EN BANC

REPUBLIC OF THE PHILIPPINES, G.R. No. 166429

Represented by Executive Secretary

Eduardo R. Ermita, the DEPARTMENT

OF TRANSPORTATION AND Present:

COMMUNICATIONS (DOTC), and the

MANILA INTERNATIONAL AIRPORT DAVIDE, JR.,  C.J.,

AUTHORITY (MIAA), PUNO,

Petitioners, PANGANIBAN,

' QUISUMBING,

YNARES-SANTIAGO,

SANDOVAL-GUTIERREZ,

CARPIO,

' -versus- AUSTRIA-MARTINEZ,

CORONA,

CARPIO-MORALES,

CALLEJO, SR.,

AZCUNA,

HON. HENRICK F. GINGOYON, TINGA,

In his capacity as Presiding CHICO-NAZARIO, and

Judge of the Regional Trial Court, GARCIA, JJ.

Branch 117, Pasay City and

PHILIPPINE INTERNATIONAL AIR

TERMINALS CO., INC.,

Respondents. Promulgated:

December 19, 2005

x---------------------------------------------------------------------- x

DECISION

TINGA, J.:

The Ninoy Aquino International Airport Passenger Terminal III (NAIA

3) was conceived, designed and constructed to serve as the
country's show window to the world. Regrettably, it has spawned
controversies. Regrettably too, despite the apparent completion of
the terminal complex way back it has not yet been operated. This
has caused immeasurable economic damage to the country, not to
mention its deplorable discredit in the international community.

In the first case that reached this Court, Agan v. PIATCO, [1] the

contracts' which the Government had with the contractor were
voided for being contrary to law and public policy. The second case
now before the Court involves the matter of just compensation due
the contractor for the terminal complex it built. We decide the case
on the basis of fairness, the same norm that pervades both the
Court's 2004 Resolution in the first case and the latest expropriation
law.

The present controversy has its roots with the promulgation of the
Court's decision in Agan v. PIATCO, [2] promulgated in 2003 (2003
Decision). This decision nullified the 'Concession Agreement for the
Build-Operate-and-Transfer Arrangement of the Ninoy Aquino
International Airport Passenger Terminal III entered into between
the Philippine Government (Government) and the Philippine
International Air Terminals Co., Inc. (PIATCO), as well as the
amendments and supplements thereto. The agreement had
authorized PIATCO to build a new international airport terminal
(NAIA 3), as well as a franchise to operate and maintain the said
terminal during the concession period of 25 years. The contracts
were nullified, among others, that Paircargo Consortium,
predecessor of PIATCO, did not possess the requisite financial
capacity when it was awarded the NAIA 3 contract and that the
agreement was' contrary to public policy. [3]

At the time of the promulgation of the 2003 Decision, the NAIA 3

facilities had already been built by PIATCO and were nearing
completion. [4] However, the ponencia was silent as to the legal
status of the NAIA 3 facilities following the nullification of the
contracts, as well as whatever rights of PIATCO for reimbursement
for its expenses in the construction of the facilities. Still, in his
Separate Opinion, Justice Panganiban, joined by Justice Callejo,
declared as follows:

Should government pay at all for reasonable expenses

incurred in the construction of the Terminal? Indeed it
 should, otherwise it will be unjustly enriching itself at
the expense of Piatco and, in particular, its funders,
contractors and investors ' both local and foreign .
After all, there is no question that the State needs and will
make use of Terminal III, it being part and parcel of the
critical infrastructure and transportation-related programs of
government. [5]

PIATCO and several respondents-intervenors filed their respective

motions for the reconsideration of the 2003 Decision. These motions
were denied by the Court in its Resolution  dated 21 January 2004
(2004 Resolution). [6] However, the Court this time squarely
addressed the issue of the rights of PIATCO to refund, compensation
or reimbursement for its expenses in the construction of the NAIA 3
facilities. The holding of the Court on this crucial point follows:

This Court, however, is not unmindful of the

reality that the structures comprising the NAIA IPT
III facility are almost complete and that funds have
been spent by PIATCO in their construction. For the
government to take over the said facility, it has to
compensate respondent PIATCO as builder of the
said structures. The compensation must be just and
in accordance with law and equity for the
government can not unjustly enrich itself at the
expense of PIATCO and its investors. [7]

 
 After the promulgation of the rulings' in Agan, the NAIA 3
facilities have remained in the possession of PIATCO, despite the
avowed intent of the Government to put the airport terminal into
immediate operation. The Government and PIATCO conducted
several rounds of negotiation regarding the NAIA 3 facilities. [8] It
also appears that arbitral proceedings were commenced before the
International Chamber of Commerce International Court of
Arbitration and the International Centre for the Settlement of
Investment Disputes, [9] although the Government has raised
jurisdictional questions before those two bodies. [10]

Then, on 21 December 2004, the Government [11] filed

a Complaint for expropriation with the Pasay City Regional Trial
Court (RTC), together with an Application for Special Raffle seeking
the immediate holding of a special raffle. The Government sought
upon the filing of the complaint the issuance of a writ of possession
authorizing it to take immediate possession and control over the
NAIA 3 facilities.

The Government also declared that it had deposited the amount

of P 3,002,125,000.00 [12] (3 Billion) [13] in Cash with the Land Bank of
the Philippines, representing the NAIA 3 terminal's assessed value for taxation
purposes. [14]

The case [15] was raffled to Branch 117 of the Pasay City RTC, presided by
respondent judge Hon. Henrick F. Gingoyon (Hon. Gingoyon). On the same day that
the Complaint was filed, the RTC issued an Order [16] directing the issuance of a
writ of possession to the Government, authorizing it to 'take or enter upon the
possession of the NAIA 3 facilities. Citing the case of City of v. Serrano, [17] the
RTC noted that it had the ministerial duty to issue the writ of possession upon the
filing of a complaint for expropriation sufficient in form and substance, and upon
deposit made by the government of the amount equivalent to the assessed value of
the property subject to expropriation. The RTC found these requisites present,
particularly noting that '[t]he case record shows that [the Government has]
deposited the assessed value of the [NAIA 3 facilities] in the Land Bank of the
Philippines, an authorized depositary, as shown by the certification attached to their
complaint. Also on the same day, the RTC issued a Writ of Possession. According to
PIATCO, the Government was able to take possession over the NAIA 3 facilities
immediately after the Writ of Possession was issued. [18]

However, on 4 January 2005, the RTC issued another Order designed to

supplement its 21 December 2004 Order and the Writ of Possession. In the 4
January 2005 Order, now assailed in the present petition, the RTC noted that its
earlier issuance of its writ of possession was pursuant to Section 2, Rule 67 of the
1997 Rules of Civil Procedure. However, it was observed that Republic Act No. 8974
(Rep. Act No. 8974), otherwise known as 'An Act to Facilitate the Acquisition of
Right-of-Way, Site or Location for National Government Infrastructure Projects and
For Other Purposes' and its Implementing Rules and Regulations (Implementing
Rules) had amended Rule 67 in many respects.

There are at least two crucial differences between the respective procedures under
Rep. Act No. 8974 and Rule 67. Under the statute, the Government is required to
make immediate payment to the property owner upon the filing of the complaint to
be entitled to a writ of possession, whereas' in Rule 67, the Government is required
only to make an initial deposit with an authorized government depositary.
Moreover, Rule 67 prescribes that the initial deposit be equivalent to the assessed
value of the property for purposes of taxation, unlike Rep. Act No. 8974 which
provides, as the relevant standard for initial compensation, the market value of the
property as stated in the tax declaration or the current relevant zonal valuation of
the Bureau of Internal Revenue (BIR), whichever is higher, and the value of the
improvements and/or structures using the replacement cost method.

