G.R. No. 175983 - Metropolitan Cebu Water District vs. J. King and Sons Co., Inc.

Case Summary (G.R. No. 175983)

Procedural History and Key Dates

Board Resolution No. 015-2004 authorizing expropriation: approved by MCWD board on 27 February 2004.
Complaint for expropriation filed by MCWD: 10 November 2004.
Motion for issuance of writ of possession filed: 7 February 2005.
LWUA letter authorizing filing (Administrator Lorenzo H. Jamora to MCWD Manager Armando H. Paredes): dated 28 February 2005.
Provisional payment deposited with the Clerk of Court: Official Receipt dated 16 March 2005 in the amount of P17,500.00 (100% of BIR zonal value at P3,500.00 per square meter).
Trial court orders granting writ of possession and related orders: 1 April 2005 and 9 May 2005; writ of possession issued 21 June 2005.
Court of Appeals issued TRO and later rendered decision granting respondent’s certiorari petition: TRO 28 June 2005; CA decision 26 July 2006; CA resolution denying reconsideration 28 September 2006.
Supreme Court final disposition reversing the Court of Appeals and reinstating the RTC orders: rendered April 16, 2009 (decision reversing CA, directing remittance of P17,500.00 and implementation of writ; case remanded for further proceedings).

Applicable Law

1987 Constitution, Article III, Section 9 (property protection; just compensation).
Presidential Decree No. 198 (P.D. No. 198), as amended: grants power of eminent domain to local water districts; sets governance structure (Secs. 5, 6, 17, 25 cited).
Republic Act No. 8974 (R.A. No. 8974) and its Implementing Rules and Regulations: defines “national government projects” (expressly includes projects by government-owned and -controlled corporations and water supply facilities), prescribes provisional payment rules (Section 4) and standards for assessment of value (Section 5).
Rule 67, Rules of Court (specifically Section 2) — traditional deposit procedure for entry into possession in expropriation cases.
Precedent cited in the decision: Tan v. Republic and Republic v. Gingoyon; Capitol Steel Corporation v. PHIVIDEC Industrial Authority; and other authorities referenced by the Court.

Issues Presented

Whether the MCWD board of directors had sufficient authority to institute the expropriation complaint.
Whether the procedure for obtaining a writ of possession was properly observed, especially in light of R.A. No. 8974 and Rule 67.

Legal Principles on Eminent Domain and Corporate Authority

Eminent domain is an inherent sovereign power to take private property for public use upon just compensation; it is governed by constitutional protections against deprivation of property without due process and payment of just compensation. Although inherent in the State, the legislature may delegate the exercise of eminent domain to agencies, public officials, and quasi‑public entities; in this context, P.D. No. 198 expressly grants MCWD the power of eminent domain, subject to review by LWUA. As a corporate entity, MCWD exercises its powers through its board of directors and may delegate executive, administrative or ministerial powers to its officers in accordance with its charter (P.D. No. 198, Secs. 6, 17, 25).

Board Resolution and LWUA Review: Sufficiency of Authority

MCWD satisfied the charter prerequisites for exercising eminent domain: (1) its board passed Board Resolution No. 015-2004 (27 February 2004) authorizing the general manager to file expropriation; and (2) the exercise of eminent domain was reviewed and approved by LWUA, evidenced by the LWUA Administrator’s letter dated 28 February 2005 authorizing the expropriation “against the owner of the five‑square meter portion of Lot No. 921‑A covered by TCT No. 168805.” The Court of Appeals’ characterization of the board resolution as lacking “exactitude and particularity” was rejected by the Supreme Court on the basis that the charter requirements were met and that LWUA’s explicit authorization identified the lot with sufficient particularity. The Court observed that corporate exercise of eminent domain is valid only when the board acts and when statutorily required administrative review (here LWUA) has occurred.

Two-Stage Nature of Expropriation Proceedings and Justiciability of Necessity

Expropriation proceedings proceed in two distinct stages: (1) determination of the authority to expropriate and the propriety or necessity of the taking (ending with an order of expropriation or dismissal), and (2) determination of just compensation (with the assistance of commissioners), which is a separate, final adjudication subject to appeal. The determination whether a taking is necessary or proper is a justiciable question decided in the first stage. The Court noted that objections to necessity or to the authority to expropriate must be addressed in the initial stage and cannot be used to indefinitely prevent the statutory mechanisms for provisional possession and compensation from operating.

