National Power Corporation vs. Posada

When the taking of private property ceases to be for a public purpose, the expropriation complaint should be dismissed by the trial court, except when the order of condemnation has become final and executory, the government has already taken possession of the property, or the expropriation proceedings have caused prejudice to the property owner, in which case the court must determine the appropriate relief including possible damages.

The National Power Corporation required parcels of land located in Barangay Marinawa, Bato, Catanduanes for the construction and maintenance of its Substation Island Grid Project intended to address power shortages in the province. It instituted expropriation proceedings against respondents Socorro T. Posada, Renato Bueno, Alice Balin, Adrian Tablizo, Teofilo Tablizo, and Lydia T. Olivo (substituted by her heirs), offering P500.00 per square meter while respondents claimed the value was P2,000.00 per square meter.

• NPC instituted expropriation proceedings for the acquisition of a right-of-way easement over parcels of land in Barangay Marinawa, Bato, Catanduanes owned by respondents for the construction of its Substation Island Grid Project.
• NPC offered P500.00 per square meter, while respondents objected and alleged that the value of the properties was P2,000.00 per square meter.
• On December 16, 2002, the trial court confirmed NPC's right to expropriate and ordered the creation of a commission to determine just compensation.
• On January 28, 2003, NPC filed a Notice to Take Possession based on a deposit of P3,280.00 with the Land Bank of the Philippines as provisional value.
• On July 10, 2003, the court-appointed commissioners recommended a fair market value of P1,500.00 per square meter based on the location along the highway, prevailing market values of P1,500.00 to P2,000.00 per square meter, and the presence of residential houses and improvements.
• NPC opposed the recommendation, arguing that the Provincial Appraisal Committee valued the lot at P500.00 per square meter, the approved zonal values ranged from P105.00 to P160.00, and only an easement should be acquired under Republic Act No. 6395.
• On November 19, 2003, NPC amended its Complaint to acquire portions of the properties instead of just an easement, and deposited P580,769.93 with the Land Bank representing the value of 3,954 square meters.
• On July 14, 2005, the trial court granted NPC's Urgent Ex Parte Motion for the Issuance of a Writ of Possession.
• Respondents filed a Motion to Lift and/or Suspend the Issuance of the Writ of Possession, which was denied.
• Respondents subsequently filed an Urgent Motion to Grant Time to Remove Houses and Additional Deposit, which the trial court granted on June 5, 2006, fixing the value of structures and improvements at P827,000.00 and ordering NPC to deposit an additional P262,639.17.
• NPC failed to make the additional deposit, prompting the trial court to issue an Order on November 27, 2006 recalling the Writ of Possession and fixing just compensation at P2,000.00 per square meter.
• While the case was pending before the Supreme Court, NPC decided to acquire an alternative vacant lot owned by FICELCO and no longer needed respondents' properties for the substation project.
• NPC filed a Motion to Withdraw Appeal on August 28, 2014, praying for the withdrawal of its Petition for Review and the dismissal of its Amended Complaint before the trial court.

• The amount of just compensation fixed at P2,000.00 per square meter is excessive and speculative since the Bureau of Internal Revenue zonal valuation classified the property as "cocoland" at only P4.15 per square meter, and the commissioners engaged in speculation and guess-work.
• The Writ of Possession should not have been recalled because NPC had already deposited P580,769.93, which represented the provisional amount required by Republic Act No. 8974, and this provisional amount should be distinguished from the final just compensation.
• The recall of the Writ of Possession amounts to an injunctive writ prohibited by Section 3 of Republic Act No. 8975, which bars lower courts from issuing temporary restraining orders or preliminary injunctions against national government infrastructure projects.
• The Substation Project was intended to resolve six to eight hours of daily brownouts suffered by residents of Catanduanes, constituting a vital public purpose.

• The Court of Appeals did not err in sustaining the amount of just compensation at P2,000.00 per square meter since the value was based on the location, costs of improvements, prevailing market values of similarly situated properties, and opinions of residents in the area.
• The recall of the Writ of Possession was correct because there was no showing that any payment was actually made to the respondents as required by Republic Act No. 8974 and the ruling in Republic v. Judge Gingoyon; NPC merely deposited the amount with the Land Bank without direct payment to the landowners.
• Respondents have no objection to the withdrawal of the appeal, but they object to the dismissal of the Amended Complaint before the trial court; the proper effect of withdrawing the Petition for Review is to make the Court of Appeals' Decision final and executory.
• Granting the Motion to Withdraw would be unjust because it would allow NPC to invalidate a judgment duly rendered by the trial court and affirmed by the Court of Appeals after years of litigation.

• Procedural Issues:
  • Whether the National Power Corporation may be allowed to withdraw its Petition for Review and what is the effect of such withdrawal on the Amended Complaint pending before the trial court.
• Substantive Issues:
  • Whether the trial court erred in recalling the Writ of Possession issued in favor of the National Power Corporation.
  • Whether the recall of the Writ of Possession constitutes a prohibited temporary restraining order or preliminary injunction under Republic Act No. 8975.
  • Whether the determination of just compensation at P2,000.00 per square meter is valid.
  • Whether the National Power Corporation complied with the requirements of Republic Act No. 8974 for the issuance of a Writ of Possession.