 
Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974 and Section 10
of the Implementing Rules, the RTC made key qualifications to its earlier
issuances. First, it directed the Land Bank of the Philippines, Baclaran Branch (LBP-
Baclaran), to immediately release the amount of US$62,343,175.77 to PIATCO, an
amount which the RTC characterized as that which the Government 'specifically
made available for the purpose of this expropriation; and such amount to be
deducted from the amount of just compensation due PIATCO as eventually
determined by the RTC. Second, the Government was directed to submit to the RTC
a Certificate of Availability of Funds signed by authorized officials to cover the
payment of just compensation. Third, the Government was directed 'to maintain,
preserve and safeguard the NAIA 3 facilities or 'perform such as acts or activities in
preparation for their direct operation of the airport terminal, pending expropriation
proceedings and full payment of just compensation. However, the Government was
prohibited 'from performing acts of ownership like awarding concessions or leasing
any part of [NAIA 3] to other parties. [19]

The very next day after the issuance of the assailed 4 January 2005 Order, the
Government filed an Urgent Motion for Reconsideration, which was set for hearing
on 10 January 2005. On 7 January 2005, the RTC issued another Order, the second
now assailed before this Court, which appointed three (3) Commissioners to
ascertain the amount of just compensation for the NAIA 3 Complex. That same day,
the Government filed a Motion for Inhibition of Hon. Gingoyon.

The RTC heard the Urgent Motion for Reconsideration and Motion for Inhibition on

10 January 2005. On the same day, it denied these motions in an Omnibus
Order dated 10 January 2005. This is the third Order now assailed before this
Court. Nonetheless, while the Omnibus Order affirmed the earlier dispositions in the
4 January 2005 Order, it excepted from affirmance 'the superfluous part of
the Order prohibiting the plaintiffs from awarding concessions or leasing any part of
[NAIA 3] to other parties. [20]

Thus, the present Petition for Certiorari and Prohibition under Rule 65 was filed on
13 January 2005. The petition prayed for the nullification of the RTC orders dated 4
January 2005, 7 January 2005, and 10 January 2005, and for the inhibition of Hon.
Gingoyon from taking further action on the expropriation case. A concurrent prayer
for the issuance of a temporary restraining order and preliminary injunction was
granted by this Court in a Resolution  dated 14 January 2005. [21]

The Government, in imputing grave abuse of discretion to the acts of Hon.

Gingoyon, raises five general arguments, to wit:

(i) that Rule 67, not Rep. Act No. 8974, governs the present expropriation
proceedings;

(ii) that Hon. Gingoyon erred when he ordered the immediate release of the
amount of US$62.3 Million to PIATCO considering that the assessed value as
alleged in the complaint was only P 3 Billion;

(iii) that the RTC could not have prohibited the Government from enjoining the
performance of acts of ownership;

(iv) that the appointment of the three commissioners was erroneous; and

(v) that Hon. Gingoyon should be compelled to inhibit himself from the
expropriation case. [22]

 
Before we delve into the merits of the issues raised by the Government, it is
essential to consider the crucial holding of the Court in its 2004 Resolution in Agan,
which we repeat below:

This Court, however, is not unmindful of the reality that the

structures comprising the NAIA IPT III facility are almost complete and
that funds have been spent by PIATCO in their construction. For the
government to take over the said facility, it has to compensate
respondent PIATCO as builder of the said structures. The
compensation must be just and in accordance with law and equity
for the government can not unjustly enrich itself at the expense of
PIATCO and its investors. [23]

This pronouncement contains the fundamental premises which permeate this

decision of the Court. Indeed, Agan , final and executory as it is, stands as
governing law in this case, and any disposition of the present petition must conform
to the conditions laid down by the Court in its 2004 Resolution .

The 2004 Resolution Which Is

Law of This Case Generally

Permits Expropriation

The pronouncement in the 2004 Resolution is especially significant to this

case in two aspects, namely: (i) that PIATCO must receive payment of just
compensation determined in accordance with law and equity; and (ii)
that the government is barred from taking over NAIA 3 until such just
compensation is paid . The parties cannot be allowed to evade the directives laid
down by this Court through any mode of judicial action, such as the complaint for
eminent domain.

It cannot be denied though that the Court in the 2004 Resolution prescribed
mandatory guidelines which the Government must observe before it could acquire
the NAIA 3 facilities. Thus, the actions of respondent judge under review, as well as
the arguments of the parties must, to merit affirmation, pass the threshold test of
whether such propositions are in accord with the 2004 Resolution.

The Government does not contest the efficacy of this pronouncement in the
2004 Resolution , [24] thus its application

to the case at bar is not a matter of controversy. Of course, questions such as what
is the standard of 'just compensation and which particular laws and equitable
principles are applicable, remain in dispute and shall be resolved forthwith.

The Government has chosen to resort to expropriation, a remedy available under

the law, which has the added benefit of an integrated process for the determination
of just compensation and the payment thereof to PIATCO. We appreciate that the
case at bar is a highly unusual case, whereby the Government seeks to expropriate
a building complex constructed on land which the State already owns. [25] There is
an inherent illogic in the resort to eminent domain on property already owned by
the State. At first blush, since the State already owns the property on which NAIA 3
stands, the proper remedy should be akin to an action for ejectment.
 

However, the reason for the resort by the Government to expropriation proceedings
is understandable in this case. The 2004 Resolution, in requiring the payment of just
compensation prior to the takeover by the Government of

NAIA 3, effectively precluded it from acquiring possession or ownership of the NAIA

3 through the unilateral exercise of its rights as the owner of the ground on which
the facilities stood. Thus, as things stood after the 2004 Resolution, the right of the
Government to take over the NAIA 3 terminal was preconditioned by lawful order on
the payment of just compensation to PIATCO as builder of the structures.

The determination of just compensation could very well be agreed upon by the
parties without judicial intervention, and it appears that steps towards that direction
had been engaged in. Still, ultimately, the Government resorted to its inherent
power of eminent domain through expropriation proceedings. Is eminent domain
appropriate in the first place, with due regard not only to the law on expropriation
but also to the Court's 2004 Resolution in Agan ?

The right of eminent domain extends to personal and real property, and the NAIA 3
structures, adhered as they are to the soil, are considered as real property.  [26] The
public purpose for the expropriation is also beyond dispute. It should also be noted
that Section 1 of Rule 67 (on Expropriation) recognizes the possibility that the
property sought to be expropriated may be titled in the name of the

 
Republic of the Philippines, although occupied by private individuals, and in such
case an averment to that effect should be made in the complaint. The instant
expropriation complaint did aver that the NAIA 3 complex 'stands on a parcel of land
owned by the Bases Conversion Development Authority, another agency of [the
Republic of the Philippines]. [27]

Admittedly, eminent domain is not the sole judicial recourse by which the
Government may have acquired the NAIA 3 facilities while satisfying the requisites
in the 2004 Resolution. Eminent domain though may be the most effective, as well
as the speediest means by which such goals may be accomplished. Not only does it
enable immediate possession after satisfaction of the requisites under the law, it
also has a built-in procedure through which just compensation may be ascertained.
Thus, there should be no question as to the propriety of eminent domain
proceedings in this case.

Still, in applying the laws and rules on expropriation in the case at bar, we are
impelled to apply or construe these rules in accordance with the Court's
prescriptions in the 2004 Resolution to achieve the end effect that the Government
may validly take over the NAIA 3 facilities. Insofar as this case is concerned, the
2004 Resolution is effective not only as a legal precedent, but as the source of
rights and prescriptions that must be guaranteed, if not enforced, in the resolution
of this petition. Otherwise, the integrity and efficacy of the rulings of this Court will
be severely diminished.

It is from these premises that we resolve the first question, whether Rule 67 of the
Rules of Court or Rep. Act No. 8974 governs the expropriation proceedings in this
case.

Application of Rule 67 Violates

the 2004 Agan Resolution

 

The Government insists that Rule 67 of the Rules of Court governs the expropriation
proceedings in this case to the exclusion of all other laws. On the other hand,
PIATCO claims that it is Rep. Act No. 8974 which does apply. Earlier, we had
adverted to the basic differences between the statute and the procedural rule.
Further elaboration is in order.

Rule 67 outlines the procedure under which eminent domain may be exercised by
the Government. Yet by no means does it serve at present as the solitary guideline
through which the State may expropriate private property. For example, Section 19
of the Local Government Code governs as to the exercise by local government units
of the power of eminent domain through an enabling ordinance. And then there is
Rep. Act No. 8974, which covers expropriation proceedings intended for national
government infrastructure projects.

