Lintag vs. National Power Corporation

Republic Act No. 8974 is a substantive law that operates prospectively, not retroactively, because it creates substantive rights — specifically, the right of the property owner to receive just compensation prior to the State's acquisition of possession — which is a proprietary right within the sole province of the legislature to enact. Absent express terms or necessary implication of legislative intent for retroactive application, the law cannot apply to expropriation proceedings where the complaint was filed and possession was obtained before its effectivity.

Petitioners-spouses Marian Berenguer-Lintag and Angelo T. Arrastia were the registered owners of an 80,001-square-meter property in Barangay Bibincahan, Sorsogon, Sorsogon, covered by TCT No. T-24855. Respondent National Power Corporation (NPC) sought to acquire an easement of right of way over an 8,050-square-meter portion for the construction and maintenance of the 350 KV Leyte-Luzon HVDC Power Transmission Project. The expropriation was commenced under Presidential Decree No. 42, which authorized the plaintiff in eminent domain proceedings to take possession of the property upon depositing the assessed value for taxation purposes. Republic Act No. 8974, enacted on November 7, 2000, later prescribed new standards for determining just compensation in expropriation cases relating to national government infrastructure projects.

Petitioners-spouses Marian Berenguer-Lintag and Angelo T. Arrastia were the registered owners of an 80,001-square-meter property covered by TCT No. T-24855 in Barangay Bibincahan, Sorsogon, Sorsogon. On December 4, 1996, respondent National Power Corporation filed a Complaint for Eminent Domain to acquire an easement of right of way over an 8,050-square-meter portion of the property, with an initial assessed value of ₱2,468.09, for the construction and maintenance of the 350 KV Leyte-Luzon HVDC Power Transmission Project.

On January 17, 1997, after NPC deposited the initial assessed value with the Philippine National Bank, the RTC, upon NPC's ex-parte motion, ordered the issuance of a Writ of Possession pursuant to PD No. 42. The writ was issued on January 24, 1997. Petitioners questioned the writ for lack of notice and for the insufficiency of the deposit, and on December 4, 1998, the CA reversed the orders involved, directing the RTC to comply with notice requirements, to order NPC to deposit ₱32,930.00 as required by PD 42, and to hear the case to determine just compensation.

On May 25, 2000, the RTC appointed three new commissioners to appraise the property. On June 15, 2000, two commissioners moved that the previous Commissioners' Report be used as basis for determining just compensation. On July 11, 2000, petitioners moved to compel NPC to pay ₱49,665.63 as tentative value of damaged improvements, which NPC paid after the RTC directed field personnel to confirm the damage. Pre-trial was held on September 13, 2000, and the case was set for trial on November 15, 2000.

On November 7, 2000, Republic Act No. 8974 was approved. On February 14, 2001, petitioners moved to direct NPC to comply with RA No. 8974, asserting that under Section 4 thereof they were entitled to 100% of the value of the subject property based on the BIR zonal valuation of ₱700.00 per square meter, or ₱5,635,000.00. The RTC granted the motion on July 10, 2001, holding RA No. 8974 procedural and retroactive. NPC's motion for reconsideration was denied, and NPC elevated the matter to the CA via certiorari. The CA reversed, holding that RA No. 8974 could not be applied retroactively because an initial deposit had been made and possession obtained before its effectivity, and that retroactive application would impose a greater burden on the State and inflict substantial injury to a substantive right.

Petitioners then filed the instant petition, arguing that the CA erred in declaring RA No. 8974 substantive rather than remedial, and that they should be promptly paid just compensation. They contended that the Government's deliberate delay in payment was the evil RA No. 8974 sought to remedy, that NPC never intended prompt payment despite Administrative Order No. 50 and NPC Resolution No. 98-184, and that just compensation requires not only correct determination but also prompt payment. They also noted that NPC failed to pay the initial deposit of ₱32,930.00 as mandated by PD 42, as found by the RTC. NPC, through the OSG, countered that RA No. 8974 is substantive, that the legislature did not intend retroactive application, that the RTC no longer had jurisdiction to amend its final order on initial deposit and possession, and that the valuation was improper since the case involved only an easement.

• Retroactivity of RA No. 8974: Petitioners argued that the CA committed reversible error in declaring that RA No. 8974 cannot be applied retroactively because it is a substantive law and not a remedial statute; they contended that the Government's deliberate delay of payment of just compensation is the evil sought to be remedied by RA No. 8974.

• Prompt Payment of Just Compensation: Petitioners argued that assuming RA No. 8974 is not retroactive, they should still be promptly paid just compensation, as just compensation does not only mean correct determination of the amount to be paid but also the prompt payment thereof; they noted that despite Administrative Order No. 50 and NPC Resolution No. 98-184, NPC never intended prompt payment, and that NPC failed to pay the initial deposit of ₱32,930.00 as mandated by PD 42.

• Legal Interest: Petitioners submitted that on account of NPC's delay in payment, the imposition of legal interest is warranted.

• Substantive Nature of RA No. 8974: NPC, through the OSG, countered that RA No. 8974 is not a remedial statute that can be given retroactive effect, and that Section 4 thereof is a substantive provision as it vests substantive rights.

