G.R. No. 59791 - Manila Electric Co. vs. Pineda

Case Summary (G.R. No. 59791)

Factual Background

On October 29, 1974, MERALCO filed a complaint for eminent domain to acquire portions of land aggregating 237,321 square meters in Pililla, Rizal, for construction of a 230 KV transmission line. Negotiations failed and private respondents, as owners in fee simple of portions of the subject land, contested MERALCO’s legal existence and the extent of the area sought. Despite motions to dismiss and allegations that MERALCO’s corporate existence had expired, the trial court on January 13, 1975 authorized MERALCO to take possession of the property. Private respondents later sought withdrawal of sums deposited by MERALCO to guarantee just compensation.

Procedural History in the Trial Court

The trial court appointed commissioners on February 11, 1980 to appraise the properties, but the commissioners’ work was suspended after MERALCO filed a motion to dismiss on June 5, 1980 asserting that its sale of assets to Napocor on October 30, 1979 caused it to lose interest in the disputed properties. Acting judicially for the vacant Branch XXII, respondent Judge Pineda thereafter entertained motions for payment by private respondents and issued orders on December 4, 1981 and December 21, 1981 allowing withdrawal from MERALCO’s deposit. On February 9, 1982 the trial court issued an order adjudging the fair market value of the property at P40.00 per square meter for a total of P389,720.00, awarding interest and attorney’s fees, and denying motions for contempt and reconsideration. On March 22, 1982 the trial court granted execution pending appeal and ordered MERALCO to deposit P52,600,000.00 representing Napocor’s consideration, and to render an accounting.

Motions and Orders Under Review

The petition sought nullification of three orders: the December 4, 1981 order granting payment of P20,400.00 at P3.00 per square meter for 6,800 square meters; the December 21, 1981 omnibus order permitting withdrawal of P90,125.50 from MERALCO’s deposit pending final determination of just compensation; and the February 9, 1982 order finally adjudging just compensation at P40.00 per square meter with interest, attorney’s fees, and consequential awards. The petitioner also challenged the March 22, 1982 order for execution pending appeal and the failure to implead Napocor as successor in interest.

The Parties’ Contentions

MERALCO contended that the trial court violated its constitutional right to due process by determining and ordering payment of just compensation without a formal hearing before the Board of Commissioners and without affording MERALCO an opportunity to present and rebut evidence. MERALCO further argued that, because it had transferred its rights to Napocor, the lower court should have impleaded Napocor in substitution or at least as party plaintiff. The private respondents defended the trial court’s actions, asserting that the court properly dispensed with commissioners and legitimately determined just compensation on the record before it.

Issue Presented

The central issue was whether the trial court could dispense with the assistance of a Board of Commissioners in an eminent domain proceeding and determine for itself the amount of just compensation without affording the parties the opportunity to present evidence before the commissioners.

Applicable Law and Precedent

The Court examined Section 5 and Section 8 of Rule 67, Revised Rules of Court, governing appointment of commissioners to ascertain just compensation and the court’s action upon their report. The Court reiterated the two-stage character of eminent domain proceedings as stated in Municipality of Binan v. Hon. Jose Mar Garcia (G.R. No. 69260, December 22, 1989, 180 SCRA 576): first, determination of authority to condemn and entry of an order of condemnation; second, determination of just compensation with the assistance of commissioners. The Court also recalled that a trial with commissioners is indispensable and that the court may reject commissioners’ findings and make its own estimate only for valid reasons such as the commissioners’ application of illegal principles, disregard of a clear preponderance of evidence, or allowance of an amount grossly inadequate or excessive, as exemplified in Manila Railroad Company v. Velasquez, 32 Phil. 286.

The Court’s Findings on Evidence and Valuation

The Court found that the trial judge had arrived at P40.00 per square meter by relying upon a Joint Venture Agreement on Subdivision and Housing Projects executed by A.B.A. Homes and private respondents and attached to a motion to withdraw funds. The Court held that the trial judge formulated an opinion of value without the proper reception of evidence before the commissioners and without giving MERALCO the opportunity to present rebuttal proof. The Court characterized the joint venture agreement, standing alone and absent other competent valuation evidence, as incompetent to establish just compensation.

Due Process Analysis and Duty to Appoint Parties

The Court emphasized that appointment of up to three competent and disinterested commissioners in expropriation proceedings is a mandatory requirement and that their hearing is a substantial right indispensable to a fair determination of compensation. The Court further found that the record, notably MERALCO’s deed of sale dated October 30, 1979, established that

Case Syllabus (G.R. No. 59791)

Parties and Posture

Manila Electric Company (MERALCO) was the petitioner and condemnor in an eminent domain action before the Court of First Instance of Rizal, Branch XXII, later acted upon by The Honorable Gregorio G. Pineda, presiding judge of Branch XXI, Pasig, Metro Manila.
Teofilo Arayon, Sr., Gil de Guzman, Lucito Santiago and Teresa Bautista were the private respondents and owners in fee simple of the property sought to be expropriated.
The petition for review on certiorari raised a pure question of law seeking nullification of the respondent judge's orders dated December 4, 1981, December 21, 1981, and February 9, 1982.
The petition challenged the lower court's purported determination of just compensation without the assistance of a Board of Commissioners and sought correction of alleged denial of due process.

Facts

MERALCO filed a complaint for eminent domain on October 29, 1974 against forty-two defendants for portions of land needed for a 230 KV transmission line from Barrio Malaya to Tower No. 220 at Pililla, Rizal, affecting an aggregate area of 237,321 square meters.
The private respondents rejected petitioner’s offers and questioned MERALCO's legal existence and the alleged excessive area in motions filed in December 1974 and January 1975.
The trial court issued an order on January 13, 1975 authorizing MERALCO to take possession despite the private respondents' opposition.
On July 13, 1976 the private respondents sought withdrawal of deposit, claiming entitlement to P40.00 per square meter or approximately P272,000.00, and prayed to withdraw P71,771.50; the motion was denied on September 3, 1976.
Branch XXII became vacant and Judge Gregorio G. Pineda acted on motions originally filed in that branch.
MERALCO sold certain power plants and transmission lines, including the subject transmission lines, to the National Power Corporation (Napocor) on October 30, 1979.
The trial court appointed commissioners on February 11, 1980, but MERALCO moved to dismiss on June 5, 1980 on the ground that it had lost interest due to the sale to Napocor, resulting in suspension of the commissioners' work.
The respondent court ordered partial withdrawals from MERALCO's deposit on December 4, 1981 (P20,400.00 for 6,800 square meters at P3.00 per square meter) and on December 21, 1981 (P90,125.50 from a deposit to guarantee just compensation of P272,000.00).
MERALCO filed a motion for reconsideration and for contempt on January 12, 1982 alleging forgery and seeking reinstatement, and the private respondents again moved for payment on January 8, 1982.
By order dated February 9, 1982 the respondent court adjudged the fair market value at P40.00 per square meter for a total award of P389,720.00 with legal interest from February 24, 1975 and attorney’s fees of P10,000.00, and it denied the motions for contempt as moot and the motion for reconsideration for lack of merit.
The respondent court later issued an order dated March 22, 1982 granting execution pending appeal and requiring MERALCO to deposit P52,600,000.00, representing Napocor's consideration at P200.55 per square meter, and to render an accounting.
MERALCO filed a petition for preliminary injunction with the Supreme Court on March 26, 1982 and obtained a temporary restraining order against enforcement of the March 22, 1982 order.

Procedural History

The trial court granted the private respondents' motions for partial withdrawal from deposit on December 4 and December 21, 1981 and later entered a final determination of just com