Rep. Act No. 8974, which provides for a procedure eminently more favorable to the
property owner than Rule 67, inescapably applies in instances when the national
government expropriates property 'for national government infrastructure
projects. [28] Thus, if expropriation is engaged in by the national government for
purposes other than national infrastructure projects, the assessed value standard
and the deposit mode prescribed in Rule 67 continues to apply.

Under both Rule 67 and Rep. Act No. 8974, the Government commences
expropriation proceedings through the filing of a complaint. Unlike in the case of
local governments which necessitate an authorizing ordinance before expropriation
may be accomplished, there is no need under Rule 67 or Rep. Act No. 8974 for
legislative authorization before the Government may proceed with a particular
exercise of eminent domain. The most crucial difference between Rule 67 and Rep.
Act No. 8974 concerns the particular essential step the Government has to
undertake to be entitled to a writ of possession.

 
 

The first paragraph of Section 2 of Rule 67 provides:

'SEC. 2. Entry of plaintiff upon depositing value with authorized

government depository. ' Upon the filing of the complaint or at any time
thereafter and after due notice to the defendant, the plaintiff shall have
the right to take or enter upon the possession of the real property
involved if he deposits with the authorized government depositary
an amount equivalent to the assessed value of the property for
purposes of taxation to be held by such bank subject to the orders
of the court. Such deposit shall be in money, unless in lieu thereof
the court authorizes the deposit of a certificate of deposit of a
government bank of the Republic of the Philippines payable on
demand to the authorized government depositary.

In contrast, Section 4 of Rep. Act No. 8974 relevantly states:

SEC. 4. Guidelines for Expropriation Proceedings . Whenever it is necessary to

acquire real property for the right-of-way, site or location for any national
government infrastructure project through expropriation, the appropriate
proceedings before the proper court under the following guidelines:
 
a) Upon the filing of the complaint, and after due notice to the
defendant, the implementing agency shall immediately pay the
owner of the property the amount equivalent to the sum of (1) one
hundred percent (100%) of the value of the property based on the
current relevant zonal valuation of the Bureau of Internal Revenue
 (BIR); and (2) the value of the improvements and/or structures as
determined under Section 7 hereof;
 
...
 
c) In case the completion of a government infrastructure project is
of utmost urgency and importance, and there is no existing
valuation of the area concerned, the implementing agency shall
immediately pay the owner of the property its proffered value
taking into consideration the standards prescribed in Section 5
hereof.

Upon completion with the guidelines abovementioned, the court

shall immediately issue to the implementing agency an order to take
possession of the property and start the implementation of the project.
 
Before the court can issue a Writ of Possession, the implementing
agency shall present to the court a certificate of availability of funds from
the proper official concerned.
 
...
 

As can be gleaned from the above-quoted texts, Rule 67 merely requires the
Government to deposit with an authorized government depositary the assessed
value of the property for expropriation for it to be entitled to a writ of possession.
On the other hand, Rep. Act No. 8974 requires that the Government make a direct
payment to the property owner before the writ may issue. Moreover, such payment
is based on the zonal valuation of the BIR in the case of land, the value of the
improvements or structures under the replacement cost method, [29] or if no such
valuation is available and in cases of utmost urgency, the proffered value of the
property to be seized.

 
It is quite apparent why the Government would prefer to apply Rule 67 in lieu of
Rep. Act No. 8974. Under Rule 67, it would not be obliged to immediately pay any
amount to PIATCO before it can obtain the writ of possession since all it need do is
deposit the amount equivalent to the assessed value with an authorized government
depositary. Hence, it devotes considerable effort to point out that Rep. Act No. 8974
does not apply in this case, notwithstanding the undeniable reality that NAIA 3 is a
national government project. Yet, these efforts fail, especially considering the
controlling effect of the 2004 Resolution in Agan on the adjudication of this case.

It is the finding of this Court that the staging of expropriation proceedings in this
case with the exclusive use of Rule 67 would allow for the Government to take over
the NAIA 3 facilities in a fashion that directly rebukes our 2004 Resolution in Agan .
This Court cannot sanction deviation from its own final and executory orders.

Section 2 of Rule 67 provides that the State 'shall have the right to take or enter
upon the possession of the real property involved if [the plaintiff] deposits with the
authorized government depositary an amount equivalent to the assessed value of
the property for purposes of taxation to be held by such bank subject to the orders
of the court. [30] It is thus apparent that under the provision, all the Government
need do to obtain a writ of possession is to deposit the amount equivalent to the
assessed value with an authorized government depositary.

Would the deposit under Section 2 of Rule 67 satisfy the requirement laid down in
the 2004 Resolution that '[f]or the government to take over the said facility, it has
to compensate respondent PIATCO as builder of the said structures' ? Evidently not.

If Section 2 of Rule 67 were to apply, PIATCO would be enjoined from receiving a

single centavo as just compensation before the Government takes over the NAIA 3
facility by virtue of a writ of possession. Such an injunction squarely contradicts the
letter and intent of the 2004 Resolution. Hence, the position of the Government
sanctions its own disregard or violation the prescription laid down by this Court that
there must first be just compensation paid to PIATCO before the Government may
take over the NAIA 3 facilities.

Thus, at the very least, Rule 67 cannot apply in this case without violating the 2004
Resolution. Even assuming that Rep. Act No. 8974 does not govern in this case, it
does not necessarily follow that Rule 67 should then apply. After all, adherence to
the letter of Section 2, Rule 67 would in turn violate the Court's requirement in the
2004 Resolution that there must first be payment of just compensation to PIATCO
before the Government may take over the property.

It is the plain intent of Rep. Act No. 8974 to supersede the system of deposit under
Rule 67 with the scheme of 'immediate payment in cases involving national
government infrastructure projects. The following portion of the Senate
deliberations, cited by PIATCO in its Memorandum, is worth quoting to cogitate on
the purpose behind the plain meaning of the law:

THE CHAIRMAN (SEN. CAYETANO). 'x x x Because the Senate believes

that, you know, we have to pay the landowners immediately not
by treasury bills but by cash.
 
Since we are depriving them, you know, upon payment, 'no, of
possession, we might as well pay them as much, 'no, hindi lang 50
percent .
 
xxx
 
THE CHAIRMAN (REP. VERGARA). Accepted.
 
xxx
 
THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really in favor of
the landowners, e.
 
 THE CHAIRMAN (REP. VERGARA). That's why we need to really secure the
availability of funds.
 
xxx
 
THE CHAIRMAN (SEN. CAYETANO). No, no. It's the same. It says
here: iyong first paragraph, diba? Iyong zonal ' talagang
magbabayad muna. In other words, you know, there must be a
payment kaagad. (TSN, Bicameral Conference on the Disagreeing
Provisions of House Bill 1422 and Senate Bill 2117, August 29, 2000, pp.
14-20)
 
xxx
 
THE CHAIRMAN (SEN. CAYETANO). Okay, okay, 'no. Unang-una, it is
not deposit, 'no. It's payment.
 
REP. BATERINA. It's payment, ho, payment. (Id., p. 63) [31]

It likewise bears noting that the appropriate standard of just compensation is a

substantive matter. It is well within the province of the legislature to fix the
standard, which it did through the enactment of Rep. Act No. 8974. Specifically, this
prescribes the new standards in determining the amount of just compensation in
expropriation cases relating to national government infrastructure projects, as well
as the manner of payment thereof. At the same time, Section 14 of the
Implementing Rules recognizes the continued applicability of Rule 67 on procedural
aspects when it provides 'all matters regarding defenses and objections to the
complaint, issues on uncertain ownership and conflicting claims, effects of appeal on
the rights of the parties, and such other incidents affecting the complaint shall be
resolved under the provisions on expropriation of Rule 67 of the Rules of Court. [32]

 
'Given that the 2004 Resolution militates against the continued use of the norm
under Section 2, Rule 67, is it then possible to apply Rep. Act No. 8974? We find
that it is, and moreover, its application in this case complements rather than
contravenes the prescriptions laid down in the 2004 Resolution.

Rep. Act No. 8974 Fits

to the Situation at Bar

and Complements the

2004 Agan Resolution

Rep. Act No. 8974 is entitled 'An Act To Facilitate The Acquisition Of Right-Of-
Way, Site Or Location For National Government Infrastructure Projects And For
Other Purposes. Obviously, the law is intended to cover expropriation proceedings
intended for national government infrastructure projects. Section 2 of Rep. Act No.
8974 explains what are considered as 'national government projects.

