MERALCO v. Pineda

Facts:

Petitioner Manila Electric Company (MERALCO) is a domestic corporation duly organized and existing under the laws of Philippines. Respondent Honorable Judge Gregorio G. Pineda is impleaded in his official capacity as the presiding judge of CFI Rizal, Branch XXII, Pasig, Metro Manila. While private respondents Teofilo Arayon, Sr., Gil de Guzman, Lucito Santiago and Teresa Bautista are owners in fee simple of the expropriated property situated at Malaya, Pililla, Rizal.

On October 29, 1974, a complaint for eminent domain was filed by petitioner MERALCO against 42 defendants with CFI Rizal. The complaint alleges that for the purpose of constructing a 230 KV Transmission line from Barrio Malaya to Tower No. 220 at Pililla, Rizal, petitioner needs portions of the land of the private respondents consisting of an aggregate area of 237,321 square meters. Despite petitioner's offers to pay compensation and attempts to negotiate with the respondents', the parties failed to reach an agreement.

Private respondents question in their MD the petitioner's legal existence and the area sought to be expropriated as too excessive.

Respondents Gil de Guzman and Teresa Bautista filed a motion for contempt of court alleging, among other things that petitioner's corporate existence had expired in 1969 and therefore it no longer exists under Philippine Laws.

The court issued an Order authorizing the petitioner to take or enter upon the possession of the property sought to be expropriated. Private respondents filed a motion for withdrawal of deposit claiming that they are entitled to be paid at P40.00 per square meter or an approximate sum of P272,000.00 and prayed that they be allowed to withdraw the sum of P71,771.50 from petitioner's deposit-account with the Philippine National Bank, Pasig Branch. However, respondents motion was denied.

In the intervening period, Branch XXII became vacant when the presiding Judge Nelly Valdellon-Solis retired, so respondent Judge Pineda acted on the motions filed with Branch XXII.

Pursuant to a government policy, the petitioners sold to Napocor the power plants and transmission lines, including the transmission lines traversing private respondents' property.

Respondent court issued an Order appointing the members of the Board of Commissioners to make an appraisal of the properties. Petitioner filed an MD on the ground that it has lost all its interests over the transmission lines and properties under expropriation because of their sale to the Napocor. In view of this motion, the work of the Commissioners was suspended.

Private respondents filed another motion for payment. But despite the opposition of the petitioner, the respondent court issued the Order granting the motion for payment of private respondents.

Private respondents filed an Omnibus Motion praying that they be allowed to withdraw an additional sum of P90,125.50 from petitioner's deposit-account with PNB which was granted.

Private respondents filed another motion praying that petitioner be ordered to pay the sum of P169, 200.00.

Petitioner filed an MR of the Orders and to declare private respondents in contempt of court for forging or causing to be forged the receiving stamp of petitioner's counsel and falsifying or causing to be falsified the signature of its receiving clerk in their Omnibus Motion.

Respondent court denied the petitioner's MR and motion for contempt.

Hence, this petition.

Subsequently, the respondent court issued an Order granting the private respondents' motion for execution pending appeal, thus requiring petitioner to deposit P52,600.00 representing the consideration paid by Napocor for the property it bought from petitioner which includes the subject matter of this case, computed at P200.55 per square meter and to render an accounting.

Petitioner filed a petition for preliminary injunction with this Court seeking to enjoin respondent judge and all persons acting under him from enforcing the Order.

SC issued a TRO addressed to respondent judge. A motion to lift the restraining order was filed by the respondents. Despite a series of oppositions and motions to lift the said order, SC reiterated its stand and noted that the restraining order is still effective.

Issue:

Whether or not the respondent court can dispense with the assistance of a Board of Commissioners in an expropriation proceeding and determine for itself the just compensation.

Held:

The applicable laws in the case at bar are Sections 5 and 8 of Rule 67 of the Revised Rules of Court. The said sections particularly deal with the ascertainment of compensation and the court's action upon commissioners' report.

