SECOND DIVISION

G.R. No. 206226, April 04, 2016

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. NIEVES CONSTANCIO Y BACUNGAY, ERNESTO

BERRY Y BACUNGAY, Accused-Appellants.

DECISION

DEL CASTILLO, J.:

This is an appeal from the February 24, 2012 Decision1 of the Court of Appeals (CA) in CA-G.R. CR-H.C. No.
02709 which affirmed the January 22, 2007 Decision 2 of the Regional Trial Court (RTC), Branch 258, Para

1. G.R. No. 212593-94 PDF

2. G.R. No. 203322

THIRD DIVISION

G.R. No. 203322, February 24, 2016

PEOPLE OF THE PHILIPPINES, Appellee, v. REMAN SARIEGO, Appellant.

DECISION

PERALTA, J.:

Before the Court is an appeal from the Decision1 dated December 9, 2011 of the Court Appeals (CA) in CA-
G.R. CEB-CR-H.C. No. 00721, which affirmed the Judgment 2 dated September 14, 2006 of the Regional Trial
Court (RTC), 7th Judicial Region, Branch 14, Cebu City, in Criminal Case Nos. CBU-61972-73 for rape.

The antecedent facts are as follows:

In two (2) separate informations, appellant Reman Sariego was charged with two (2) counts of the crime of
rape, committed by having carnal knowledge of his own daughter, AAA,3 a 17-year-old girl, against her will
and to her damage and prejudice, the accusatory portions of which read:

Criminal Case No. CBU-61972:

xxxx

That on December 15, 2000, at about 8:00 a.m., in Cebu City, Philippines, and within the jurisdiction of this
Honorable Court, the said accused, being the father of AAA, a 17-year-old minor, by means of force and
intimidation, did then and there wilfully, feloniously and unlawfully have carnal knowledge with said AAA
against her will.

Contrary to law.

Criminal Case No. CBU-61973:

xxxx

That on February 20, 2001, at about 8:00 a.m., in Cebu City, Philippines, and within the jurisdiction of this
Honorable Court, the said accused, being the father of AAA, a 17-year-old minor, by means of force and
intimidation, did then and there wilfully, feloniously and unlawfully have carnal knowledge with said AAA
against her will.

Page 1 of 169
Contrary to law.4

Upon arraignment, appellant pleaded not guilty to the offense charged. 5 Thereafter, during trial, the
prosecution presented the testimonies of the victim AAA, and Dr. Jean Astercita. 6

According to AAA, at about 8:00 a.m. on December 5, 2000, she was at home with her father and two (2)
cousins washing clothes when her father asked her to buy cigarettes from a nearby store. When she
returned, she went to the room in the second floor of her house to give her father the cigarettes she had
bought. There, her father was already covered by a blanket in the dark. He held her hand and told her to
turn her back and remove her short pants. When she refused, appellant removed her pants himself. He then
proceeded to insert his penis into her vagina with her back towards him. He also told her to "stoop" on top
of the table facedown. AAA kept asking her father the reason for his actions but he did not answer. After
appellant satisfied his lust, AAA went to the comfort room downstairs to wash her private part. 7

The same incident happened on February 20, 2001 while AAA's mother was selling goods at the Carbon
Market.8 AAA pleaded that appellant stop what he was doing to her because she might get pregnant, which
would make her mother discover the horrific events, but to no avail. AAA revealed that on both occasions',
she refrained from seeking help from her cousins who were in the same house because of fear that appellant
might choke her mother, as what he would usually do in the past. 9 She also revealed that appellant would
threaten that if she tells anyone of the incidents, he will kill all of them in their house. 10 She, however, could
not keep the secret from her mother any longer because she became pregnant. When she gave birth, she
left the baby in Norfeld, a place for unwed mothers subject to incest. 11

After AAA's testimony, the prosecution presented Dr. Astercita to appear on behalf of Dr. Julius Caesar
Santiago, her senior resident physician, the doctor who attended to AAA and prepared the medical certificate
on his findings, but was no longer connected with the Vicente Sotto Memorial Medical Center (VCMMC).
According to Dr. Astercita, the medical certificate states that the examination conducted on AAA's anus and
genital area revealed that her hymen had deep notches at the seven and ten o'clock positions. This meant
that there was & 50% previous laceration thereon. Dr. Astercita explained that it may have been caused by
any blunt object inserted into AAA's vagina. 12 She further added that the examination on her abdomen also
revealed that she was pregnant, which was later confirmed by an ultrasound report. Moreover, when asked
the standard five questions in determining whether AAA was a victim of child abuse, AAA's answers showed
a positive finding.13