 
Sec. 2. National Government Projects . ' The term 'national
government projects' shall refer to all national government
infrastructure, engineering works and service contracts, including
projects undertaken by government-owned and controlled corporations,
all projects covered by Republic Act No. 6957, as amended by Republic
Act No. 7718, otherwise known as the Build-Operate-and-Transfer Law,
and other related and necessary activities, such as site acquisition,
supply and/or installation of equipment and materials, implementation,
 construction, completion, operation, maintenance, improvement, repair
and rehabilitation, regardless of the source of funding.

As acknowledged in the 2003 Decision, the development of NAIA 3 was made

pursuant to a build-operate-and-transfer arrangement pursuant to Republic Act No.
6957, as amended, [33] which pertains to infrastructure or development projects
normally financed by the public sector but which are now wholly or partly
implemented by the private sector. [34] Under the build-operate-and-transfer
scheme, it is the project proponent which undertakes the construction, including the
financing, of a given infrastructure facility. [35] In Tatad v. Garcia, [36] the Court
acknowledged that the operator of the EDSA Light Rail Transit project under a BOT
scheme was the owner of the facilities such as 'the rail tracks, rolling stocks like the
coaches, rail stations, terminals and the power plant. [37]

There can be no doubt that PIATCO has ownership rights over the facilities which it
had financed and constructed. The 2004 Resolution squarely recognized that right
when it mandated the payment of just compensation to PIATCO prior to the
takeover by the Government of NAIA 3. The fact that the Government resorted to
eminent domain proceedings in the first place is a concession on its part of PIATCO's
ownership. Indeed, if no such right is recognized, then there should be no
impediment for the Government to seize control of NAIA 3 through ordinary
ejectment proceedings.

Since the rights of PIATCO over the NAIA 3 facilities are established, the nature of
these facilities should now be determined. Under Section 415(1) of the Civil Code,
these facilities are ineluctably immovable or real property, as they constitute
buildings, roads and constructions of all kinds adhered to the soil. [38] Certainly, the
NAIA 3 facilities are of such nature that they cannot just be packed up and
transported by PIATCO like a traveling circus caravan.

Thus, the property subject of expropriation, the NAIA 3 facilities, are real property
owned by PIATCO. This point is critical, considering the Government's insistence
that the NAIA 3 facilities cannot be deemed as the 'right-of-way', 'site or 'location of
a national government infrastructure project, within the coverage of Rep. Act No.
8974.

There is no doubt that the NAIA 3 is not, under any sensible contemplation, a 'right-
of-way. Yet we cannot agree with the Government's insistence that neither could
NAIA 3 be a 'site or 'location. The petition quotes the definitions provided in Black's
Law Dictionary of 'location as the specific place or position of a person or thing and
'site as pertaining to a place or location or a piece of property set aside for specific
use. [39] Yet even Black's Law Dictionary provides that '[t]he term [site] does not of
itself necessarily mean a place or tract of land fixed by definite boundaries.  [40] One
would assume that the Government, to back up its contention, would be able to
point to a clear-cut rule that a 'site or 'location exclusively refers to soil, grass,
pebbles and weeds. There is none.

Indeed, we cannot accept the Government's proposition that the only properties
that may be expropriated under Rep. Act No. 8974 are parcels of land. Rep. Act No.
8974 contemplates within its coverage such real property constituting land,
buildings, roads and constructions of all kinds adhered to the soil. Section 1 of Rep.
Act No. 8974, which sets the declaration of the law's policy, refers to 'real property
acquired for national government infrastructure projects are promptly paid just
compensation. [41] Section 4 is quite explicit in stating that the scope of the law
relates to the acquisition of 'real property, which under civil law includes buildings,
roads and constructions adhered to the soil.

 
It is moreover apparent that the law and its implementing rules commonly provide
for a rule for the valuation of improvements and/or structures thereupon separate
from that of the land on which such are constructed. Section 2 of Rep. Act No. 8974
itself recognizes that the improvements or structures on the land may very well be
the subject of expropriation proceedings. Section 4(a), in relation to Section 7 of the
law provides for the guidelines for the valuation of the improvements or structures
to be expropriated. Indeed, nothing in the law would prohibit the application of
Section 7, which provides for the valuation method of the improvements and or
structures in the instances wherein it is necessary for the Government to
expropriate only the improvements or structures, as in this case.

The law classifies the NAIA 3 facilities as real properties just like the soil to which
they are adhered. Any sub-classifications of real property and divergent treatment
based thereupon for purposes of expropriation must be based on substantial
distinctions, otherwise the equal protection clause of the Constitution is violated.
There may be perhaps a molecular distinction between soil and the inorganic
improvements adhered thereto, yet there are no purposive distinctions that would
justify a variant treatment for purposes of expropriation. Both the land itself and the
improvements thereupon are susceptible to private ownership independent of each
other, capable of pecuniary estimation, and if taken from the owner, considered as
a deprivation of property. The owner of improvements seized through expropriation
suffers the same degree of loss as the owner of land seized through similar means.
Equal protection demands that all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities imposed. For purposes
of expropriation, parcels of land are similarly situated as the buildings or
improvements constructed thereon, and a disparate treatment between those two
classes of real property infringes the equal protection clause.

Even as the provisions of Rep. Act No. 8974 call for that law's application in this
case, the threshold test must still be met whether its implementation would conform
to the dictates of the Court in the 2004 Resolution. Unlike in the case of Rule 67,
the application of Rep. Act No. 8974 will not contravene the 2004 Resolution, which
requires the payment of just compensation before any takeover of the NAIA 3
facilities by the Government. The 2004 Resolution does not particularize the extent
such payment must be effected before the takeover, but it unquestionably requires
at least some degree of payment to the private property owner before a writ of
possession may issue. The utilization of Rep. Act No. 8974 guarantees compliance
with this bare minimum requirement, as it assures the private property owner the
payment of, at the very least, the proffered value of the property to be seized. Such
payment of the proffered value to the owner, followed by the issuance of the writ of
possession in favor of the Government, is precisely the schematic under Rep. Act
No. 8974, one which facially complies with the prescription laid down in the 2004
Resolution.

Clearly then, we see no error on the part of the RTC when it ruled that Rep. Act No.
8974 governs the instant expropriation proceedings.

The Proper Amount to be Paid

under Rep. Act No. 8974

Then, there is the matter of the proper amount which should be paid to PIATCO by
the Government before the writ of possession may issue, consonant to Rep. Act No.
8974.

At this juncture, we must address the observation made by the Office of the
Solicitor General in behalf of the Government that there could be no 'BIR zonal
valuations' on the NAIA 3 facility, as provided in Rep. Act No. 8974, since zonal
valuations are only for parcels of land, not for airport terminals. The Court agrees
with this point, yet does not see it as an impediment for the application of Rep. Act
No. 8974.

It must be clarified that PIATCO cannot be reimbursed or justly compensated for the
value of the parcel of land on which NAIA 3 stands. PIATCO is not the owner of the
land on which the NAIA 3 facility is constructed, and it should not be entitled to just
compensation that is inclusive of the value of the land itself. It would be highly
disingenuous to compensate PIATCO for the value of land it does not own. Its
entitlement to just compensation should be limited to the value of the
improvements and/or structures themselves. Thus, the determination of just
compensation cannot include the BIR zonal valuation under Section 4 of Rep. Act
No. 8974.

Under Rep. Act No. 8974, the Government is required to 'immediately pay the
owner of the property the amount equivalent to the sum of (1) one hundred percent
(100%) of the value of the property based on the current relevant zonal valuation of
the [BIR]; and (2) the value of the improvements and/or structures as determined
under Section 7. As stated above, the BIR zonal valuation cannot apply in this case,
thus the amount subject to immediate payment should be limited to 'the value of
the improvements and/or structures as determined under Section 7, with Section 7
referring to the 'implementing rules and regulations for the equitable valuation of
the improvements and/or structures on the land. Under the present implementing
rules in place, the valuation of the improvements/structures are to be based using
'the replacement cost method. [42] However, the replacement cost is only one of
the factors to be considered in determining the just compensation.

