to acquire just compensation for the full and fair equivalent of the property taken from its owner by the expropriator. The fact that the owner, rather than the expropriator, brings the action does not change the essential nature of the suit as an inverse condemnation. In Felisa Agricultural Corp. v. National Transmission Corp.,12 it was explained that property owners usually initiate inverse condemnation proceedings when the government does not commence expropriation proceedings to acquire the privately-owned lands.13

Accordingly, when the power of eminent domain is exercised by the State, the latter can either institute an action for expropriation under Rule 67 of the Rules, or the private landowner can commence inverse condemnation proceeding, which is treated similarly as an action for expropriation under Rule 67. In any case, both these actions are within the original and exclusive jurisdiction of the RTC.

In Forfom, it was underscored that if a private person, whose property was taken by the State under its power of eminent domain, fails to institute an action to claim just compensation, i.e., inverse condemnation proceeding, the land cannot be returned to such person even if he/she files a complaint for recovery of possession of real property;14 rather, the land shall remain with the State, to wit:

While the Court held in Forfom that the private landowner was entitled to just compensation, it also underscored that the determination of just compensation should not be adjudicated in the complaint for recovery of possession of real property instituted by the landowner. Instead, the determination of just compensation should be decided in a separate action for expropriation – particularly, in the RTC – which can appoint commissioners to duly determine such just compensation. The State, in Forfom, was directed to institute a separate expropriation action over the land in question, to wit:

Verily, in Forfom, instead of remanding the case to the RTC involving the complaint for recovery of possession of real property, the Court directed the Philippine National Railways to institute a separate expropriation action to determine the just compensation due to the landowner. To determine just compensation, the Court took into consideration the importance of instituting a separate action for expropriation in the RTC, which has the power to appoint commissioners to establish the amount of such compensation in an action for expropriation.

Accordingly, I find that the Court in this case should adopt the established procedure provided in Forfom. To recapitulate, in the March 12, 2018 Decision, the Court stated that this case stemmed from an unlawful detainer case instituted by petitioners against the City of Naga before the Municipal Trial Court (MTC):

Like Forfom, the petitioners in this case did not institute an inverse condemnation proceeding to claim just compensation due to the taking of the State. Rather, they merely instituted an action for unlawful detainer before the MTC.

Evidently, the MTC does not have jurisdiction over an action for expropriation. Again, the original and exclusive jurisdiction to determine just compensation is lodged exclusively with the RTC, which has the authority to appoint commissioners. In this case, the court which exercised original jurisdiction over the complaint for unlawful detainer was the MTC; the RTC only exercised appellate jurisdiction when the parties appealed the decision of the MTC.

Accordingly, I cannot find sufficient basis to simply remand this case of unlawful detainer for the determination of just compensation to the RTC. To repeat, only in an action for expropriation or inverse condemnation proceeding lodged in the RTC, which exercises original and exclusive jurisdiction, can there be a determination of just compensation under Rule 67 of the Rules of Court.

The better approach, as stated in Forfom, would be to direct the State – particularly, the City of Naga – in the dispositive portion to forthwith institute the appropriate expropriation action over the land in question, so that just compensation due to the owners may be determined. With such directive, the City of Naga shall be compelled to institute the proper action for expropriation under Rule 67 before the RTC and the issue of determination of just compensation can be properly determined in accordance with the Rules of Court.

Notably, the ponencia cites Secretary of DPWH18 and Republic v. Spouses Nocom19 to justify the remand of the case to the RTC for determination of just compensation, even though this case stemmed from an action for unlawful detainer. However, I disagree that those cases are on all fours with the present case.1âшphi1

For one, Secretary of DPWH is not squarely applicable in the present situation because it was not disputed in the said case that the government did not have a valid claim over the lot involved when it took the property; thus, there was unlawful taking of land belonging to a private individual. On the contrary, the government in this case does not even recognize the right of ownership of petitioners.

Republic v. Spouses Nocom, likewise, is not applicable. In that case, the Court remanded the case to the lower court for the determination of just compensation.20 However, it must be emphasized that there was already a separate expropriation proceeding instituted earlier therein, it just so happened that therein respondents were excluded:

Evidently, while respondents in Republic v. Spouses Nocom were excluded, it is undeniable that there was already a separate expropriation proceeding filed before the RTC. This is in contrast with the present case where no expropriation proceeding was ever filed before the RTC pursuant to Rule 67 of the Rules of Court. Thus, in this case, the determination of just compensation simply cannot be remanded to the RTC considering that the case stemmed from an unlawful detainer case and no expropriation proceeding had ever been filed by the parties.

Indeed, there must be a separate expropriation proceeding initiated to properly determine the amount of just compensation to be awarded to herein petitioners if in case the subject property can no longer be returned by the City of Naga due to the government structures already constructed thereon and the functions undertaken therein. The second stage of the expropriation proceeding requires the full presentation of evidence from both parties to determine the just compensation due to petitioners for the portions of the subject property that cannot be returned by the City of Naga. Verily, this requires a full-blown trial in a separate proceeding, and cannot be done in the same present case.

In this manner of mandatorily requiring the City of Naga to institute a separate action for expropriation against petitioners, the City of Naga can remain on the subject property, without interruption of government functions, and petitioners will be able to receive the just compensation due them.

Finally, if the subject property cannot be returned to petitioners and an expropriation proceeding is filed to award just compensation, it is but proper that the necessary interest be imposed on the just compensation to be received by petitioners. As stated in Republic v. Spouses Nocom,22 it would result in great injustice if this Court grants the prayer that the just compensation be pegged at the value of the subject properties at the alleged time of taking by the government, without any interest imposed. To do so would reward the government for its disregard of procedural due process in its exercise of the power of eminent domain.23

In National Transmission Corp. v. Oroville Development Corp.,24 the Court explained that when the government takes private property, the owner's loss is not only his or her property but also on its income-generating potential. Thus, as a rule, when property is taken, full compensation of its value must immediately be paid to achieve a fair exchange for the property and the potential income lost.25 The rationale for imposing the interest is to compensate the landowners for the income they would have made had they been properly compensated for their properties at the time of the taking.26

Similarly, in Land Bank of the Philippines v. Heirs of Barrameda,27 the Court held that the delay in the payment of just compensation is a forbearance of money. As such, this is necessarily entitled to earn interest. The difference in the amount between the final amount, as adjudged by the court, and the initial payment made by the government — which is part and parcel of the just compensation due to the property owner — should earn legal interest as a forbearance of money.

Accordingly, any just compensation to be received by petitioners in a separate expropriation proceeding should have the accompanying interest computed from the time of the taking.

WHEREFORE, I vote to GRANT the second motion for reconsideration as respondent City of Naga cannot be ordered to vacate and return the subject property to petitioners. However, pursuant to Forfom Development Corp. v. Philippine National Railways, respondent City of Naga is DIRECTED to forthwith INITIATE a separate expropriation action over the land in question, so that just compensation due to the owners may be determined in accordance with the Rules of Court, with interest at the legal rate of six (6%) percent per annum from the time of taking until full payment is made.