In contrast, the defense presented the lone testimony of appellant himself, who simply denied the charges
against him.14 While admitting that AAA was, indeed, his daughter, appellant refuted any allegation of
involvement in her pregnancy. Instead, he pointed out that it was AAA's boyfriend who impregnated her. He
conceded, however, that he may have mauled his daughter in the past but such bodily harm was inflicted
because she was fond of flirting with the opposite sex.15

On September 14, 2006, the RTC found appellant guilty beyond reasonable doubt of the two (2) counts of
rape and rendered its Decision, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing premises, judgment is rendered finding accused, REMAN SARIEGO,
GUILTY beyond reasonable doubt of two (2) counts of rape under subparagraph (a), paragraph (1) of ART.
266-A of the Revised Penal Code ("The Anti-Rape Law of 1997"-R.A. 8353) and upon him the indivisible
penalty of reclusion perpetua.

Accused is, likewise, ordered to pay AAA the sum of

1.) SEVENTY-FIVE THOUSAND (P75,000.00) PESOS, for and as civil liability; and

2.) FIFTY THOUSAND (P50,000.00) PESOS, for and as moral damages.

SO ORDERED.16

According to the RTC, the prosecution presented sufficient evidence proving, beyond reasonable doubt, that
appellant had carnal knowledge of his daughter AAA. AAA testified in a categorical, straightforward,
spontaneous and frank manner, evincing her credibility. The trial court cited several jurisprudential
authorities in ruling that the fact that she failed to shout during the entire ordeal and that she waited until

Page 2 of 169
she became pregnant to report the matter to the authorities does not weaken her case. As to the presence
of the element of force and intimidation, the RTC firmly ruled in the positive considering appellant's moral
ascendancy over AAA, being the father thereof, as well as his threats to kill her and the whole family, not to
mention his admitted acts of physical abuse.17 In view of the prosecution's positive evidence, the trial court
refused to give credence to appellant's bare denial and asseverations that it was A,A.A's boyfriend who
impregnated her. When there is no evidence to show any improper motive on the part of the prosecution
witness to testify falsely against an accused, the testimony is worthy of full faith and credit. 18

On appeal, the CA affirmed the RTC judgment finding appellant guilty beyond reasonable doubt of having
carnal knowledge of his own daughter. It found AAA's testimony to be credible and corroborated by the
results of the medical examination. It took into consideration the findings of the trial court on her credibility
in view of its unique position of having observed that elusive and incommunicable evidence of the
witness' deportment on the stand while testifying. The appellate court also noted the fact that AAA broke
into tears while testifying, evinces the truth of the rape charges, for display of such emotion indicates pain
when asked to recount her traumatic experience.19

The CA, however, deemed it necessary to point out that AAA's minority was not duly established by the
evidence on record. It ruled that while the Informations specifically ^alleged minority and relationship as
qualifying circumstances, the birth certificate, which was identified by AAA as Exhibit "B" in the course of her
testimony, was not formally offered in evidence.20 This- is because when the prosecution formally offered its
documentary evidence orally, the document offered as Exhibit "B" was not the birth certificate of AAA but
was actually the ultrasound report.21 Since AAA's birth certificate was not offered in evidence, the same
cannot be considered pursuant to Section 3422 of Rule 132 of the Revised Rules on Evidence. Thus, the CA
held that the qualifying circumstance of minority cannot be appreciated. It, however, deemed the
circumstance of relationship sufficient to qualify the offense. Hence, the appellate court sustained the RTC's
judgment finding appellant guilty of qualified rape and sentencing him to suffer the penalty of reclusion
perpetua for each count of rape, which would have been the death penalty without the passage of Republic
Act No. 9346, prohibiting the imposition thereof.23

Consequently, appellant filed a Notice of Appeal24 on January 26, 2012. Thereafter, in a Resolution25dated
October 17, 2012, the Court notified the parties that they may file their respective supplemental briefs, if
they so desire, within thirty (30) days from notice. Both parties, however, manifested that they are adopting
their respective briefs filed before the CA as their supplemental briefs, their issues and arguments having
been thoroughly discussed therein. Thus, the-case was deemed submitted for decision.

In his Brief, appellant assigned the following error:

I.

