Republic vs. Heirs of Borbon

When an expropriation proceeding is discontinued due to the cessation of the public purpose for which the property was sought, the expropriator who had already taken possession of the property is obliged to pay reasonable compensation or damages to the landowner for the period of such possession, reckoned from the time of actual taking (entry) until the restoration of possession, rather than just compensation based on the full market value of the property.

The National Power Corporation (NAPOCOR), a government-owned and controlled corporation vested with authority under Republic Act No. 6395 to develop hydro-electric power and construct transmission lines, entered a 14,257-square meter property located in Barangay San Isidro, Batangas City in February 1993 to construct and maintain transmission lines for the 230 KV Mahabang Parang-Pinamucan Power Transmission Project. The property was registered under Transfer Certificate of Title No. T-9696 in the name of the Heirs of Saturnino Q. Borbon. NAPOCOR entered the property without the owners' consent, installed five transmission line posts and five woodpoles, and destroyed some fruit trees.

• NAPOCOR entered the property in February 1993, prior to filing the expropriation complaint, and installed transmission line posts and woodpoles for the 230 KV Mahabang Parang-Pinamucan Power Transmission Project.
• The entry was made without the owners' consent and without payment of just compensation or deposit of the assessed value as required by law.
• The property had a total area of 14,257 square meters and was registered under Transfer Certificate of Title No. T-9696 in the name of the Heirs of Saturnino Q. Borbon.
• The property was reclassified from agricultural to industrial land on June 30, 1994, pursuant to the Amended Zoning Ordinance of Batangas City approved by the Housing and Land Use Regulatory Board on February 15, 1993.
• The transmission lines passed through the center of the land, dividing it into three lots and effectively rendering the entire property inutile for future use.
• NAPOCOR destroyed fruit trees and plants during the construction of the transmission lines without payment.
• During the pendency of the appeal before the Supreme Court, NAPOCOR manifested that the transmission lines installed on the property had been retired, eliminating the public purpose for the expropriation.
• NAPOCOR had not presented any board resolution formally resolving to discontinue the expropriation, but submitted a Memorandum dated December 13, 2012 and a Certificate of Inspection/Accomplishment dated February 5, 2005 attesting to the retirement of the transmission lines.

• NAPOCOR argued that the expropriation proceedings should be discontinued because the transmission lines had been retired, rendering the public purpose for the expropriation obsolete.
• It contended that continuing the proceedings would unduly burden the Government with payment of just compensation for property it no longer requires.
• It cited Metropolitan Water District v. De los Angeles as authority for the dismissal of expropriation proceedings when the land is no longer necessary for public use.
• It prayed that the compensation to be awarded be reduced by the equivalent of the benefit received by the respondents from the land during the time of occupation, or that the case be remanded to the trial court for determination of reasonable compensation.

• The respondents (Heirs of Borbon) maintained that NAPOCOR entered the property without prior negotiation and without consent, destroying fruit trees and rendering the entire property inutile.
• They argued that the transmission lines divided the property into three lots, diminishing its potential value and depriving them of beneficial enjoyment.
• They demanded just compensation for the entire 14,257 square meters at P1,000.00 per square meter (later accepting the commissioners' valuation of P550.00/sqm) because the property was classified as industrial land at the time of taking.
• They opposed the discontinuance of the proceedings, effectively seeking payment for the taking that had already occurred.

• Procedural: Whether the Supreme Court may grant the motion to discontinue expropriation proceedings pending appeal despite the lack of a formal board resolution from NAPOCOR formally resolving to discontinue the proceedings.
• Substantive Issues:
  • Whether the expropriation proceedings should be dismissed due to the cessation of the public purpose.
  • Whether NAPOCOR is liable for compensation despite the dismissal of the expropriation proceedings, and if so, what is the proper basis and reckoning period for such compensation.

