G.R. No. 165354 - Republic vs. Heirs of Borbon

Case Summary (G.R. No. 165354)

Factual Background

In February and March 1993, National Power Corporation entered a parcel of land in Barangay San Isidro, Batangas City, to construct a 230 KV transmission line for the Mahabang Parang–Pinamucan project. The respondents owned the subject parcel, a 14,257–square–meter tract registered under Transfer Certificate of Title No. T-9696. In May 1995, NAPOCOR filed a complaint for expropriation seeking an easement or right of way over about 6,326 square meters, alleging prior negotiations and tendering a deposit of P9,790 as the assessed value of the portion sought. The respondents answered, denied negotiation, alleged that NAPOCOR entered without consent, destroyed fruit trees, and installed poles and towers which traversed the land and divided it into three lots, allegedly rendering the entire property useless for future uses. They pressed claims for compensation for the whole property and sought to participate in the appointment of commissioners.

Trial Court Proceedings

The RTC conducted pretrial on December 20, 1995, and directed parties to nominate commissioners. The court appointed three commissioners. Two commissioners submitted a joint report on April 8, 1999, finding that the property had been reclassified to industrial use as of June 30, 1994, and appraising the land at P550.00 per square meter. A third commissioner filed a minority report on March 16, 1999, recommending an easement fee equal to at least ten percent of the assessed tax value plus damages and tower occupancy fees. The RTC, in a judgment dated November 27, 2000, adopted the joint report, held that the relevant date for valuation was the date of filing of the complaint, and fixed just compensation for the whole lot at P550.00 per square meter. The RTC ordered NAPOCOR to pay just compensation for the entire 14,257 square meters, legal interest from May 5, 1995 until full payment, and costs.

Court of Appeals Decision

NAPOCOR appealed to the Court of Appeals. By decision promulgated April 29, 2004, the Court of Appeals affirmed the RTC decision with a modification: NAPOCOR was to pay just compensation only for the occupied 6,326 square meters at P550.00 per square meter, with legal interest from the date of filing until full payment. NAPOCOR then appealed to the Supreme Court.

NAPOCOR’s Motion to Discontinue and Subsequent Manifestation

While the appeal was pending, NAPOCOR filed a Motion to Defer Proceedings on December 3, 2012, and on January 3, 2014 filed a Manifestation and Motion to Discontinue Expropriation Proceedings. NAPOCOR represented that negotiations had failed and that the transmission lines constructed on the respondents’ property had been retired, thereby eliminating the public purpose for the taking. It invoked Section 4, Rule 67 of the Rules of Court and sought dismissal or discontinuance on terms the court deemed just, or alternatively a remand for determination of reasonable compensation for the period of occupation. The motion was supported by a Memorandum dated December 13, 2012 and a Certificate of Inspection/Accomplishment dated February 5, 2005 evidencing the retirement of the lines.

Issue Presented

The dispositive issue was whether the expropriation proceedings should be discontinued or dismissed during the pendency of the appeal in light of the alleged cessation of the public purpose for which the property was sought.

Ruling of the Court

The Supreme Court granted NAPOCOR’s motion to discontinue the expropriation proceedings but required that the discontinuance be upon such terms as are just and equitable under Section 4, Rule 67. The Court ordered the return of the property to the respondents and remanded the case to the RTC, with instructions to treat the litigation as an action for damages arising from the taking and occupation, and to conduct further proceedings consistent with the Court’s directions.

Legal Basis and Reasoning

The Court reiterated that the power of eminent domain is conditioned on two mandatory requisites: that the taking be for a particular public purpose and that just compensation be paid. The Court emphasized that the element of public use must subsist throughout the expropriation proceedings and that, when the public purpose ceases, the action cannot be maintained. Reliance on Metropolitan Water District v. De los Angeles was held apt; there the Court recognized the duty of the expropriator and the courts to dismiss proceedings when the taking is no longer for public use and to impose conditions to address dispossession and damages. The Supreme Court found that the retirement of the transmission lines removed the public use and rendered dismissal appropriate.

The Court further noted that NAPOCOR had entered and taken possession of the property without the owners’ consent and without depositing just compensation before entry as required by the Constitution. The Court therefore held that there had been a taking as of March 1993 when NAPOCOR entered the property, and that the proper measure of relief given the discontinuance is not full market value but compensation for the disturbance of property rights during the period of occupation. In support, the Court cited Ansaldo v. Tantuico, Jr. for the principle that where the expropriator takes possession prior to filing suit, the date of taking governs valuation. The Court also relied on Mactan-Cebu International Airport Authority v. Lozada, Sr. for the proposition that property taken for a specific public purpose must be devoted to that purpose and that abandonment permits reversion or other relief subject to return of compensation when appropriate.

Conversion to an Action for Damages and Remand Instructions

Case Syllabus (G.R. No. 165354)

Parties and Posture

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE NATIONAL POWER CORPORATION filed the expropriation complaint and appealed the Court of Appeals decision to the Supreme Court.
HEIRS OF SATURNINO Q. BORBON were the private landowners and respondents in the expropriation proceedings.
COURT OF APPEALS was a respondent by virtue of the appealed judgment it promulgated in CA-G.R. No. 72069.
The Regional Trial Court, Branch 1, Batangas City entered judgment awarding just compensation which the Court of Appeals affirmed with modification and which the petitioner then appealed to the Supreme Court.
During the pendency of the appeal, the petitioner moved to defer and later filed a Manifestation and Motion to Discontinue Expropriation Proceedings alleging cessation of the public purpose.

Key Facts

NAPOCOR entered the respondents' property in Barangay San Isidro, Batangas City in February-March 1993 to construct and maintain transmission lines for the 230 KV Mahabang Parang-Pinamucan Project.
The respondents owned a 14,257 square meter parcel registered under Transfer Certificate of Title No. T-9696.
NAPOCOR filed a complaint for expropriation on May 26, 1995 seeking an easement of right of way over approximately 6,326 square meters and offered a provisional deposit of P9,790.00.
The respondents alleged entry without consent, destruction of fruit trees, installation of five transmission posts and woodpoles, and asserted that the transmission line divided and greatly diminished the use and value of the entire estate.
Two commissioners appraised the property at P550.00 per square meter, while a third commissioner recommended an easement fee and other charges.
The RTC adopted the joint report and fixed just compensation at P550.00 per square meter for the whole lot and ordered payment of interest and costs.
The Court of Appeals modified the judgment to require payment only for the occupied 6,326 square meters at P550.00 per square meter.
NAPOCOR later informed the Court that the transmission lines installed on the respondents' property had been retired and moved to discontinue the expropriation proceedings, attaching a December 13, 2012 memorandum and a February 5, 2005 Certificate of Inspection/Accomplishment.

Procedural History

NAPOCOR filed the expropriation complaint in the RTC on May 26, 1995 and took possession earlier in March 1993.
The RTC rendered judgment on November 27, 2000 adopting the joint commissioners' report as to valuation.
The Court of Appeals promulgated its decision on April 29, 2004 affirming the RTC with modification.
During the Supreme Court appeal, NAPOCOR filed motions to defer proceedings and to discontinue the expropriation proceedings in December 2012 and January 2014 respectively.
The Supreme Court resolved whether the expropriation proceedings should be discontinued and what remedies flow from such discontinuance.

Issues Presented

Whether the expropriation proceedings should be discontinued on the ground that the public purpose for the taking ceased to exist