THE COURT OF APPEALS ERRED IN CONVICTING THE ACCUSED-APPELLANT FOR THE CRIME CHARGED
DESPITE THE FAILURE OF THE PROSECUTION TO PROVE HIS GUILT BEYOND REASONABLE DOUBT. 26

Appellant raises his suspicions as to why AAA, who was not alone in the house at the times of the alleged
rape incidents, her cousins being merely on the ground floor, failed to shout for help or call the attention of
said cousins. He also found surprising how, despite the proximity of their house to the barangay hall and
police station, she chose not to immediately report the alleged incidents. Similarly, appellant questions
AAA's decision to wait only until her mother noticed her pregnancy before she actually told her what had
happened.27 According to appellant, it was not he who impregnated her, but her boyfriend. Thus, he insists
that AAA's bare statements that she was "raped" should not be deemed sufficient to establish his guilt for
the crime or rape.28

We affirm appellant's conviction, but not for rape in its qualified form.

At the outset, the Court does not find any reason to depart from the findings of the courts below as to
appellant's guilt. Article 266-A, paragraph (1) of the Revised Penal Code (RPC) provides the elements of the
crime of rape:

Article 266-A. Rape: When And How Committed. - Rape is committed:

chanRoblesvirtualLawlibrary

1) By a man who shall have carnal knowledge of a woman under any of the following circumstances:

a) Through force, threat, or intimidation;

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b) When the offended party is deprived of reason or otherwise unconscious;

c) By means of fraudulent machination or grave abuse of authority; and

d) When the offended party is under twelve (12) years of age or is demented, even though none of the
circumstances mentioned above be present;
2. By any person who, under any of the circumstances mentioned in paragraph 1 hereof, shall commit an
act of sexual assault by inserting his penis into another person's mouth or anal orifice, or any instrument or
object, into the genital or anal orifice of another person. 29
ChanRoblesVirtualawlibrary

In resolving rape cases, the Court has always given primordial consideration to the credibility of the victim's
testimony. In fact, since rape is a crime that is almost always committed in isolation, usually leaving only
the victims to testify on the commission of the crime, for as long as the victim's testimony is logical,
credible, consistent and convincing, the accused may be convicted solely on the basis thereof. 30 In this case,
the courts below expressly found that AAA testified in a categorical, straightforward, spontaneous and frank
manner, evincing her credibility. As reproduced in the CA Decision, AAA's testimony during her direct
examination clearly recounted, in detail, the series of events that transpired during the alleged
incidents.31 Indeed, unless there appears certain facts or circumstances of weight and value which the lower
court overlooked or misappreciated and which, if properly considered, would alter the result of the case, the
trial court's conclusions on the credibility of witnesses in rape cases are generally accorded great weight and
respect, and at times even finality.32

The Court notes, however, that appellant cannot be held guilty of the crime of rape in its qualified form.
Article 266-B of the RPC provides that rape is qualified when certain circumstances are present in its
commission, such as when the victim is under eighteen (18) years of age and the offender is a parent,
ascendant, step-parent, guardian, relative by consanguinity or affinity within the third civil degree, or the
common-law spouse of the parent of the victim. 33 Hence, in a conviction for qualified rape, the prosecution
must prove that (1) the victim is under eighteen years of age at the time of the rape, and (2) the offender is
a parent (whether legitimate, illegitimate or adopted) of the victim. 34 In other words, it is the concurrence of
both the minority of the victim and her relationship with the offender that will be considered as a special
qualifying circumstance, raising the penalty to the supreme penalty of death. Thus, it is imperative that the
circumstance of minority and relationship be proved conclusively and indubitably as the crime itself;
otherwise, the crime shall be considered simple rape warranting the imposition of the lower penalty
of reclusion perpetual.35 If, at trial, both the age of the victim and her relationship with the offender are not
proven beyond reasonable doubt, the death penalty cannot be imposed. 36

In this case, while it is undisputed that AAA is the daughter of appellant, 37 her minority was not conclusively
established. In People v. Prunaa,38 the Court laid down the following controlling guidelines in appreciating
age, either as an element of the crime or as a qualifying circumstance:

In order to remove any confusion that may be engendered by the foregoing cases, we hereby set the
following guidelines in appreciating age, either as an element of the crime or as a qualifying circumstance.

1. The best evidence to prove the age of the offended party is an original or certified true copy of the
certificate of live birth of such party.

2. In the absence of a certificate of live birth, similar authentic documents, such as baptismal certificate and
school records which show the date of birth of the victim, would suffice to prove age.