• Procedural: The Supreme Court held that while NAPOCOR failed to present a board resolution formally resolving to discontinue the expropriation proceedings, the Memorandum dated December 13, 2012 and the Certificate of Inspection/Accomplishment dated February 5, 2005 attached to the motion were sufficient to establish that the expropriation was no longer for a public purpose. Citing Metropolitan Water District v. De los Angeles, the Court ruled that it is the duty of the court to dismiss the action at any stage if it appears that the expropriation is not for public use, regardless of the presence of a formal board resolution.
• Substantive:
  • The Court dismissed the expropriation proceedings because the retirement of the transmission lines eliminated the public purpose essential to the exercise of eminent domain. Public use is a fundamental basis for expropriation and must exist throughout the proceedings; its cessation renders the judgment invalid for lack of an indispensable element.
  • However, the Court ruled that NAPOCOR must pay reasonable compensation to the respondents for the disturbance of their property rights from the time of entry (March 1993) until the restoration of possession. Since NAPOCOR entered without consent and without prior payment of just compensation, and effectively rendered the property inutile by dividing it into three lots, it is liable for actual or compensatory damages for the period of possession.
  • The taking occurred in March 1993, not May 1995 (filing of complaint), because possession was taken prior to the filing of the expropriation suit. Just compensation is determined as of the time of taking when possession precedes filing.
  • Since the property is to be returned to the owners, full market value (just compensation) is not payable; instead, compensation should be based on what the owners actually lost, including the value of destroyed fruit trees, plants, and crops, and the deprivation of use of the property.
  • The case was remanded to the RTC to try the case as an action for damages, allowing the parties to litigate the extent of the taking and the value of compensation for the period of disturbance.

• Power of Eminent Domain — The inherent right of the sovereign to appropriate private property for public use upon payment of just compensation. The exercise of this power requires two mandatory elements: (1) public purpose, and (2) just compensation. In this case, the Court emphasized that public purpose must be maintained throughout the proceedings; its cessation justifies dismissal.
• Public Use — Traditionally understood as "use by the public," but now expanded to include "public interest," "public benefit," and "public convenience." The Court held that public use is the fundamental basis for expropriation, and the moment it appears at any stage that the expropriation is not for public use, the action must necessarily fail.
• Time of Taking — When the expropriator takes possession prior to the filing of the expropriation suit, just compensation is determined as of the time of taking, not as of the filing of the complaint. Taking occurs when the owner is deprived of possession or the ordinary use of the property, or when there is practical destruction or material impairment of value.
• Effect of Discontinuance — When expropriation proceedings are discontinued due to cessation of public purpose, the expropriator who has taken possession must pay reasonable compensation for the period of possession. The dismissal converts the case into an action for damages where the landowner may recover for the disturbance of property rights, destruction of improvements, and loss of use during the period of occupation.

• "The expropriator who has taken possession of the property subject of expropriation is obliged to pay reasonable compensation to the landowner for the period of such possession although the proceedings had been discontinued on the ground that the public purpose for the expropriation had meanwhile ceased."
• "The right of eminent domain is 'the ultimate right of the sovereign power to appropriate, not only the public but the private property of all citizens within the territorial sovereignty, to public purpose.'"
• "There is a 'taking' when the owner is actually deprived or dispossessed of his property; when there is a practical destruction or a material impairment of the value of his property or when he is deprived of the ordinary use thereof."
• "The very moment that it appears at any stage of the proceedings that the expropriation is not for a public use, the action must necessarily fail and should be dismissed, for the reason that the action cannot be maintained at all except when the expropriation is for some public use."

• Metropolitan Water District v. De los Angeles (55 Phil. 776) — Controlling precedent establishing that expropriation proceedings must be dismissed when the property is no longer necessary for public use, and that the court has the duty to dismiss the action at any stage when public use ceases.
• Mactan-Cebu International Airport Authority v. Lozada, Sr. (G.R. No. 176625) — Cited for the principle that public use must be maintained throughout the expropriation proceedings, and that abandonment of the public purpose entitles the former owner to seek reversion of the property subject to return of just compensation received.
• Ansaldo v. Tantuico, Jr. (G.R. No. L-50147) — Cited for the rule that when possession is taken prior to the filing of the expropriation suit, the just compensation is determined as of the time of taking, not the filing of the complaint.
• National Power Corporation v. Zabala (G.R. No. 173520) — Cited for the principle that high-tension electric current passing through transmission lines perpetually deprives property owners of normal use, requiring compensation.
• Republic v. Libunao (G.R. No. 166553) — Cited alongside other NPC cases on the effects of transmission lines on property use and the obligation to pay just compensation.
• Asia's Emerging Dragon Corporation v. Department of Transportation and Communications (G.R. No. 169914) — Cited for the expanded definition of public use to include public interest, benefit, and convenience.

• 1987 Constitution, Article III, Section 9 — Mandates that private property shall not be taken for public use without just compensation; cited to emphasize that the Government must pay just compensation before depriving any person of property.
• Republic Act No. 6395 — The National Power Corporation charter, vesting NAPOCOR with authority to undertake development of hydro-electric generation and construction of transmission lines.
• Rules of Court, Rule 67, Section 4 — Provides that after rendition of an order of expropriation, the plaintiff shall not be permitted to dismiss or discontinue the proceeding except on such terms as the court deems just and equitable; cited as the basis for conditioning the dismissal on payment of reasonable compensation.