G.R. No. 166429 - J. Corona

G. R. No. 166429 – REPUBLIC OF THE PHILIPPINES represented by Executive Secretary Eduardo R. Ermita, the DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS (DOTC) and the MANILA INTERNATIONAL AIRPORT AUTHORITY (MIAA), petitioners, v. HON. HENRICK F. GINGOYON in his capacity as Presiding Judge of the Regional Trial Court of Pasay City, Branch 117, and PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., respondents.

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DISSENTING OPINION

In the Court’s December 19, 2005 decision, the majority relied heavily on a strained interpretation of the 2004 resolution in Agan v. PIATCO and concluded that Rule 67 of the Rules of Court violated Agan. It then ruled that RA 8974 governed the expropriation of the NAIA IPT3. I wrote a dissenting opinion.

Petitioners are before us again with their motion for partial reconsideration, alleging that the December 19, 2005 decision requiring prior payment to PIATCO before any government takeover of NAIA IPT3 will only further delay instead of hasten its opening and operation. According to petitioners, the decision will also work grave injustice to the government and other lawful claimants to the just compensation. They specifically identify Takenaka Corporation and Asahikosan Corporation, unpaid contractor and supplier of materials in the construction of NAIA IPT3 as lawful claimants to the compensation due from the expropriation of the facilities. Petitioners call the Court’s attention to the February 18, 2005 and December 2, 2005 orders of the High Court of Justice, Queen’s Bench Division, London directing PIATCO to pay Takenaka and Asahikosan approximately US$81,000,000.

Petitioners also assert that Agan does not require prior payment of full compensation before any government takeover of NAIA IPT3 and that the application of Rule 67 in the expropriation proceedings does not violate Agan. They further argue that RA 8974 cannot repeal or amend Rule 67.

Takenaka and Asahikosan are also before us with their separate motions for leave to file motion for partial reconsideration-in-intervention and their respective motions for partial reconsideration-in-intervention. Both allege that, in an amended complaint dated January 11, 2005 filed by petitioners in the court a quo, they were impleaded as necessary parties. Without awaiting service of summons, they separately filed a manifestation and motion, in lieu of answer, manifesting that they did not object to the taking of NAIA IPT3, provided that they were justly compensated for their respective claims as unpaid contractor and supplier of materials in the construction of the facility.

They also maintain that the London court rendered two separate money judgments in their favor against PIATCO which they intend to enforce in Philippine courts. Hence, they prayed that they be allowed to intervene and establish their claims before any payment is made to PIATCO.

The majority resolves to deny petitioners’ motion for partial reconsideration with finality. The motions of Takenaka and Asahikosan are also denied. In so doing, the majority again invokes Agan. I maintain my dissent.

I have more than adequately discussed in my original dissent the various points raised by petitioners. Here, I will concentrate only on the two major points which the majority used as basis in disposing of petitioners’ motion for partial reconsideration and Takenaka’s and Asahikosan’s respective motions for leave to file motion for partial reconsideration-in-intervention and motions for partial reconsideration-in-intervention.

Claims of Movants-Intervenors Takenaka and Asahikosan

I asserted in my original dissent that it was incorrect to state that Agan constituted the law of the case here. I explained that, while both Agan and this case involved NAIA IPT3, the respective subject matters of the two cases were separate and distinct.

Moreover, Agan only required PIATCO to be given just compensation in accordance with law and equity as a condition for the government’s take over of NAIA IPT3. It did not mandate any particular procedure for the payment of such compensation. In fact, it did not even touch on the State’s right to expropriate NAIA IPT3. Thus, as Mr. Justice Puno (ponente in Agan) aptly stated in his separate opinion, “there is no need to strain in attempting to square the Agan ruling with the ruling in this case.”

However, the majority again invokes Agan in making the all-too-sweeping statement that only PIATCO, as builder of the NAIA IPT3, is entitled to just compensation. I strongly disagree.