3. If the certificate of live birth or authentic document is shown to have been lost or destroyed or otherwise
unavailable, the testimony, if clear and credible, of the victim's mother or a member of the family either by
affinity or consanguinity who is qualified to testify on matters respecting pedigree such as the exact age or
date of birth of the offended party pursuant to Section 40, Rule 130 of the Rules on Evidence shall be
sufficient under the following circumstances:
chanRoblesvirtualLawlibrary

a. If the victim is alleged to be below 3 years of age and what is sought to be proved is that she is less than
7 years old;

b. If the victim is alleged to be below 7 years of age and what is sought to be proved is that she is less than
12 years old;

c. If the victim is alleged to be below 12 years of age and what is sought to be proved is that she is less
than 18 years old.

Page 4 of 169
4. In the absence of a certificate of live birth, authentic document, or the testimony of the victim's mother
or relatives concerning the victim's age, the complainant's testimony will suffice provided that it is expressly
and clearly admitted by the accused.

5. It is the prosecution that has the burden of proving the age of the offended party. The failure of the
accused to object to the testimonial evidence regarding age shall not be taken against him. 39

Thus, the best evidence to prove the age of a person is the original birth certificate or certified true copy
thereof, and in their absence, similar authentic documents may be presented such as baptismal certificates
and school records. If the original or certified true copy of the birth certificate is not available, credible
testimonies of the victim's mother or a member of the family may be sufficient under certain circumstances.
In the event that both the birth certificate or other authentic documents and the testimonies of the victim's
mother or other qualified relative are unavailable, the testimony of the victimmay be admitted in evidence
provided that it is expressly and clearly admitted by the accused.40 cralawred

In line with the foregoing guidelines, the Court holds that AAA's minority was not duly established by the
evidence on record. As the appellate court ruled, while AAA's minority was specifically alleged in the
Informations as qualifying circumstances, the birth certificate, which was identified by AAA as Exhibit "B" in
the course of her testimony, was not formally offered in evidence because during the prosecution's formal
offer of documentary evidence, the document offered as Exhibit "B" was not actually the birth certificate of
AAA but was, in fact, the ultrasound report. Notably therefore, while the RTC stated in its judgment that
"AAA testified that she was born on 18 April 1984 at the Cebu City Medical Center," citing her supposed
Birth Certificate as "Exhibit B,"41 a perusal of the minutes of the session held by the trial court on March 10,
2005 would show that the prosecution did not actually offer AAA's birth certificate but merely offered the
following exhibits: (1) Exhibit A - Medical Certificate of victim AAA, (2) Exhibit B - Ultrasound Report, (3)
Exhibit C - Laboratory Report, and (4) Exhibit D - Five Direct Questions To Determine Victimization. 42 In fact,
AAA's Birth Certificate is nowhere to be found in the Index of Original Record 43 issued by Atty. Aurora V.
Penaflor, the Branch Clerk of Court of the RTC, 7th Judicial Region, Branch 14, Cebu City. The only logical
conclusion, therefore, is that the Birth Certificate was never really offered in evidence for it was never part
of the records in the proceedings below. It must be noted, moreover, that when the appellate court
rendered its judgment pointing to said failure to present AAA's birth certificate, the prosecution never raised
any objection thereto before this Court, merely adopting its appellate brief filed before the CA. Hence, the
Court finds that the prosecution, indeed, failed to adduce the best evidence to prove AAA's age. As Section
34, Rule 132 of the Rules of Court explicitly provides: "The court shall consider no evidence which has not
been formally offered."

Furthermore, unfortunately for the prosecution, the records show that it likewise failed to present such other
documentary and testimonial evidence which may suffice as substitutes for AAA's birth certificate, as
enumerated in Pruna. For one, apart from AAA's purported birth certificate, which turned out to be her
ultrasound report, the prosecution presented no other similar, authentic documentary evidence, such as
baptismal certificates and school records. For another, while AAA's testimony may be admitted in evidence
to prove her age, Pruna requires that the same must be expressly and clearly admitted by the
accused.Regrettably, however, there is no such express admission herein. True, AAA had testified during
trial that she was 17 years old at the time of the unfortunate incidents. Yet, nowhere in the records does it
appear that appellant explicitly acknowledged AAA to be 17 years of age during the time when the alleged
incidents occurred. Thus, AAA's testimony cannot be considered sufficient enough to prove her age.