Writ of Possession under Rule 67 and R.A. No. 8974: Procedural Requirements

Under Rule 67, the plaintiff traditionally obtains entry upon depositing the assessed value for taxation with an authorized government depositary. R.A. No. 8974, however, modifies this scheme for national government infrastructure projects (which include GOCC projects and water supply facilities) by imposing an “immediate payment” requirement: upon filing the complaint and after due notice, the implementing agency must immediately pay the owner (1) 100% of the value based on the current BIR zonal valuation and (2) the value of improvements as determined under the Act; upon compliance, the court shall immediately issue an order to take possession and commence implementation, provided a certificate of availability of funds is presented. The Act therefore prescribes a provisional payment as a prerequisite and trigger for issuing a writ of possession in such projects, while preserving the court’s ultimate judicial function to determine final just compensation under standards set by Section 5 of the Act.

Application of RA 8974 to This Case and Character of the Provisional Payment

R.A. No. 8974 applies to MCWD’s expropriation because the statute expressly covers projects by government-owned and -controlled corporations and the Implementing Rules identify water supply facilities as covered projects. MCWD deposited P17,500.00, representing 100% of the BIR zonal valuation (P3,500.00 per square meter for five square meters). Although MCWD initially intended to tender the provisional payment directly to respondent during a hearing (which it could not effect due to counsel’s absence), the trial court accepted the deposit with the court. The Supreme Court treated the deposit with the court as equivalent to the immediate payment required by R.A. No. 8974 and thus sufficient to trigger the court’s ministerial duty to issue the writ of possession.

The Court’s Rationale on Judicial Function and Legislative Standards for

Case Syllabus (G.R. No. 175983)

Procedural History

Petition for review under Rule 45 filed in the Supreme Court seeking reversal of the Court of Appeals decision and resolution in CA-G.R. CEB-SP No. 00810 (Decision dated 26 July 2006; Resolution dated 28 September 2006). [Rollo, pp. 29-36; 49-50]
Trial court (RTC Cebu City, Branch 23) issued Orders dated 1 April 2005 and 9 May 2005, and a writ of possession dated 21 June 2005, allowing petitioner to take possession of the subject lot. [Rollo, pp. 57-58; 98-100]
Respondent moved for reconsideration of the RTC orders; motion denied. [Rollo, p. 97]
Respondent filed a petition for certiorari under Rule 65 with the Court of Appeals and obtained a temporary restraining order (TRO), preventing petitioner from entering the lot. [Rollo, pp. 233-278; 82-83; 44]
Court of Appeals granted respondent’s petition, nullifying the RTC orders and writ of possession on grounds stated in its Decision dated 26 July 2006. [Rollo, pp. 29-36]
Petitioner moved for reconsideration in the Court of Appeals; motion denied by Resolution dated 28 September 2006. [Rollo, p. 37-45; supra note 3]
Supreme Court resolved the Rule 45 petition by decision dated 16 April 2009 (G.R. No. 175983), reversing the Court of Appeals, reinstating the RTC orders, directing remittance of P17,500.00 to respondent, requiring the sheriff to implement the writ of possession, and remanding the case to the trial court for further proceedings.