• Legislative Intent: NPC argued that the legislature did not intend RA No. 8974 to have retroactive application, and that the silence of the Implementing Rules as to prospectivity does not ipso facto render it retroactive.

• Jurisdiction of the RTC: NPC argued that the RTC no longer had jurisdiction to amend its final Order dated January 17, 1997 regarding initial deposit and possession.

• Proper Valuation Standard: NPC argued that the valuation fixed by the RTC is improper since the case involves an easement, and thus NPC should be required to pay only an easement fee.

• Retroactivity of RA No. 8974: Whether Republic Act No. 8974 may be applied retroactively to expropriation proceedings commenced and possession obtained before its effectivity.

• Prompt Payment of Just Compensation: Whether petitioners are entitled to prompt payment of just compensation and legal interest on account of NPC's delay in payment.

• Retroactivity of RA No. 8974: No. RA No. 8974 is a substantive law that operates prospectively, and there is nothing in the law or its Implementing Rules that expressly provides for or necessarily implies retroactive effect. The two cases where the Court applied RA No. 8974 involved complaints filed when the law was already in full force and effect, and thus cannot serve as binding precedent.

• Prompt Payment of Just Compensation: Yes, in part. Just compensation requires not only the correct determination of the amount to be paid but also payment within a reasonable time; however, the determination of the amount involves factual matters, so the Court directed the RTC to try the case expeditiously. The unpaid initial deposit of ₱32,930.00, having been deemed admitted by NPC's failure to contest it, shall be considered by the RTC and included in the determination of final just compensation.

• Retroactivity of RA No. 8974: The Court relied on Republic vs. Gingoyon, which held that RA No. 8974 is a substantive law because it prescribes new standards in determining the amount of just compensation in expropriation cases relating to national government infrastructure projects, as well as the payment of the provisional value as a prerequisite to the issuance of a writ of possession. The Court quoted its February 1, 2006 Resolution in Gingoyon, which stated that a matter is substantive when it involves the creation of rights to be enjoyed by the owner of property to be expropriated, and that the right of the owner to receive just compensation prior to acquisition of possession by the State is a proprietary right within the sole province of the legislature. The Court applied the well-entrenched principle that statutes operate prospectively unless legislative intent to the contrary is manifest by express terms or by necessary implication, based on the maxim Lex prospicit non respicit (the law looks forward, not backward). The Court found no justification to depart from this rule: first, RA No. 8974 is substantive; second, nothing in the law expressly provides for retroactive effect; third, retroactivity is not necessarily implied from the law or its provisions. The silence of the law and its Implementing Rules cannot give rise to an inference of retroactivity. The two cases where the Court applied RA No. 8974 — Republic vs. Gingoyon and Capitol Steel Corporation vs. PHIVIDEC Industrial Authority — involved complaints filed when the law was already in full force and effect, and thus cannot serve as binding precedent.

• Prompt Payment of Just Compensation: The Court explained that expropriation consists of two stages: the first concerns the determination of the authority of the plaintiff to exercise eminent domain and the propriety of its exercise, ending with an order of condemnation; the second concerns the determination by the court of just compensation with the assistance of not more than three commissioners. The process is not complete until payment of just compensation, and the issuance of the writ of possession does not write finis to the expropriation proceedings. The Court observed that petitioners were not questioning NPC's authority to exercise eminent domain, but the imperative just compensation was still wanting. The Court acknowledged that it had been ten years since petitioners were divested of possession without being paid just compensation, and directed the RTC to try the case expeditiously. The Court instructed that the RTC must bear in mind that it is the value of the land at the time of the taking or at the time of the filing of the complaint, whichever came first, that should be considered; in this case, where the institution of the expropriation action preceded the taking, just compensation is based on the value of the land at the time of the filing of the complaint, as provided by the Rules of Court. Finally, the Court took cognizance of petitioners' manifestation that NPC failed to pay the initial deposit of ₱32,930.00 as required by PD 42, as found by the RTC; because NPC did not contest this fact in its pleadings before the CA or the Court, it was deemed admitted. However, since petitioners made no mention of this amount in their prayer, it shall simply be considered by the RTC and included in the determination of final just compensation.

• Prospectivity of Laws — Statutes, including administrative rules and regulations, operate prospectively unless the legislative intent to the contrary is manifest by express terms or by necessary implication, because the retroactive application of a law usually divests rights that have already become vested. This is based on the Latin maxim Lex prospicit non respicit (the law looks forward, not backward). The Court applied this doctrine to hold that RA No. 8974, being substantive and silent on retroactivity, cannot apply to expropriation proceedings commenced before its effectivity.

• Substantive vs. Procedural Law — A matter is substantive when it involves the creation of rights to be enjoyed by the owner of property to be expropriated; the right of the owner to receive just compensation prior to acquisition of possession by the State is a proprietary right, appropriately classified as a substantive matter within the sole province of the legislature. It is possible for a substantive matter to be embodied in a procedural rule, but the absorption of the substantive point into a procedural rule does not prevent the substantive right from being superseded or amended by statute.