In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also mandated that

the payment of just compensation should be in accordance with equity as well.
Thus, in ascertaining the ultimate amount of just compensation, the duty of the trial
court is to ensure that such amount conforms not only to the law, such as Rep. Act
No. 8974, but to principles of equity as well.

Admittedly, there is no way, at least for the present, to immediately ascertain the
value of the improvements and structures since such valuation is a matter for
factual determination. [43] Yet Rep. Act No. 8974 permits an expedited means by
which the Government can immediately take possession of the property without
having to await precise determination of the valuation. Section 4(c) of Rep. Act No.
8974 states that 'in case the completion of a government infrastructure project is of
utmost urgency and importance, and there is no existing valuation of the area
concerned, the implementing agency shall immediately pay the owner of the
property its proferred value, taking into consideration the standards prescribed in
Section 5 [of the law]. [44] The 'proffered value may strike as a highly subjective
standard based solely on the intuition of the government, but Rep. Act No. 8974
does provide relevant standards by which 'proffered value should be based,  [45] as
well as the certainty

of judicial determination of the propriety of the proffered value. [46]

In filing the complaint for expropriation, the Government alleged to have deposited
the amount of P3 Billion earmarked for expropriation, representing the assessed
value of the property. The making of the deposit, including the determination of the
amount of the deposit, was undertaken under the erroneous notion that Rule 67,
and not Rep. Act No. 8974, is the applicable law. Still, as regards the amount, the
Court sees no impediment to recognize this sum of P3 Billion as the proffered value
under Section 4(b) of Rep. Act No. 8974. After all, in the initial determination of the
proffered value, the Government is not strictly required to adhere to any
predetermined standards, although its proffered value may later be subjected to
judicial review using the standards enumerated under Section 5 of Rep. Act No.
8974.

How should we appreciate the questioned order of Hon. Gingoyon, which pegged the
amount to be immediately paid to PIATCO at around $62.3 Million?
The Order dated 4 January 2005, which mandated such amount, proves problematic
in that regard. While the initial sum of P3 Billion may have been based on the
assessed value, a standard which should not however apply in this case, the RTC
cites without qualification Section 4(a) of Rep. Act No. 8974 as the basis for the
amount of $62.3 Million, thus leaving the impression that the BIR zonal valuation
may form part of the basis for just compensation, which should not be the case.
Moreover, respondent judge made no attempt to apply the enumerated guidelines
for determination of just compensation under Section 5 of Rep. Act No. 8974, as
required for judicial review of the proffered value.

The Court notes that in the 10 January 2005 Omnibus Order , the RTC noted that
the concessions agreement entered into between the Government and PIATCO
stated that the actual cost of building NAIA 3 was 'not less than US$350
Million. [47] The RTC then proceeded to observe that while Rep. Act No. 8974
required the immediate payment to PIATCO the amount equivalent to 100% of the
value of NAIA 3, the amount deposited by the Government constituted only 18% of
this value. At this point, no binding import should be given to this observation that
the actual cost of building NAIA 3 was 'not less than US$350 Million, as the final
conclusions on the amount of just compensation can come only after due
ascertainment in accordance with the standards set under Rep. Act No. 8974, not
the declarations of the parties. At the same time, the expressed linkage between
the BIR zonal valuation and the amount of just compensation in this case, is
revelatory of erroneous thought on the part of the RTC.

We have already pointed out the irrelevance of the BIR zonal valuation as an
appropriate basis for valuation in this case, PIATCO not being the owner of the land
on which the NAIA 3 facilities stand. The subject order is flawed insofar as it fails to
qualify that such standard is inappropriate.

It does appear that the amount of US$62.3 Million was based on the certification
issued by the LBP-Baclaran that the Republic of the Philippines maintained a total
balance in that branch amounting to such amount. Yet the actual representation of
the $62.3 Million is not clear. The Land Bank Certification expressing such amount
does state that it was issued upon request of the International Airport Authority
'purportedly as guaranty deposit for the expropriation complaint. [48] The
Government claims in its Memorandum that the entire amount was made available
as a guaranty fund for the final and executory judgment of the trial court, and not
merely for the issuance of the writ of possession. [49] One could readily conclude
that the entire amount of US$62.3 Million was intended by the Government to
answer for whatever guaranties may be required for the purpose of the
expropriation complaint.

Still, such intention the Government may have had as to the entire US$62.3 Million
is only inferentially established. In ascertaining the proffered value adduced by the
Government, the amount of P3 Billion as the amount deposited characterized in the
complaint as 'to be held by [Land Bank] subject to the [RTC's ] orders,  [50] should
be deemed as controlling. There is no clear evidence that the Government intended
to offer US$62.3 Million as the initial payment of just compensation, the wording of
the Land Bank Certification notwithstanding, and credence should be given to the
consistent position of the Government on that aspect.

In any event, for the RTC to be able to justify the payment of US$62.3 Million to
PIATCO and not P3 Billion Pesos, he would have to establish that the higher amount
represents the valuation of the structures/improvements, and not the BIR zonal
valuation on the land wherein NAIA 3 is built. The Order dated 5 January 2005 fails
to establish such integral fact, and in the absence of contravening proof, the
proffered value of P3 Billion, as presented by the Government, should prevail.

Strikingly, the Government submits that assuming that Rep. Act No. 8974 is
applicable, the deposited amount of P3 Billion should be considered as the proffered
value, since the amount was based on comparative values made by the City
Assessor. [51] Accordingly, it should be deemed as having faithfully complied with
the requirements of the statute. [52] While the Court agrees that P3 Billion should
be considered as the correct proffered value, still we cannot deem the Government
as having faithfully complied with Rep. Act No. 8974. For 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.

Writ of Possession May Not

Be Implemented Until Actual

Receipt by PIATCO of Proferred

Value

The Court thus finds another error on the part of the RTC. The RTC authorized the
issuance of the writ of possession to the Government notwithstanding the fact that
no payment of any amount had yet been made to PIATCO, despite the clear
command of Rep. Act No. 8974 that there must first be payment before the writ of
possession can issue. While the RTC did direct the LBP-Baclaran to immediately
release the amount of US$62 Million to PIATCO, it should have likewise suspended
the writ of possession, nay, withdrawn it altogether, until the Government shall
have actually paid PIATCO. This is the inevitable consequence of the clear command
of Rep. Act No. 8974 that requires immediate payment of the initially determined
amount of just compensation should be effected. Otherwise, the overpowering
intention of Rep. Act No. 8974 of ensuring payment first before transfer of
repossession would be eviscerated.

Rep. Act No. 8974 represents a significant change from previous expropriation laws
such as Rule 67, or even Section 19 of the Local Government Code. Rule 67 and the
Local Government Code merely provided that the Government deposit the initial
amounts [53] antecedent to acquiring possession of the property with, respectively,
an authorized

Government depositary [54] or the proper court. [55] In both cases, the private

owner does not receive compensation prior to the deprivation of property. On the
other hand, Rep. Act No. 8974 mandates immediate payment of the initial just
compensation prior to the issuance of the writ of possession in favor of the
Government.

Rep. Act No. 8974 is plainly clear in imposing the requirement of immediate
prepayment, and no amount of statutory deconstruction can evade such requisite. It
enshrines a new approach towards eminent domain that reconciles the inherent
unease attending expropriation proceedings with a position of fundamental equity.
While expropriation proceedings have always demanded just compensation in
exchange for private property, the previous deposit requirement impeded
immediate compensation to the private owner, especially in cases wherein the
determination

of the final amount of compensation would prove highly disputed. Under the new
modality prescribed by Rep. Act No. 8974, the private owner sees immediate
monetary recompense with the same degree of speed as the taking of his/her
property.

While eminent domain lies as one of the inherent powers of the State, there is no
requirement that it undertake a prolonged procedure, or that the payment of the
private owner be protracted as far as practicable. In fact, the expedited procedure
of payment, as highlighted under Rep. Act No. 8974, is inherently more fair,
especially to the layperson who would be hard-pressed to fully comprehend the
social value of expropriation in the first place. Immediate payment placates to some
degree whatever ill-will that arises from expropriation, as well as satisfies the
demand of basic fairness.