• Procedural:
  • The Supreme Court granted the Motion to Withdraw the Petition for Review dated June 4, 2010.
  • The Court held that the withdrawal carries with it the necessary consequence of making the trial court's order of condemnation final and executory.
  • However, since NPC was never able to take possession of the properties and the record does not show whether respondents suffered damages from the commencement of the expropriation proceedings, the case was remanded to the Regional Trial Court of Virac, Catanduanes, Branch 43 to determine whether respondents have been prejudiced by the expropriation and to adjudicate the rights of the parties accordingly.
  • NPC was directed to file the proper Motion to Withdraw before the trial court to discontinue the expropriation proceedings.
• Substantive:
  • The trial court erred in granting the Writ of Possession in the first place because NPC failed to comply with Section 4 of Republic Act No. 8974, which requires immediate payment to the landowner of 100% of the zonal valuation and the value of improvements, not merely a deposit with an authorized government depositary.
  • The recall of a Writ of Possession for failure to comply with statutory requirements is not the same as the issuance of an injunctive writ prohibited by Republic Act No. 8975; the former is a correction of an erroneous issuance, while the latter is an ancillary remedy to preserve rights.
  • Just compensation (the final determination of fair market value) differs from the provisional value required for a Writ of Possession; once just compensation is determined by the court, the government must pay that amount to enter and take possession, not merely the provisional value.
  • When the taking of private property is no longer for a public purpose (as when NPC decided to use an alternative site), the expropriation complaint should be dismissed, unless the trial court's order of condemnation became final and executory, the government already took possession of the property, or the expropriation caused prejudice to the property owner.

• Two-Stage Expropriation Proceedings — Expropriation involves two distinct phases: (1) the determination of the authority to exercise eminent domain and the propriety of its exercise, ending with an order of condemnation or dismissal; and (2) the determination of just compensation with the assistance of commissioners. The Court applied this distinction to differentiate between the provisional value required for possession and the final just compensation.
• Immediate Payment Requirement under Republic Act No. 8974 — For national infrastructure projects, the implementing agency must immediately pay the landowner (not merely deposit with a bank) the amount equivalent to 100% of the Bureau of Internal Revenue zonal valuation plus the value of improvements before the trial court can issue a Writ of Possession. This procedure is more favorable to the property owner than Rule 67 of the Rules of Court.
• Constructive Trust in Expropriation — When expropriated property is no longer devoted to the public purpose for which it was taken, the government holds the property in constructive trust for the former owner, who may demand reconveyance upon restoration of the just compensation received, as the government cannot plausibly keep the property in any manner it pleases.
• Dismissal of Expropriation When Public Purpose Ceases — An expropriation action must be dismissed when the property is no longer intended for public use, unless the condemnation order is final and executory, possession has been taken, or the landowner has suffered prejudice, in which case the court must determine the appropriate relief including damages.

• "When the taking of private property is no longer for a public purpose, the expropriation complaint should be dismissed by the trial court."
• "The law plainly requires direct payment to the property owner, and not a mere deposit with the authorized government depositary. Without such direct payment, no writ of possession may be obtained."
• "It is arbitrary and capricious for a government agency to initiate expropriation proceedings, seize a person's property, allow the judgment of the court to become final and executory and then refuse to pay on the ground that there are no appropriations for the property earlier taken and profitably used."

• Republic v. Judge Gingoyon — Cited for the interpretation of Republic Act No. 8974, specifically that the law requires immediate payment to the property owner rather than a mere deposit with an authorized government depositary before a writ of possession may be issued.
• National Housing Authority v. Heirs of Guivelondo — Cited for the rule that expropriation proceedings must be dismissed when no longer for public use, except when the condemnation order is final, possession has been taken, or prejudice has been caused to the landowner.
• Heirs of Moreno v. Mactan-Cebu International Airport Authority — Cited for the doctrine of constructive trust applicable when expropriated property is no longer used for the public purpose for which it was taken, allowing the former owner to demand reconveyance upon restoration of just compensation.
• City of Manila v. Ruymann — Cited for the principle that a plaintiff in an expropriation case may be permitted to dismiss the action with court approval when the property is no longer needed for the declared public purpose.
• Metropolitan Water District v. De Los Angeles — Cited for the rule that the moment it appears at any stage of the proceedings that the expropriation is not for public use, the action must necessarily fail and should be dismissed.
• Capitol Steel Corporation v. PHIVIDEC Industrial Authority — Cited for distinguishing between provisional value (required for writ of possession) and just compensation (final judicial determination), and that the former does not substitute for the latter.
• Vda. de Ouano v. Republic — Cited for the requirement that the state must show genuine need and exacting public purpose to take private property, and that if the public necessity ceases, the property should be returned to the owner.

• Constitution, Article III, Section 9 — Provides that private property shall not be taken for public use without just compensation, cited as the constitutional basis limiting the exercise of eminent domain.
• Republic Act No. 8974, Section 4 — Mandates immediate payment of 100% of the Bureau of Internal Revenue zonal valuation and the value of improvements to the property owner before issuance of a writ of possession for national government infrastructure projects.
• Republic Act No. 8974, Section 7 — Requires implementing agencies to adopt rules for equitable valuation of improvements using the replacement cost method.
• Republic Act No. 8975, Section 3 — Prohibits lower courts from issuing temporary restraining orders, preliminary injunctions, or preliminary mandatory injunctions against national government projects, cited to distinguish the recall of a writ of possession from a prohibited injunction.
• Rules of Court, Rule 67, Section 2 — Provides for entry of plaintiff upon depositing value with authorized government depositary, contrasted with the stricter immediate payment requirement of Republic Act No. 8974.
• Rules of Court, Rule 67, Section 4 — Outlines the order of expropriation and the two-phase nature of expropriation proceedings.
• Civil Code, Article 1454 — Provides for implied trusts when absolute conveyance is made to secure performance of an obligation, applied by analogy in cases where expropriated property is no longer used for public purpose.
• Civil Code, Articles 1189 and 1190 — Provide for the effects of loss, deterioration, or improvement of things subject to conditions, and the obligation to return what has been received when conditions are fulfilled, applied to the restitution of expropriated property.