• Two-Stage Expropriation Proceeding — Expropriation of lands consists of two stages: the first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise, ending with an order of condemnation; the second is concerned with the determination by the court of just compensation with the assistance of not more than three commissioners. The process is not complete until payment of just compensation, and the issuance of a writ of possession does not write finis to the expropriation proceedings.

• Just Compensation Valuation Date — Just compensation is based on the value of the land at the time of the taking or at the time of the filing of the complaint, whichever came first, not the value at the time of the rendition of judgment. Where the institution of an expropriation action preceded the taking of the property, just compensation is based on the value of the land at the time of the filing of the complaint.

• Just Compensation Includes Prompt Payment — Just compensation is not only the correct determination of the amount to be paid to the property owner but also the payment of the property within a reasonable time; without prompt payment, compensation cannot be considered "just."

• "It likewise bears noting that the appropriate standard of just compensation is a substantive matter. It is well within the province of the legislature to fix the standard, which it did through the enactment of Rep. Act No. 8974." — This quotation from Republic vs. Gingoyon establishes the foundational principle that RA No. 8974 is substantive law, which the Court applied to reject retroactive application.

• "Indubitably, a matter is substantive when it involves the creation of rights to be enjoyed by the owner of property to be expropriated. The right of the owner to receive just compensation prior to acquisition of possession by the State of the property is a proprietary right, appropriately classified as a substantive matter and, thus, within the sole province of the legislature to legislate on." — This passage from the Court's Resolution in Gingoyon defines the substantive character of the right to just compensation and was quoted approvingly to support the ruling.

• "It is a well-entrenched principle that statutes, including administrative rules and regulations, operate prospectively unless the legislative intent to the contrary is manifest by express terms or by necessary implication because the retroactive application of a law usually divests rights that have already become vested." — This states the controlling doctrine on prospectivity of laws, which the Court applied to deny retroactive application of RA No. 8974.

• "Indeed, just compensation is not only the correct determination of the amount to be paid to the property owner but also the payment of the property within a reasonable time. Without prompt payment, compensation cannot be considered 'just.'" — This articulates the Court's recognition that prompt payment is an essential component of just compensation, supporting the directive to the RTC to proceed expeditiously.

• Republic vs. Gingoyon, G.R. No. 166429, December 19, 2005, 478 SCRA 474 — Controlling precedent holding that RA No. 8974 is a substantive law prescribing new standards for determining just compensation in expropriation cases relating to national government infrastructure projects; the Court relied on this case and its February 1, 2006 Resolution to reject retroactive application.

• Republic vs. Lim, G.R. No. 161656, June 29, 2005, 462 SCRA 265 — Cited for the two-stage framework of expropriation proceedings and for the principle that just compensation includes prompt payment.

• Republic vs. Salem Investment Corporation, G.R. No. 137569, June 23, 2000, 334 SCRA 320 — Cited for the proposition that the expropriation process is not complete until payment of just compensation.

• Republic vs. Ker and Company Limited, 433 Phil. 70 (2002) — Cited for the rule that just compensation is determined as of the date of the taking or the filing of the complaint, whichever came first.

• Republic vs. Sarabia, G.R. No. 157847, August 25, 2005, 468 SCRA 142 — Cited for the principle that just compensation is based on the value of the land at the time of the filing of the complaint where the institution of the expropriation action preceded the taking.

• BPI Leasing Corporation vs. Court of Appeals, 461 Phil. 451 (2003) — Cited for the principle that statutes operate prospectively unless legislative intent to the contrary is manifest.

• Paloma vs. Mora, G.R. No. 157783, September 23, 2005, 470 SCRA 711 — Cited for the principle that retroactive application of a law usually divests rights that have already become vested.

• Capitol Steel Corporation vs. PHIVIDEC Industrial Authority, G.R. No. 169453, December 6, 2006 — Distinguished; the Court applied RA No. 8974 in this case because the expropriation complaint was re-filed on November 24, 2003, when the law was already in full force and effect.

• Sunville Timber Products, Inc. vs. Abad, G.R. No. 85502, February 24, 1992, 206 SCRA 482 — Cited for the principle that factual findings not disputed in pleadings are deemed admitted.

• Section 4, Republic Act No. 8974 — The provision entitling property owners to 100% of the value of the property based on the current relevant zonal valuation made by the Bureau of Internal Revenue; the Court held this provision substantive and not retroactive.

• Presidential Decree No. 42 — The law authorizing the plaintiff in eminent domain proceedings to take possession of the property upon depositing the assessed value for taxation purposes with the Philippine National Bank; the Court noted NPC's failure to pay the required deposit of ₱32,930.00, which was deemed admitted.

• Section 4, Rule 67, 1997 Rules of Civil Procedure — The rule providing that just compensation is to be determined as of the date of the taking or the filing of the complaint, whichever came first; the Court applied this rule in directing the RTC on the proper valuation date.

• Ynares-Santiago, J. (Chairperson)
• Austria-Martinez, J.
• Chico-Nazario, J.