Republic of the Philippines vs. Court of Appeals

In expropriation proceedings instituted by the national government, title vests in the public upon condemnation, and the unpaid private owner is entitled only to the payment of just compensation with legal interest from the time of taking, not the return of the property, even if execution of the judgment is delayed.

The Philippine Information Agency (PIA) instituted expropriation proceedings in 1969 over a 544,980-square meter property in Malolos, Bulacan, for the "Voice of the Philippines" project, taking over premises previously leased to the "Voice of America." The trial court condemned the property in 1979, fixing just compensation at P6.00 per square meter with legal interest from the date of taking. The national government occupied and utilized the property but failed to pay the just compensation awarded to the heirs of Luis Santos, who owned a 76,589-square meter portion. After the heirs moved for payment and partial disbursement of the initial deposit in 1984, the government remained in default. In 1999, the government sought to deposit a computed amount, prompting the heirs to demand adjustment to current zonal valuation or the return of the property.

• The Expropriation and 1979 Judgment: On 19 September 1969, the Republic, through the PIA, filed expropriation cases covering 544,980 square meters of land along MacArthur Highway, Malolos, Bulacan, for the "Voice of the Philippines" project. The PIA took over the premises after the previous lessee, the "Voice of America," ceased operations. A provisional deposit of P517,558.80 was made. On 26 February 1979, the RTC condemned the property and ordered the Republic to pay just compensation at P6.00 per square meter, with legal interest from 19 September 1969 until fully paid.
• Non-Payment and Partial Execution: The national government failed to pay the compensation. On 09 May 1984, the heirs of Luis Santos, who owned 76,589 square meters of the expropriated area, filed a manifestation and motion seeking payment. On 07 June 1984, the RTC issued a writ of execution for the unpaid sum of P1,058,655.05. When the order was not complied with, the heirs moved for the release of P72,683.55, representing their share of the initial deposit, which the RTC granted on 10 July 1984.
• Change in Public Use and Subsequent Motions: President Estrada later issued Proclamation No. 22, transferring 20 hectares of the expropriated property to the Bulacan State University and 5 hectares for carabao propagation, with the rest retained by the PIA. The heirs remained unpaid. On 16 September 1999, the Republic filed a manifestation and motion to deposit P4,664,000.00 as just compensation. The heirs opposed, moving instead to adjust the compensation to the current zonal valuation of P5,000.00 per square meter or, alternatively, for the return of the property.
• RTC 2000 Order: On 01 March 2000, the RTC vacated its 1979 decision, declaring it unenforceable under Section 6, Rule 39 of the Rules of Court due to prescription, denied the Republic's motion to deposit, and ordered the return of the property to the heirs pursuant to Provincial Government of Sorsogon vs. Vda. de Villaroya.
• CA Dismissal: The Republic elevated the case to the Court of Appeals via certiorari, but the petition was dismissed outright based on the then-existing interpretation of Section 4, Rule 65 regarding the reglementary period to file certiorari after a denied motion for reconsideration.

• Prescription: Petitioner argued that the heirs' motion for payment in 1984, and the subsequent disbursement, interrupted the five-year prescriptive period to enforce the 1979 judgment by motion under Section 6, Rule 39 of the Rules of Court.
• Estoppel: The receipt of partial compensation (P72,683.55) by the heirs in 1984 constituted partial compliance, estopping them from invoking prescription.
• Public Interest: The expropriated property is of public nature and devoted to public use, warranting the execution of the judgment for payment rather than the return of the property.

• Prescription of Judgment: Respondents contended that the failure to execute the 1979 judgment within five years rendered it unenforceable by motion under Section 6, Rule 39.
• Interruption of Period: The 1984 motion for payment was filed by the respondents, not the prevailing party (petitioner), and thus did not interrupt the prescriptive period. The partial payment of P72,683.55 was merely a release of the initial deposit, not a partial payment by the government.
• Invalid Transfer: Respondents questioned the PIA's right to transfer ownership of a portion of the property to the Bulacan State University while just compensation remained unpaid.
• Return of Property: Relying on Provincial Government of Sorsogon vs. Vda. de Villaroya, respondents argued that the alternative remedy of recovering the expropriated property was proper due to non-payment.

• Prescription of Execution: Whether the trial court correctly vacated the 1979 expropriation judgment on the ground of prescription under Section 6, Rule 39 of the Rules of Court.
• Remedy of the Unpaid Owner: Whether unpaid landowners in an expropriation case instituted by the national government are entitled to the return of the property as an alternative remedy for non-payment.
• Change in Public Use: Whether the transfer of portions of the expropriated property to other government entities invalidates the public use character of the taking.
• Just Compensation and Interest: Whether legal interest at 12% per annum from the time of taking is the proper measure of just compensation to offset currency fluctuation, in lieu of applying Article 1250 of the Civil Code on extraordinary inflation.

