G.R. No. 220598 - Macapagal-Arroyo vs. People

On October 25, 1994, the Philippine National Oil Company (PNOC) filed a complaint for eminent domain against respondent Oscar S. Maglasang concerning a 63,333‑square meter parcel of land (Lot No. 11900, covered by TCT No. T-4097) at Lim-ao, Municipality of Kananga, Leyte.
On November 10, 1994, PNOC filed a second expropriation complaint against respondent Leolino A. Maglasang regarding a 98,206‑square meter parcel (Lot No. 11907, covered by OCT No. P‑18869) in the same locale.
The properties were to be used for the construction and operation of the 125MW Upper Mahiao Geothermal Power Plant Project.

The Regional Trial Court (RTC) of Ormoc City, Branch 35, docketed the cases as Civil Case Nos. 3267‑O and 3273‑O.
Writs of possession were issued on December 13, 1994 (Lot 11900) and December 5, 1994 (Lot 11907) after PNOC posted the provisional deposit.
On March 21, 1997, following finality of the condemnation orders, the trial court appointed three commissioners—Atty. Bibiano Reforzado (Branch Clerk of Court), Briccio D. Supremo (City Assessor), and Augusto T. Pongos (businessman)—to determine the just compensation.
The commissioners submitted differing valuations:

Supremo recommended P1,000.00 per square meter.
Reforzado recommended P900.00 per square meter.
Pongos proposed the lowest valuation: P400.00 per square meter for developed portions and P85.00 per square meter for undeveloped portions.

Confronted with these varying recommendations, the trial court initially computed the value at P300.00 per square meter (based on the time of filing) and then increased it to P700.00 per square meter to account for inflation and an adjustment factor.
The trial court’s decision, relying on the precedent in Cosculluela v. Court of Appeals, emphasized the need for compensation to reflect the loss within a reasonable time span to the owner.

Both parties appealed the RTC decision and on January 23, 2002, the CA rendered a decision modifying the trial court ruling.
The CA reduced the just compensation from P700.00 to P300.00 per square meter, reasoning that:

The application of an "inflation factor" and "adjustment factor" was erroneous.
Such factors improperly substituted for the legally mandated interest and extended compensation beyond the actual loss suffered by the owner.
Precedents dictate that compensation must be limited to the property’s value at the time of taking, which in these cases was determined as of 1994.

P18,999,900.00 for Lot No. 11900.
P29,461,800.00 for Lot No. 11907.
Interest was to be applied at the legal rate of 6% per annum from the respective dates when the complaints were filed.

Dissatisfied with the CA ruling, PNOC filed a petition for review on certiorari under Rule 45.
PNOC’s primary contentions included:

The initial valuation by the trial court (P300.00 per square meter) did not reflect the fair market value as supported by the evidence.
The properties, allegedly agricultural in nature at the time of taking, should not have been classified as industrial lands.
The proper reckoning of the "time of taking" should have been from January 1, 1992, when PNOC leased the land, rather than from the filing date of the complaint in 1994.

The petition sought to set aside the factual findings of both the RTC and the CA regarding the just compensation of the expropriated properties.

The trial court considered the complaints’ filing dates in 1994 as the time when the expropriation “took” effect, despite PNOC taking possession earlier under a lease.
It was held that the proper measure of just compensation is the actual loss suffered at the moment of effective taking—as evidenced by the filing of the expropriation complaint.
Regarding land classification, the courts noted that:

The property was reclassified as industrial owing to local ordinances and appraiser assessments.
Petitioner’s belated objection that the land was agricultural was untimely and thus barred by estoppel.

Whether the trial court erred in applying an inflation factor and an adjustment factor in computing the just compensation, beyond the legally mandated interest owed at the time of taking.
Whether the appropriate "time of taking" for the computation of just compensation should be reckoned from the lease commencement in 1992 or from the filing of the expropriation complaints in 1994.
Whether the classification of the expropriated lots as industrial, as adopted by the lower courts, was erroneous given PNOC’s contention that they were agricultural lands at the time of expropriation.