The fact that neither Takenaka nor Asahikosan was mentioned in Agan does not in any way affect their right to assert a claim in the compensation for NAIA IPT3. First, Agan merely required payment of compensation, without specifying how or in what manner and by whom or to whom and when. Second, Agan did not deal with the expropriation of NAIA IPT3, hence, it could not have determined the parties entitled to just compensation in case expropriation proceedings were instituted. Third, Takenaka and Asahikosan were not parties in Agan, hence, the Court could not be reasonably expected to mention them in that case. Finally, the law itself ordains the protection of all parties who have an interest in the property to be expropriated.

In my original dissent, I noted that both petitioners and PIATCO admit that there are other parties asserting an interest in NAIA IPT3. One of these parties is movant-intervenor Takenaka, PIATCO’s contractor for the construction of NAIA IPT3.

Rule 67, Section 1 of the Rules of Court requires that all persons owning or claiming to own, or occupying, any part thereof or interest therein be joined as defendants in the expropriation case. This is based on the principle that, in eminent domain, just compensation is not due to the owner alone.[1]

As the Court held in De Knecht v. Court of Appeals,[2] when property is taken by eminent domain, the actual owner is not necessarily the only person who is entitled to compensation. All those who have a lawful interest in the property to be expropriated are entitled to compensation.[3] Every person having an estate or interest at law or in equity in the land taken is entitled to share in the award.[4]

As unpaid contractor and supplier of materials, Takenaka and Asahikosan have a lien on NAIA IPT3’s facilities. As a general rule, claims which are liens on the property at the time of the taking are entitled to be satisfied out of the compensation awarded.[5] While a lien is not an estate or interest in the property but rather a remedy against it, which may be impaired without amounting to a taking requiring compensation, a condemnation award is considered to stand in place of the property so that valid liens on the property attach to the condemnation award and the lienor may proceed against the award in equity.[6]

The majority declares that “[i]f there is indeed any right to remuneration due to these two entities arising from NAIA 3, they have not yet been established by the courts of the land.” Precisely. This is why no payment should be made to any party yet pending the determination of conflicting and various claims.

No payments should be made out of the fund until all persons named in the pleadings of the condemnor as having an interest in the property are given due notice and opportunity to make their claims.[7] As early as January 11, 2005, both Takenaka and Asahikosan were impleaded by petitioners as necessary parties in the expropriation proceedings in the court a quo. In the absence of a determination of Takenaka’s and Asahikosan’s respective claims, it would be wrong for the Court to order the release of the funds deposited with the Land Bank-Parañaque Branch and direct its payment to PIATCO alone.

Agan declared that compensation should be in accordance with law and equity. Following the majority’s admonition that Agan be observed, would it not be lawful and just to allow Takenaka and Asahikosan to first establish their claims before any order of payment to PIATCO is made?

Also, the majority’s stance is that RA 8974 and its implementing rules should be observed in the expropriation proceedings. Following this, Section 8 of the implementing rules of RA 8974, like Section 1 of Rule 67, provides that “all persons owning or claiming to own, or occupying, any part thereof or interest therein” should be named in the verified complaint “showing as far as practicable, the interest of each defendant separately.” If a person claiming an interest in the property is not made a party, he is given the right to intervene and lay claim to the compensation.[8]

Thus, the majority should not have brushed aside the judgments in favor of Takenaka and Asahikosan. Their respective claims are based not on some unsubstantiated demand but on an actual judgment of a foreign court and their lawful liens on the property as unpaid contractor and supplier of materials.

Apportionment of the compensation award is ancillary to expropriation and should, if possible, be made without the necessity of bringing a new suit or action.[9] As Mr. Justice Puno astutely observed in his separate opinion:

To be sure, the [December 2, 2005] Order [of the High Court of Justice, Queen’s Bench Division, London] is not yet final.[10] Be that as it may, the Court cannot turn a blind eye to this new wrinkle of the case at bar. It is of judicial notice that despite Agan, the subject case has reached the international arbitral tribunals where the government and the private respondent have filed charges and countercharges. There is evident need to avoid the issues pestering the parties from further multiplying and for new proceedings to be started in other courts, lest public interest suffer further irretrievable prejudice.