• Prescription of Execution: The trial court erred in vacating the 1979 judgment on the ground of prescription. The Republic's occupation, utilization, and exercise of dominion over the property pursuant to the final judgment amounted to at least partial compliance or satisfaction of the judgment, preempting any claim of prescription based on non-execution. Furthermore, laches can be invoked against the heirs, who waited five years after the judgment became final before instituting proceedings for payment.
• Remedy of the Unpaid Owner: The return of the expropriated property was incorrectly ordered. Unlike local governments whose power of eminent domain is merely delegated, the national government possesses the inherent power of eminent domain. Condemnation is an in rem proceeding that vests paramount title in the public under a new and independent title. The right of the expropriatory authority is not akin to that of an unpaid seller in ordinary sales where rescission applies. The unpaid owner's sole remedy is to demand the fair market value of the property.
• Change in Public Use: The change in the specific public use of the property does not invalidate the taking. Upon expropriation, the property assumed a public character. The condemnor, as owner, has the right to alter the use of the property, provided the new use remains for a public purpose, which the transfer to a state university and for carabao propagation satisfies.
• Just Compensation and Interest: Just compensation includes legal interest from the time of taking until actual payment to place the owner in as good a position as before the taking. The imposition of 12% per annum interest on the value of the property from the time of taking eliminates the issue of currency fluctuation. Article 1250 of the Civil Code on extraordinary inflation has strict application only to contractual obligations and cannot be applied to alter the value of currency in expropriation cases absent a contractual agreement.

• Inherent Power of Eminent Domain — The right of eminent domain is an ultimate right of the sovereign power, fundamental to the independent existence of a State, requiring no constitutional recognition but merely subject to regulatory limitations of public use and just compensation. It reaches every form of property the State needs for public use.
• Effect of Condemnation Proceedings — Expropriation is an in rem proceeding that acts upon the property. After condemnation, paramount title vests in the public under a new and independent title, binding upon all claimants. The remedy of an unpaid landowner is not rescission or recovery of possession, but the demand for fair market value, provided the property remains devoted to public use.
• Just Compensation as Market Value with Interest — Just compensation is the sum equivalent to the market value of the property at the time of taking. If property is taken before compensation is deposited, the final compensation must include legal interest computed from the time of taking to the time of actual payment, ensuring the owner is placed in as good a position as before the taking occurred.
• Curative Statutes and Procedural Amendments — Curative statutes are enacted to cure defects in prior laws or validate legal proceedings that would otherwise be void. They are retroactive and apply to all cases still pending with the courts at the time of their effectivity, such as the amendment to Section 4, Rule 65 granting a fresh 60-day period to file certiorari from notice of denial of a motion for reconsideration.

• "Expropriation proceedings are not adversarial in the conventional sense, for the condemning authority is not required to assert any conflicting interest in the property. Thus, by filing the action, the condemnor in effect merely serves notice that it is taking title and possession of the property, and the defendant asserts title or interest in the property, not to prove a right to possession, but to prove a right to compensation for the taking."
• "After condemnation, the paramount title is in the public under a new and independent title; thus, by giving notice to all claimants to a disputed title, condemnation proceedings provide a judicial process for securing better title against all the world than may be obtained by voluntary conveyance."
• "In arguing for the return of their property on the basis of non-payment, respondents ignore the fact that the right of the expropriatory authority is far from that of an unpaid seller in ordinary sales, to which the remedy of rescission might perhaps apply."

• Provincial Government of Sorsogon vs. Vda. de Villaroya, 153 SCRA 291 — Distinguished. The case allowed the return of property to unpaid landowners but involved a municipal government, which possesses merely a delegated and limited power of eminent domain, unlike the inherent power vested in the national government.
• Valdehueza vs. Republic, 17 SCRA 107 — Followed. Ruled that unpaid landowners of property condemned by the national government are not entitled to recover possession if the property is still devoted to public use, but only to demand fair market value.
• Alfonso vs. Pasay City, 106 Phil. 1017 — Followed. Denied recovery of possession of property taken for public use even without prior expropriation proceedings, limiting the landowner's relief to recovering compensation at market value at the time of taking.
• Narzoles vs. NLRC, 341 SCRA 533 — Followed. Discussed the curative nature of the amendment to Section 4, Rule 65, which reverted to the old rule allowing a fresh 60-day period from notice of denial of a motion for reconsideration to file a petition for certiorari.
• Eastern Shipping Lines, Inc. vs. Court of Appeals, 234 SCRA 78 — Followed. Basis for imposing a 12% per annum interest on the just compensation, the allowance of interest being considered an effective forbearance.

• Section 6, Rule 39, Rules of Court — Provides that a final and executory judgment may be executed on motion within five years from the date of its entry; after such time, it may be enforced by independent action before it is barred by the Statute of Limitations. The trial court used this to vacate the 1979 judgment, a ruling reversed by the Supreme Court.
• Section 4, Rule 65, 1997 Rules of Civil Procedure (as amended by A.M. No. 00-2-03 S.C.) — Provides that a petition for certiorari shall be filed not later than sixty (60) days from notice of the judgment, order, or resolution. In case a motion for reconsideration is timely filed, the 60-day period is counted from notice of the denial of said motion. Applied as a curative amendment to justify giving due course to the petition despite the CA's outright dismissal.
• Article 1250, Civil Code — Provides that in case of extraordinary inflation or deflation, the value of the currency at the time of the establishment of the obligation shall be the basis for payment. Held inapplicable to expropriation cases because it strictly applies only to contractual obligations.

Davide, Jr., C.J. (Chairman), Kapunan, Ynares-Santiago, and Austria-Martinez, JJ.