SC already emphasized in the case of Municipality of Biñan v. Hon. Jose Mar Garcia (G.R. No. 69260, December 22, 1989, 180 SCRA 576, 583-584) the procedure for eminent domain, to wit:

There are two (2) stages in every action of expropriation. 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 in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint". An order of dismissal, if this be ordained, would be a final one, of course, since it finally disposes of the action and leaves nothing more to be done by the Court on the merits. So, too, would an order of condemnation be a final one, for thereafter, as the Rules expressly state, in the proceedings before the Trial Court, "no objection to the exercise of the right of condemnation (or the propriety thereof) shall be filed or heard."

The second phase of the eminent domain action is concerned with the determination by the Court of "the just compensation for the property sought to be taken." This is done by the Court with the assistance of not more than three (3) commissioners. The order fixing the just compensation on the basis of the evidence before, and findings of, the commissioners would be final, too. It would finally dispose of the second stage of the suit, and leave nothing more to be done by the Court regarding the issue. Obviously, one or another of the parties may believe the order to be erroneous in its appreciation of the evidence or findings of fact or otherwise. Obviously, too, such a dissatisfied party may seek reversal of the order by taking an appeal therefrom.

Respondent judge, in the case at bar, arrived at the valuation of P40.00 per square meter on a property declared for real estate tax purposes at P2.50 per hectare on the basis of a "Joint Venture Agreement on Subdivision and Housing Projects" executed by A.B.A Homes and private. This agreement was merely attached to the motion to withdraw from petitioner's deposit. Respondent judge arrived at the amount of just compensation on its own, without the proper reception of evidence before the Board of Commissioners. Private respondents as landowners have not proved by competent evidence the value of their respective properties at a proper hearing. Likewise, petitioner has not been given the opportunity to rebut any evidence that would have been presented by private respondents. In an expropriation case such as this one where the principal issue is the determination of just compensation, a trial before the Commissioners is indispensable to allow the parties to present evidence on the issue of just compensation. Contrary to the submission of private respondents, the appointment of at least three (3) competent persons as commissioners to ascertain just compensation for the property sought to be taken is a mandatory requirement in expropriation cases. While it is true that the findings of commissioners may be disregarded and the court may substitute its own estimate of the value, the latter may only do so for valid reasons, i.e., where the Commissioners have applied illegal principles to the evidence submitted to them or where they have disregarded a clear preponderance of evidence, or where the amount allowed is either grossly inadequate or excessive (Manila Railroad Company v. Velasquez, 32 Phil. 286). Thus, trial with the aid of the commissioners is a substantial right that may not be done away with capriciously or for no reason at all. Moreover, in such instances, where the report of the commissioners may be disregarded, the trial court may make its own estimate of value from competent evidence that may be gathered from the record. The aforesaid joint venture agreement relied upon by the respondent judge, in the absence of any other proof of valuation of said properties, is incompetent to determine just compensation.

Prior to the determination of just compensation, the property owners may rightfully demand to withdraw from the deposit made by the condemnor in eminent domain proceedings. Upon an award of a smaller amount by the court, the property owners are subject to a judgment for the excess or upon the award of a larger sum, they are entitled to a judgment for the amount awarded by the court. Thus, when the respondent court granted in the Orders dated December 4, 1981 and December 21, 1981 the motions of private respondents for withdrawal of certain sums from the deposit of petitioner, without prejudice to the just compensation that may be proved in the final adjudication of the case, it committed no error.

Meralco had already ceded and in fact lost all its rights and interests over the aforesaid parcels of land in favor of Napocor. In addition, the same contract reveals that the Napocor was previously advised and actually has knowledge of the pending litigation and proceedings against Meralco (see Rollo, pp. 342-343). Hence, We find the contention of the petitioner tenable. It is therefore proper for the lower court to either implead the Napocor in substitution of the petitioner or at the very least implead the former as party plaintiff.

All premises considered, this Court is convinced that the respondent judge's act of determining and ordering the payment of just compensation without the assistance of a Board of Commissioners is a flagrant violation of petitioner's constitutional right to due process and is a gross violation of the mandated rule established by the Revised Rules of Court.

Petition is GRANTED.