Facts

Petitioner: Metropolitan Cebu Water District (MCWD), a government-owned and controlled corporation created pursuant to Presidential Decree No. 198, as amended, with among its purposes the acquisition, installation, improvement, maintenance and operation of water supply and distribution systems within district boundaries. [P.D. No. 198, Sec. 5; Rollo]
Respondent: J. King and Sons Company, Inc., owner of a property in Banilad, Cebu City covered by TCT No. 168605 (text initially) sought to be partly expropriated. [Rollo]
Subject property: a five (5)-square-meter portion occupied by petitioner’s production well, described in the complaint as part of respondent’s lot; the LWUA letter refers to Lot No. 921-A covered by TCT No. 168805 (as reflected in the LWUA correspondence excerpt). [Rollo, pp. 102-106; 95; 118]
Petitioner initiated negotiations for voluntary sale; negotiations failed as respondent did not acquiesce. [Rollo, pp. 112-116]
Board Resolution No. 015-2004 (approved by petitioner’s board on 27 February 2004) authorized the general manager to file expropriation and other cases. [Rollo, p. 118]
LWUA review and approval: LWUA Administrator Lorenzo H. Jamora wrote petitioner’s manager Armando H. Paredes a letter dated 28 February 2005 authorizing petitioner to file the expropriation case “against the owner of the five-square meter portion of Lot No. 921-A covered by TCT No. 168805, pursuant to Section 25 of P.D. No. 198, as amended.” The letter identifies the lot with particularity. [Rollo, p. 95]
On 10 November 2004, petitioner filed a complaint to expropriate the five-square-meter portion. [Rollo, pp. 102-106]
On 7 February 2005, petitioner filed a motion for issuance of a writ of possession, intending to tender provisional payment to respondent during a rescheduled hearing which petitioner’s counsel failed to attend. [Rollo, Records pp. 49-50; p. 40]
Petitioner deposited with the Clerk of Court the amount of P17,500.00 (Official Receipt No. 5908819 dated 16 March 2005), equivalent to 100% of the current zonal value as determined by the BIR at P3,500.00 per square meter. [Rollo, pp. 56; 117]
The trial court granted the motion and issued the writ of possession. [Rollo, pp. 57-58; 98-100]

Issues Presented by Petitioner

Whether there was sufficient authority from the petitioner’s board of directors to institute the expropriation complaint.
Whether the procedure in obtaining a writ of possession was properly observed.

Court of Appeals’ Rationale (as stated in its decision)

The Court of Appeals ruled that the board resolution authorizing the filing of the expropriation complaint lacked exactitude and particularity, likening it to a general warrant in criminal law and declaring it invalid. [Rollo, CA Decision]
The Court of Appeals found there was no genuine necessity for expropriation of the five-square-meter lot. [Rollo, CA Decision]
The Court of Appeals also held that reliance on Republic Act No. 8974 in fixing the value of the property contravenes the judicial determination of just compensation. [Rollo, CA Decision]
As a consequence, the Court of Appeals nullified the RTC orders and writ of possession and granted respondent’s petition for certiorari, and a TRO had been issued preventing petitioner’s entry. [Rollo]

Applicable Statutory and Constitutional Provisions (as cited in the decision)

1987 Constitution, Art. III, Sec. 9: “Private property shall not be taken for public use without just compensation.” [Rollo, supra note 25]
Presidential Decree No. 198 (P.D. No. 198), as amended:
- Sec. 5 (Purpose): enumerates powers and purposes of local water districts including acquiring, installing, improving, maintaining and operating water supply and distribution systems and related functions. [Rollo, supra note 6]
- Sec. 25 (Authorization): grants the district the power of eminent domain and provides that its exercise shall be subject to review by the Administration. [Rollo, supra note 8]
- Sec. 6 (Formation of District): characterizes district as quasi-public corporation exercising powers of private corporations in addition to powers under the Act. [Rollo, supra note 30]
- Sec. 17 (Performance of District Powers): provides that all powers, privileges, and duties of the district shall be exercised and performed by and through the board, with delegation of executive, administrative or ministerial powers permitted. [Rollo, supra note 31]
Republic Act No. 8974 (R.A. No. 8974) (enacted 7 November 2000):
- Sec. 2 (Definition of National Government Projects): includes national government infrastructure projects and explicitly includes projects undertaken by government-owned and controlled corporations; implementing rules include water supply, sewerage, and waste management facilities among covered projects. [Rollo, Sec. 2; Implementing Rules and Regulations citation]
- Sec. 4 (Guidelines for Expropriation Proceedings): prescribes immediate payment upon filing equivalent to 100% of the BIR zonal valuation plus value of improvements; requires certificate of availability of funds; mandates that upon compliance the court shall immediately issue order to take possession. [Rollo, Sec. 4]
- Sec. 5 (Standards for Assessment of Value): lists factors the court may consider in determining just compensation (enumerated standards such as classification and use, developmental costs, declared value, comparable selling price, disturbance compensation, size/shape/location/tax declaration/zonal valuation, price manif