The Court has the duty to implement Rep. Act No. 8974 and to direct compliance
with the requirement of immediate payment in this case. Accordingly, the Writ of
Possession dated 21 December 2004 should be held in abeyance, pending proof of
actual payment by the Government to PIATCO of the proffered value of the NAIA 3
facilities, which totals P3,002,125,000.00.

Rights of the Government

upon Issuance of the Writ

of Possession

Once the Government pays PIATCO the amount of the proffered value of P3 Billion,
it will be entitled to the Writ of Possession. However, the Government questions the
qualification imposed by the RTC in its 4 January 2005 Order consisting of the
prohibition on the Government from performing acts of ownership such as awarding
concessions or leasing any part of NAIA 3 to other parties. To be certain, the RTC, in
its 10 January 2005 Omnibus Order , expressly stated that it was not affirming 'the
superfluous part of the Order [of 4 January 2005] prohibiting the plaintiffs from
awarding concessions or leasing any part of NAIA [3] to other parties. [56] Still,
such statement was predicated on the notion that since the Government was not
yet the owner of NAIA 3 until final payment of just compensation, it was obviously
incapacitated to perform such acts of ownership.

In deciding this question, the 2004 Resolution in Agan cannot be ignored,

particularly the declaration that '[f]or the government to take over the said facility,
it has to compensate respondent PIATCO as builder of the said structures. The
obvious import of this holding is that unless PIATCO is paid just compensation, the
Government is barred from 'taking over, a phrase which in the strictest sense could
encompass even a bar of physical possession of NAIA 3, much less operation of the
facilities.

There are critical reasons for the Court to view the 2004 Resolution less stringently,
and thus allow the operation by the Government of NAIA 3 upon the effectivity of
the Writ of Possession. For one, the national prestige is diminished every day that
passes with the NAIA 3 remaining mothballed. For another, the continued non-use
of the facilities contributes to its physical deterioration, if it has not already. And still
for another, the economic benefits to the Government and the country at large are
beyond dispute once the NAIA 3 is put in operation.

 
Rep. Act No. 8974 provides the appropriate answer for the standard that governs
the extent of the acts the Government may be authorized to perform upon the
issuance of the writ of possession. Section 4 states that 'the court shall immediately
issue to the implementing agency an order to take possession of the property
and start the implementation of the project. We hold that accordingly, once the
Writ of Possession is effective, the Government itself is authorized to perform the
acts that are essential to the operation of the NAIA 3 as an international airport
terminal upon the effectivity of the Writ of Possession. These would include the
repair, reconditioning and improvement of the complex, maintenance of the existing
facilities and equipment, installation of new facilities and equipment, provision of
services and facilities pertaining to the facilitation of air traffic and transport, and
other services that are integral to a modern-day international airport.

The Government's position is more expansive than that adopted by the Court. It
argues that with the writ of possession, it is enabled to perform acts de jure on the
expropriated property. It cites Republic v. Tagle , [57] as well as the statement
therein that 'the expropriation of real property does not include mere physical entry
or occupation of land, and from them concludes that 'its mere physical entry and
occupation of the property fall short of the taking of title, which includes all the
rights that may be exercised by an owner over the subject property.

This conclusion is indeed lifted directly from statements in Tagle , [58] but not from
the ratio decidendi of that case. Tagle  concerned whether a writ of possession in
favor of the Government was still necessary in light of the fact that it was already in
actual possession of the property. In ruling that the Government was entitled to the
writ of possession, the Court in Tagle explains that such writ vested not only
physical possession, but also the legal right to possess the property. Continues the
Court, such legal right to possess was particularly important in the case, as there
was a pending suit against the Republic for unlawful detainer, and the writ of
possession would serve to safeguard the Government from eviction. [59]

At the same time, Tagle conforms to the obvious, that there is no transfer of

ownership as of yet by virtue of the writ of possession. Tagle may concede that the
Government is entitled to exercise more than just the right of possession by virtue
of the writ of possession, yet it cannot be construed to grant the Government the
entire panoply of rights that are available to the owner. Certainly, neither Tagle nor
any other case or law, lends support to the Government's proposition that it
acquires beneficial or equitable ownership of the expropriated property merely
through the writ of possession.

Indeed, this Court has been vigilant in defense of the rights of the property owner
who has been validly deprived of possession, yet retains legal title over the
expropriated property pending payment of just compensation. We reiterated the
various doctrines of such import in our recent holding in Republic v. Lim: [60]

The recognized rule is that title to the property expropriated shall

pass from the owner to the expropriator only upon full payment of the
just compensation. Jurisprudence on this settled principle is consistent
both here and in other democratic jurisdictions. In Association of Small
Landowners in the Philippines, Inc. et al., vs. Secretary of Agrarian
Reform [  [61] ]  , thus:

Title to property which is the subject of

condemnation proceedings does not vest the
condemnor until the judgment fixing just
compensation is entered and paid, but the condemnor's
title relates back to the date on which the petition under the
Eminent Domain Act, or the commissioner's report under the
Local Improvement Act, is filed.

x x x Although the right to appropriate and use

land taken for a canal is complete at the time of entry,
title to the property taken remains in the owner until
payment is actually made. (Emphasis supplied.)

In Kennedy v. Indianapolis , the US Supreme Court

cited several cases holding that title to property does not
pass to the condemnor until just compensation had actually
been made. In fact, the decisions appear to be uniform to
this effect. As early as 1838, in Rubottom v. McLure , it was
held that 'actual payment to the owner of the
condemned property was a condition precedent to the
 investment of the title to the property in the State
albeit 'not to the appropriation of it to public
use. In Rexford v. Knight , the Court of Appeals of New
Yorksaid that the construction upon the statutes was that the
fee did not vest in the State until the payment of the
compensation although the authority to enter upon and
appropriate the land was complete prior to the payment.
Kennedy further said that 'both on principle and authority
the rule is . . . that the right to enter on and use the
property is complete, as soon as the property is
actually appropriated under the authority of law for a
public use, but that the title does not pass from the
owner without his consent, until just compensation has
been made to him.

Our own Supreme Court has held in Visayan Refining

Co. v. Camus and Paredes , that:

If the laws which we have exhibited or cited in

the preceding discussion are attentively examined it
will be apparent that the method of expropriation
adopted in this jurisdiction is such as to afford
absolute reassurance that no piece of land can be
finally and irrevocably taken from an unwilling owner
until compensation is paid.... (Emphasis supplied.)

Clearly, without full payment of just compensation, there can be no

transfer of title from the landowner to the expropriator. Otherwise stated,
the Republic's acquisition of ownership is conditioned upon the full
payment of just compensation within a reasonable time.

Significantly, in  Municipality of Bian v. Garcia [ [62]]  this Court

ruled that the expropriation of lands consists of two stages, to wit:

x x x 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 x  x 
x.

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. x  x  x.

It is only upon the completion of these two stages that

expropriation is said to have been completed.  In Republic v. Salem
Investment Corporation  [ [63]] ,  we ruled that, 'the process is not
completed until payment of just compensation. Thus, here, the failure of
the Republic to pay respondent and his predecessors-in-interest for a
period of 57 years rendered the expropriation process incomplete.

Lim serves fair warning to the Government and its agencies who consistently refuse
to pay just compensation due to the private property owner whose property had
been

expropriated. At the same time, Lim emphasizes the fragility of the rights of the

Government as possessor pending the final payment of just compensation, without
diminishing the potency of such rights. Indeed, the public policy, enshrined
foremost in the Constitution, mandates that the Government must pay for the
private property it expropriates. Consequently, the proper judicial attitude is to
guarantee compliance with this primordial right to just compensation.

Final Determination of Just

Compensation Within 60 Days

 
The issuance of the writ of possession does not write finis  to the expropriation
proceedings. As earlier pointed out, expropriation is not completed until payment to
the property owner of just compensation. The proffered value stands as' merely a
provisional determination of the amount of just compensation, the payment of
which is sufficient to transfer possession of the property to the Government.
However, to effectuate the transfer of ownership, it is necessary for the Government
to pay the property owner the final just compensation.