Nature and Validity of RA 8974

There are at least two crucial differences between the respective procedures under [RA] 8974 and Rule 67.

x x x x x x x x x

[RA] 8974, which provides for a procedure eminently more favorable to the property owner than Rule 67 ….

x x x x x x x x x

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 … under [RA] 8974 ….

x x x x x x x x x

[RA] 8974 mandates a speedy method by which the final determination of just compensation may be had. (emphasis supplied)

These are all statements of the majority in the December 19, 2005 decision. Repeatedly, RA 8974 has been referred to as providing a procedure that conforms to Agan.

The provisions of RA 8974 and its implementing rules with “guidelines for expropriation proceedings” radically alter the rules for expropriation under Rule 67. Congressional deliberations on the bills that were consolidated, reconciled and eventually enacted as RA 8974 show that the legislative intent was to amend Rule 67 and lay down rules of procedure for the expropriation of land or other real property to be acquired for right of way, site or location for national government infrastructure projects.

Clearly, RA 8974 which the majority described as a “significant change from previous expropriation laws such as Rule 67 ….” is a procedural law. No amount of hair-splitting can change this reality.

Being a procedural law effectively amending Rule 67, RA 8974 constitutes an invalid encroachment on the Court’s rule-making power, a power reserved exclusively to this Court. It directly contravenes Echegaray v. Court of Appeals[11] where the Court ruled that the legislature has no power to annul, modify or augment the Rules of Court. It subverts the fundamental law and defeats the constitutional intent to strengthen the independence of this Court.

Mr. Justice Puno remarked in his separate opinion in this case:

Rule 67 is the rule this Court promulgated to govern the proceedings in expropriation cases filed in court. It has been the undeviating rule for quite a length of time. Following Article VIII, section 5(6) of the 1987 Constitution and the Echegaray jurisprudence, Rule 67 cannot be repealed or amended by Congress. This prohibition against non-repeal or non-amendment refers to any part of Rule 67 for Rule 67 is pure procedural law. Consequently, the Court should not chop Rule 67 into pieces and hold that some can be changed by Congress but others can[not] be changed. The stance will dilute the rule making power of this Court which can not be allowed for it will weaken its institutional independence. (emphasis supplied)

There is no question that the appropriate standard of just compensation is a substantive matter, not a procedural one. That standard remains to be the fair market value of the property. But the manner of determining just compensation (including how it shall be paid and under what conditions a writ of possession may be issued) is a matter of procedure, not of substantive law. That Congress cannot validly legislate on.

At the risk of being branded as an alarmist, I can almost predict that the implementation of the majority decision will only further IMPEDE the already delayed opening of NAIA IPT3.

ACCORDINGLY, I vote to GRANT petitioners’ motion for partial reconsideration as well as Takenaka Corporation’s and Asahikosan Corporation’s respective motions for leave to file motion for partial reconsideration-in-intervention and their motions for partial reconsideration-in-intervention.

RENATO C. CORONA

Associate Justice

[1] Joaquin Bernas, S.J., The 1987 Constitution of the Republic of the Philippines: A Commentary, 2003 Edition, p. 393.

[2] De Knecht v. Court of Appeals, 352 Phil. 833 (1998).

[5] Eminent Domain, Section 200, 29A Corpus Juris Secundum 890.

[6] Eminent Domain, Section 268, 26 Am Jur 2d 685.

[7] Eminent Domain, Section 205, 29A Corpus Juris Secundum 916.

[8] De Knecht v. Court of Appeals, supra note 2.

[10] Both Takenaka and Asahikosan allege that the February 18, 2005 and December 2, 2005 orders of the High Court of Justice, Queen’s Bench Division, London have already attained finality.

[11] 361 Phil. 76 (1999).