EN BANC
[ G.R. No. 210669, August 01, 2017 ]
HI-LON MANUFACTURING, INC., PETITIONER, VS. COMMISSION
ON AUDIT, RESPONDENT.
FACTS:
Sometime in 1978, the government, through the then Ministry of Public Works and
Highways (now DPWH), converted to a road right-of-way (RROW) a 29,690 sq. m.
portion of the 89,070 sq. m. parcel of land (subject property) located in Mayapa,
Calamba, Laguna, for the Manila South Expressway Extension Project. The subject
property was registered in the name of Commercial and Industrial Real Estate
Corporation (CIREC). Later on, Philippine Polymide Industrial Corporation (PPIC)
acquired the subject property. PPIC then mortgaged the subject property with the
Development Bank of the Philippines (DBP), a government financing institution, which
later acquired the property in a foreclosure proceeding.
Despite the use of the 29,690 sq. m. portion of the property as RROW, the government
neither annotated its claim or lien on the titles of CIREC, PPIC and DBP nor initiated
expropriation proceedings, much less paid just compensation to the registered owners.
Upon issuance of Administrative Order No. 14 dated February 3, 1987 the DBP
submitted all its acquired assets, including the subject property, to the Asset
Privatization Trust (APT) for disposal, pursuant to Proclamation No. 50 dated 8
December 1986.
APT then disposed of a portion of the subject property in a public bidding. As the
highest bidder, APT executed two (2) separate Deeds of Sale with TGPI and Fibertex
with regard to the property. and on April 16, 1995, TGPI executed a Deed of Absolute
Sale in favor of HI-LON over the entire 89,070 sq. m. subject property for a
consideration of P44,535,000.00.
Sometime in 1998, Rupert P. Quijano, Attorney-in-Fact of HI-LON, requested
assistance from the Urban Road Project Office (URPO) DPWH for payment of just
compensation for the 29,690 sq. m. portion of the subject property converted to a
RROW.
On December 21, 2001, a Deed of Sale was executed between HI-LON and the
Republic of the Philippines, and on January 23, 2002, the Republic, through the DPWH,
made the first partial payment to HI-LON in the amount of P10,461,338.00.
On post audit, the Supervising Auditor of the DPWH noted that the use of the 1999
zonal valuation of P2,500.00/sq. m. as basis for the determination of just compensation
was unrealistic, thus, recommended the recovery of excess payments.
Upon review of the auditor's observations, the Director of the LAO-N rendered Decision
affirming the same ND, and stating the value of the property must be computed from the
time of the actual taking.
Aggrieved, HI-LON filed a petition for review before the COA. The COA denied said
petition for lack of merit and affirmed ND No. 2004-032 dated July 29, 2004 with
modification declaring the claimant not entitled to just compensation.
The COA noted, among others, that the Deed of Sale between APT and Fibertex has a
disclosure that "The subject of this Deed of Absolute Sale, therefore, as fully disclosed
in the APT Asset Catalogue, is the total useable area of 59,380 sq. m.," [8] excluding for
the purpose the 29,690 sq. m. converted to RROW.
ISSUE:
Whether or not HI-LON is entitled for just compensation for the taking of the subject property being
used as Road Right-of-Way.
RULING:
No, HI-LON is entitled for just compensation for the taking of the subject property being used as Road
Right-of-Way.
Concededly, the 29, 690 sq. m. portion of the subject property is not just an ordinary asset, but is being
use as RROW for the Manila south Expressway Extension Project, a road devoted for a public use since it
was taken in 1978. Under the Philippine Highway Act of 1953, “right-of-way” is defined as the land
secured and reserved to the public for highway purposes, whereas “highway” includes rights-of-ways,
bridges, ferries, drainage structures, signs, guard rails, and protective structures in connection with
highways. Article 420 of the New Civil Code considers as property of public those intended for public
use, such as roads, canals, torrents, ports and bridges constructed by the state, banks, shores,
roadsteads, and others of similar character.
Being of similar character as roads for public use, a road right-of-way (RROW) can be considered as a
property of public dominion, which is outside the commerce of man, and cannot be leased, donated,
sold, or be the object of a contract, except insofar as they may be the object of repairs or improvements
and other incidental matters.
As property of public dominion akin to a public thoroughfare, a RROW cannot be registered in the name
of private persons under the Land Registration Law and be the subject of a Torrens Title; and if
erroneously included in a Torrens title, the land involved remains as such a property of public dominion.
DOCTRINE:
A road right-of-way can be considered as a property of public dominion, which is outside the commerce
of man, and cannot be leased, donated, sold, or be the object of a contract, except insofar as they may
be the object of repairs or improvements and other incidental matters.