In Lim,  the Court went as far as to countenance, given the exceptional

circumstances of that case, the reversion of the validly expropriated property to
private ownership due to the failure of the Government to pay just compensation in
that case. [64] It was noted in that case that the Government deliberately refused to
pay just compensation. The Court went on to rule that 'in cases where the
government failed to pay just compensation within five (5) years from the finality of
the judgment in the expropriation proceedings, the owners concerned shall have the
right to recover possession of their property. [65]

Rep. Act No. 8974 mandates a speedy method by which the final determination of
just compensation may be had. Section 4 provides:

In the event that the owner of the property contests the implementing
agency's proffered value, the court shall determine the just compensation
to be paid the owner within sixty (60) days from the date of filing of the
expropriation case. When the decision of the court becomes final and
executory, the implementing agency shall pay the owner the difference
between the amount already paid and the just compensation as
determined by the court.

 
 

We hold that this provision should apply in this case. The sixty (60)-day period
prescribed in Rep. Act No. 8974 gives teeth to the law's avowed policy 'to ensure
that owners of real property acquired for national government infrastructure
projects are promptly paid just compensation. [66] In this case, there already has
been irreversible delay in the prompt payment of PIATCO of just compensation, and
it is no longer possible for the RTC to determine the just compensation due PIATCO
within sixty (60) days from the filing of the complaint last 21 December 2004, as
contemplated by the law. Still, it is feasible to effectuate the spirit of the law by
requiring the trial court to make such determination within sixty (60) days
from finality of this decision, in accordance with the guidelines laid down in Rep.
Act No. 8974 and its Implementing Rules.

Of course, once the amount of just compensation has been finally determined, the
Government is obliged to pay PIATCO the said amount. As shown in Lim and other
like-minded cases, the Government's refusal to make such payment is indubitably
actionable in court.

Appointment of Commissioners

The next argument for consideration is the claim of the Government that the RTC
erred in appointing the three commissioners in its 7 January 2005 Order without
prior consultation with either the Government or PIATCO, or without affording the
Government the opportunity to object to the appointment of these commissioners.
We can dispose of this argument without complication.
 

It must be noted that Rep. Act No. 8974 is silent on the appointment of
commissioners tasked with the ascertainment of just compensation. [67] This
protocol though is sanctioned under Rule 67. We rule that the appointment of
commissioners under Rule 67 may be resorted to, even in expropriation proceedings
under Rep. Act No. 8974, since the application of the provisions of Rule 67 in that
regard do not conflict with the statute. As earlier stated, Section 14 of the
Implementing Rules does allow such other incidents affecting the complaint to be
resolved under the provisions on expropriation of Rule 67 of the Rules of Court.
Even without Rule 67, reference during trial to a commissioner of the examination
of an issue of fact is sanctioned under Rule 32 of the Rules of Court.

But while the appointment of commissioners under the aegis of Rule 67 may be
sanctioned in expropriation proceedings under Rep. Act No. 8974, the standards to
be observed for the determination of just compensation are provided not in Rule 67
but in the statute. In particular, the governing standards for the determination of
just compensation for the NAIA 3 facilities are found in Section 10 of the
Implementing Rules for Rep. Act No. 8974, which provides for the replacement cost
method in the valuation of improvements and structures. [68]

Nothing in Rule 67 or Rep. Act No. 8974 requires that the RTC consult with the
parties in the expropriation case on who should be appointed as commissioners.
Neither does the Court feel that such a requirement should be imposed in this case.
We did rule in Municipality of Talisay v. Ramirez [69] that 'there is nothing to
prevent [the trial court] from seeking the recommendations of the parties on [the]
matter [of appointment of commissioners], the better to ensure their fair
representation. [70] At the same time, such solicitation of recommendations is not
obligatory on the part of the court, hence we cannot impute error on the part of the
RTC in its exercise of solitary discretion in the appointment of the commissioners.

What Rule 67 does allow though is for the parties to protest the appointment of any
of these commissioners, as provided under Section 5 of the Rule. These objections
though must be made filed within ten (10) days from service of the order of
appointment of the commissioners. [71] In this case, the proper recourse of the
Government to challenge the choice of the commissioners is to file an objection with
the trial court, conformably with Section 5, Rule 67, and not as it has done, assail
the same through a special civil action for certiorari. Considering that the
expropriation proceedings in this case were effectively halted seven (7) days after
the Order appointing the commissioners, [72] it is permissible to allow the parties to
file their objections with the RTC within five (5) days from finality of this decision.

Insufficient Ground for Inhibition

of Respondent Judge

The final argument for disposition is the claim of the Government is that Hon.
Gingoyon has prejudged the expropriation case against the Government's cause
and, thus, should be required to inhibit himself. This grave charge is predicated on
facts which the Government characterizes as 'undeniable. In particular, the
Government notes that the 4 January 2005 Order  was issued motu proprio , without
any preceding motion, notice or hearing. Further, such order, which directed the
payment of US$62 Million to PIATCO, was attended with error in the computation of
just compensation. The Government also notes that the said Order  was issued even
before summons had been served on PIATCO.

The disqualification of a judge is a deprivation of his/her judicial power [73] and

should not be allowed on the basis of mere speculations and surmises. It certainly
cannot be predicated on the adverse nature of the judge's rulings towards the
movant for inhibition, especially if these rulings are in accord with law. Neither could
inhibition be justified merely on the erroneous nature of the rulings of the judge. We
emphasized in Webb v. People : [74]

To prove bias and prejudice on the part of respondent

judge, petitioners harp on the alleged adverse and erroneous
rulings of respondent judge on their various motions. By
themselves, however, they do not sufficiently prove bias and
prejudice to disqualify respondent judge. To be disqualifying, the
bias and prejudice must be shown to have stemmed from an
extrajudicial source and result in an opinion on the merits on
some basis other than what the judge learned from his
participation in the case. Opinions formed in the course of judicial
proceedings, although erroneous, as long as they are based on the
evidence presented and conduct observed by the judge, do not prove
personal bias or prejudice on the part of the judge. As a general rule,
repeated rulings against a litigant, no matter how erroneous and
vigorously and consistently expressed, are not a basis for
disqualification of a judge on grounds of bias and prejudice.
Extrinsic evidence is required to establish bias, bad faith, malice
or corrupt purpose, in addition to the palpable error which may be
inferred from the decision or order itself. Although the decision
may seem so erroneous as to raise doubts concerning a judge's
integrity, absent extrinsic evidence, the decision itself would be
insufficient to establish a case against the judge. The only
exception to the rule is when the error is so gross and patent as to
produce an ineluctable inference of bad faith or malice. [75]

The Government's contentions against Hon. Gingoyon are severely undercut by the
fact that the 21 December 2004 Order , which the 4 January 2005 Order sought to
rectify, was indeed severely flawed as it erroneously applied the provisions of Rule
67 of the Rules of Court, instead of Rep. Act No. 8974, in ascertaining compliance
with the requisites for the issuance of the writ of possession. The 4 January
 

2005 Order , which according to the Government establishes Hon. Gingoyon's bias,

was promulgated precisely to correct the previous error by applying the correct
provisions of law. It would not speak well of the Court if it sanctions a judge for
wanting or even attempting to correct a previous erroneous' order which precisely is
the right move to take.

Neither are we convinced that the motu proprio issuance of the 4 January

2005 Order , without the benefit of notice or hearing, sufficiently evinces bias on the
part of Hon. Gingoyon. The motu proprio amendment by a court of an erroneous
order previously issued may be sanctioned depending on the circumstances, in line
with the long-recognized principle that every court has inherent power to do all
things reasonably necessary for the administration of justice within the scope of its
jurisdiction. [76] Section 5(g), Rule 135 of the Rules of Court further recognizes the
inherent power of courts 'to amend and control its process and orders so as to make
them conformable to law and justice, [77] a power which Hon. Gingoyon noted in his
10 January 2005 Omnibus Order. [78] This inherent power includes the right of the
court to reverse itself, especially when in its honest opinion it has committed an
error or mistake in judgment, and that to adhere to its decision will cause injustice
to a party litigant. [79]

Certainly, the 4 January 2005 Order  was designed to make the RTC's previous order
conformable to law and justice, particularly to apply the correct law of the case. Of
course, as earlier established, this effort proved incomplete, as the 4 January
2005 Order did not correctly apply Rep. Act No. 8974 in several respects. Still, at
least, the 4 January 2005 Order correctly reformed the most basic premise of the
case that Rep. Act No. 8974 governs the expropriation proceedings.

