Background

The case revolves around MIAA's occupation of private lands for airport expansion without proper expropriation proceedings. Initially, MIAA included the subject lots in its expropriation case but later moved to exclude some portions. Despite the exclusion, MIAA continued to occupy these portions without paying just compensation. The landowners, led by the Spouses Nocom, filed a case for recovery of possession and payment of rentals. The lower courts ruled in favor of the landowners, prompting MIAA to appeal to the Supreme Court.

Facts

• 1. Lots No. 2817, 2818, and 2819 situated in Ibayo, Parañaque were originally owned by Emiliano Cruz.
• 2. MIAA initiated expropriation proceedings for these lots as part of NAIA expansion.
• 3. MIAA later moved to exclude some portions of these lots from expropriation.
• 4. The excluded lots were registered under the names of the heirs of Cruz and later transferred to the Spouses Nocom and others.
• 5. MIAA continued to occupy portions of the excluded lots without proper expropriation proceedings or payment of just compensation.

Arguments of the Petitioners

• 1. The Court of Appeals erred in not finding grave abuse of discretion on the part of the RTC for taking cognizance of respondents' civil complaint despite petitioner's claim of sovereign immunity and res judicata.
• 2. MIAA's use of the subject lots was an exercise of governmental function, not proprietary function.
• 3. Respondents are not entitled to rental payments and interest.
• 4. The subject lots were part of the original expropriation proceedings and should not have been excluded.

Arguments of the Respondents

• 1. MIAA waived its sovereign immunity through its charter which allows it to sue and be sued.
• 2. MIAA's use of the subject lots was proprietary in nature, not a governmental function.
• 3. The subject lots were validly excluded from the expropriation proceedings as per the Court of Appeals' July 21, 1992 Resolution.
• 4. Respondents are entitled to rental payments and interest for MIAA's use of their property without just compensation.

Issues

• 1. Whether MIAA can invoke sovereign immunity to avoid paying just compensation.
• 2. Whether the principle of res judicata applies to bar respondents' claims.
• 3. Whether MIAA's use of the subject lots was an exercise of governmental or proprietary function.
• 4. Whether respondents are entitled to compensation, and if so, in what form and amount.

Ruling

• 1. MIAA cannot invoke sovereign immunity to avoid paying just compensation for private property taken for public use.
• 2. Res judicata does not apply as there is no identity of causes of action between the expropriation case and the recovery of possession case.
• 3. MIAA's use of the subject lots was an exercise of its power of eminent domain, not a proprietary function.
• 4. Respondents are entitled to just compensation, not rental payments. The just compensation should be calculated based on the value at the time of taking (1995) plus interest, using the present value method.

Rationale

• 1. The State cannot hide behind sovereign immunity when it takes private property for public use without following proper expropriation procedures.
• 2. The expropriation case and the recovery of possession case have different causes of action, precluding the application of res judicata.
• 3. MIAA's use of the lots for airport operations is a public purpose, not a commercial or proprietary function.
• 4. Just compensation, not rental payment, is the appropriate remedy when the government takes private property for public use. The present value method ensures fair compensation considering the delay in payment.

Doctrines

• 1. Doctrine of Sovereign Immunity: The State may not be sued without its consent. However, this doesn't apply when the State takes private property without proper expropriation proceedings.
• 2. Res Judicata: Requires identity of parties, subject matter, and causes of action between two cases. Not applicable here due to different causes of action.
• 3. Eminent Domain: The power of the State to take private property for public use upon payment of just compensation.
• 4. Just Compensation: Must be fair, reasonable, and prompt. Calculated based on the fair market value at the time of taking, plus interest to account for delay in payment.
• 5. Present Value Method: A new approach introduced by the Court to calculate just compensation, considering the time value of money and opportunity cost.

Key Excerpts

• 1. "To be sure, this Court — as the staunch guardian of the citizens' rights and welfare — cannot sanction an injustice so patent on its face, and allow itself to be an instrument in the perpetration thereof."
• 2. "It is unthinkable then that precisely because there was a failure to abide by what the law requires, the government would stand to benefit."
• 3. "For it to be legitimately just, one must look not at the taker's gain, but at the owner's loss."
• 4. "Apart from the requirement that compensation for expropriated land must be fair and reasonable, compensation, to be 'just,' must also be made without delay."

Precedents Cited

• 1. Ministerio v. Court of First Instance of Cebu (1970): Established that sovereign immunity doesn't apply when the government takes private property without expropriation proceedings.
• 2. Republic v. Sandiganbayan (1991): Reiterated that sovereign immunity doesn't apply in cases of uncompensated taking of private property.
• 3. Forfom Development Corporation v. Philippine National Railways (2008): Used to illustrate how just compensation should be determined when there's a taking without expropriation proceedings.
• 4. Apo Fruits Corporation v. Land Bank of the Philippines (2010): Emphasized the need for prompt payment of just compensation and the award of interest for delays.
• 5. National Power Corporation v. Heirs of Macabangkit Sangkay (2011) and National Power Corporation v. Spouses Saludares (2012): Discussed as examples where the Court deviated from the general rule of basing just compensation on the time of taking.

Statutory and Constitutional Provisions

• 1. Article III, Section 9 (Bill of Rights) of the 1987 Constitution: "Private property shall not be taken for public use without just compensation."
• 2. Article XVI, Section 3 of the 1987 Constitution: "The State may not be sued without its consent."