Nonetheless, the Government belittles Hon. Gingoyon's invocation of Section 5(g),

Rule 135 as 'patently without merit. Certainly merit can be seen by the fact that
the 4 January 2005 Order  reoriented the expropriation proceedings towards the
correct governing law. Still, the Government claims that the unilateral act of the
RTC did not conform to law or justice, as it was not afforded the right to be heard.

 
The Court would be more charitably disposed towards this argument if not for the
fact that the earlier order with the 4 January 2005 Order sought to correct was itself
issued without the benefit of any hearing. In fact, nothing either in Rule 67 or Rep.
Act No. 8975 requires the conduct of a hearing prior to the issuance of the writ of
possession, which by design is available immediately upon the filing of the
complaint provided that the requisites attaching thereto are present. Indeed, this
expedited process for the obtention of a writ of possession in expropriation cases
comes at the expense of the rights of the property owner to be heard or to be
deprived of possession. Considering these predicates, it would be highly awry to
demand that an order modifying the earlier issuance of a writ of possession in an
expropriation case be barred until the staging of a hearing, when the issuance of the
writ of possession itself is not subject to hearing. Perhaps the conduct of a hearing
under these circumstances would be prudent. However, hearing is not mandatory,
and the failure to conduct one does not establish the manifest bias required for the
inhibition of the judge.

The Government likewise faults Hon. Gingoyon for using the amount of US$350
Million as the basis for the 100% deposit under Rep. Act No. 8974. The Court has
noted that this statement was predicated on the erroneous belief that the BIR zonal
valuation applies as a standard for determination of just compensation in this case.
Yet this is manifest not of bias, but merely of error on the part of the judge. Indeed,
the Government was not the only victim of the errors of the RTC in the assailed
orders. PIATCO itself was injured by the issuance by the RTC of the writ of
possession, even though the former had yet to be paid any amount of just
compensation. At the same time, the Government was also prejudiced by the
erroneous ruling of the RTC that the amount of US$62.3 Million, and not P3 Billion,
should be released to PIATCO.

The Court has not been remiss in pointing out the multiple errors committed by the
RTC in its assailed orders, to the prejudice of both parties. This attitude of error
towards all does not ipso facto negate the charge of bias. Still, great care should be
had in requiring the inhibition of judges simply because the magistrate did err.
Incompetence may be a ground for administrative sanction, but not for inhibition,
which requires lack of objectivity or impartiality to sit on a case.

 
The Court should necessarily guard against adopting a standard that a judge should
be inhibited from hearing the case if one litigant loses trust in the judge. Such loss
of trust on the part of the Government may be palpable, yet inhibition cannot be
grounded merely on the feelings of the party-litigants. Indeed, every losing litigant
in any case can resort to claiming that the judge was biased, and he/she will gain a
sympathetic ear from friends, family, and people who do not understand the judicial
process. The test in believing such a proposition should not be the vehemence of
the litigant's claim of bias, but the Court's judicious estimation, as people who know
better than to believe any old cry of 'wolf!', whether such bias has been irrefutably
exhibited.

The Court acknowledges that it had been previously held that 'at the very first sign
of lack of faith and trust in his actions, whether well-grounded or not, the judge has
no other alternative but to inhibit himself from the case. [80] But this doctrine is
qualified by the entrenched rule that 'a judge may not be legally prohibited from
sitting in a litigation, but when circumstances appear that will induce doubt to his
honest actuations and probity in favor of either party, or incite such state of mind,
he should conduct a careful self-

examination. He should exercise his discretion in a way that the people's faith in the
Courts of Justice is not impaired. [81] And a self-assessment by the judge that
he/she is not impaired to hear the case will be respected by the Court absent any
evidence to the contrary. As held in Chin v. Court of Appeals :

An allegation of prejudgment, without more, constitutes mere conjecture

and is not one of the "just and valid reasons" contemplated in the second
paragraph of Rule 137 of the Rules of Court for which a judge may inhibit
himself from hearing the case. We have repeatedly held that mere
suspicion that a judge is partial to a party is not enough. Bare allegations
of partiality and prejudgment will not suffice in the absence of clear and
 convincing evidence to overcome the presumption that the judge will
undertake his noble role to dispense justice according to law and evidence
and without fear or favor. There should be adequate evidence to prove
the allegations, and there must be showing that the judge had an
interest, personal or otherwise, in the prosecution of the case. To be a
disqualifying circumstance, the bias and prejudice must be shown to have
stemmed from an extrajudicial source and result in an opinion on the
merits on some basis other than what the judge learned from his
participation in the case. [82]

The mere vehemence of the Government's claim of bias does not translate to clear
and convincing evidence of impairing bias. There is no sufficient ground to direct the
inhibition of Hon. Gingoyon from hearing the expropriation case.

In conclusion, the Court summarizes its rulings as follows:

(1) The 2004 Resolution in Agan sets the base requirement that has to be observed

before the Government may take over the NAIA 3, that there must be payment to
PIATCO of just compensation in accordance with law and equity. Any ruling in the
present expropriation case must be conformable to the dictates of the Court as
pronounced in the Agan cases.

(2) Rep. Act No. 8974 applies in this case, particularly insofar as it requires the
immediate payment by the Government of at least the proffered value of the NAIA 3
facilities to PIATCO and provides certain valuation standards or methods for the
determination of just compensation.

(3) Applying Rep. Act No. 8974, the implementation of Writ of Possession in favor of
the Government over NAIA 3 is held in abeyance until PIATCO is directly paid the
amount of P3 Billion, representing the proffered value of NAIA 3 under Section 4(c)
of the law.

(4) Applying Rep. Act No. 8974, the Government is authorized to start the
implementation of the NAIA 3 Airport terminal project by performing the acts that
are essential to the operation of the NAIA 3 as an international airport terminal
upon the effectivity of the Writ of Possession, subject to the conditions above-
stated. As prescribed by the Court, such authority encompasses 'the repair,
reconditioning and improvement of the complex, maintenance of the existing
facilities and equipment, installation of new facilities and equipment, provision of
services and facilities pertaining to the facilitation of air traffic and transport, and
other services that are integral to a modern-day international airport. [83]

(5) The RTC is mandated to complete its determination of the just compensation
within sixty (60) days from finality of this Decision. In doing so, the RTC is obliged
to comply with 'law and equity as ordained in Again and the standard set under
Implementing Rules of Rep. Act No. 8974 which is the 'replacement cost method as
the standard of valuation of structures and improvements.

(6) There was no grave abuse of discretion attending the RTC Order  appointing the
commissioners for the purpose of determining just compensation. The provisions on
commissioners under Rule 67 shall apply insofar as they are not inconsistent with
Rep. Act No. 8974, its Implementing Rules, or the rulings of the Court in Agan .

(7) The Government shall pay the just compensation fixed in the decision of the trial
court to PIATCO immediately upon the finality of the said decision.

(8) There is no basis for the Court to direct the inhibition of Hon. Gingoyon.

 
All told, the Court finds no grave abuse of discretion on the part of the RTC to
warrant the nullification of the questioned orders. Nonetheless, portions of these
orders should be modified to conform with law and the pronouncements made by
the Court herein.

WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4
January 2005 and 10 January 2005 of the lower court. Said orders are AFFIRMED
with the following MODIFICATIONS:

1)     The implementation of the Writ of Possession dated 21 December 2005 is HELD IN ABEYANCE, pending payment by
petitioners to PIATCO of the amount of Three Billion Two Million One Hundred Twenty Five Thousand Pesos

(P3,002,125,000.00), representing the proffered value of the NAIA 3 facilities;

2)     Petitioners, upon the effectivity of the Writ of Possession, are authorized start the implementation of the Ninoy

Aquino International Airport Pasenger Terminal III project by performing the acts that are essential to the operation

of the said International Airport Passenger Terminal project;

3)     RTC Branch 117 is hereby directed, within sixty (60) days from finality of this Decision, to determine the just

compensation to be paid to PIATCO by the Government.

The Order dated 7 January 2005 is AFFIRMED in all respects subject to the

qualification that the parties are given ten (10) days from finality of this Decision to
file, if they so choose, objections to the appointment of the commissioners decreed
therein.

The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED.

No pronouncement as to costs.