In sum, the Court finds that not only did the prosecution fail to adduce competent documentary evidence to
prove AAA's minority such as her original or duly certified birth certificate, baptismal certificate, school
records, or any other authentic documents as required by Pruna, it likewise failed to establish that said
documents were lost, destroyed, unavailable, or otherwise totally absent. There is also nothing in the
records to show that AAA's mother or any member of her family, by affinity or consanguinity, testified on
her age or date of birth. In like manner, while AAA may have testified as to her age during the trial, it was
not clearly shown that the same was expressly admitted by appellant. Thus, AAA's minority cannot be
appreciated as a qualifying circumstance against appellant herein.

Indeed, qualifying circumstances must be proved beyond reasonable doubt just like the crime itself. 44 In
view of the prosecution's failure to establish AAA's minority with absolute certainty and clearness, the Court
cannot sustain appellant's conviction for the crime of rape in its qualified form. Consequently, appellant
should only be convicted of the crime of simple rape, the penalty for which is reclusion
perpetua.45 Additionally, the damages awarded by the courts below should also be modified in line with
prevailing jurisprudence.46 Thus, the award of civil indemnity must be reduced to P50,000.00, while the

Page 5 of 169
award of moral damages in the amount of P50,000.00 shall be maintained. In addition, there shall be an
award of exemplary damages in the amount of P30,000.00. Said amounts shall earn interest at the rate of
6% per annum from date of finality of this judgment until fully paid. 47

WHEREFORE, premises considered, the Court AFFIRMS the Decision dated December 9, 2011 of the Court
of Appeals in CA-G.R. CEB-CR-H.C. No. 00721 with the MODIFICATION that appellant Reman Sariego is
hereby found guilty beyond reasonable doubt of two (2) counts of simple rape and is sentenced to suffer the
penalty of reclusion perpetua for each count of rape and to pay AAA the following amounts for each count of
rape: (a) P50,000.00 as civil indemnity; (b) P50,000.00 as moral damages; and (c) P30,000.00 as
exemplary damages, plus 6% interest per annum of all the damages awarded from finality of decision until
fully paid.

SO ORDERED.

Velasco, Jr., (Chairperson), Bersamin,* Perez, and Reyes, JJ., concur. chanroblesvirtuallawlibrary

Endnotes:

*
Designated Additional Member in lieu of Associate Justice Francis H. Jardeleza, per Raffle dated October 1,
2014.

1
Penned by Associate Justice Ramon Paul L. Hernando, with Associate Justices Edgardo L. Delos Santos and
Victoria Isabela A. Paredes concurring; rollo, pp. 3-18.

2
Penned by Judge Raphael B. Yrastorza, Sr.; CA rollo, pp. 17-20.

3
In line with the Court's ruling in People v. Cabalquinlo, G.R. No. 167693, September 19, 2006, 502 SCRA
419, 426, citing Rule on Violence Against Women and their Children, Sec. 40, Rules and Regulations
Implementing Republic Act No. 9262, Rule XI, Sec. 63, otherwise known as the "Anti-Violence Against
Women and their Children Act," the real name of the rape victim will not be disclosed.

Rollo, p. 5.
4

5
Id. at 6.

6
CA rollo, pp. 36-40.

7
Id. at 17.

8
Id. at 18.

Rollo, p. 7.
9

10
CA rollo, p. 18.

11
Id.

12
Rollo, p. 7.

13
Id.

14
CA rollo, p. 18.

15
Rollo, p. 8.

16
CA rollo, p. 20.

17
Id. at 18-19.

18
Id. at 18.

Page 6 of 169
19
Rollo, p. 14.

20
Id. at 16.

21
Id. at 17.

22
Sec. 34. Offer of evidence. - The court shall consider no evidence which has not been formally offered.
The purpose for which the evidence is offered must be specified.

23
Rollo, p. 17.

24
Id. at 19. cralawred

25
Id. at 26.

26
CA rollo, p. 31. cralawred

27
Id. at 36.

28
Id. at 37.

23
Article 266-A of the Revised Penal Code (1930), as amended by Republic Act No. 8353 (1997).

30
People of the Philippines v. Domingo Gallano y Jarcmilla, G.R. No. 184762, February 25, 2015.

31
Rollo, pp. 10-13.

32
People v. Padilla, 617 Phil. 170, 183 (2009).

33
Article 266-B of the Revised Penal Code (1930), as amended by Republic Act No. 8353 (1997).

34
People v. Buclao, G.R. No. 208173, June 11, 2014, 726 SCRA 365, 377.

People v. Barcela, G.R. No. 208760, April 23, 2014, 723 SCRA 647, 666, citing People v. Alemunia, 440
35

Phil. 297, 306 (2002).

36
People v. Arcillas, 692 Phil. 40, 52 (2012).

37
CA rollo, p. 35.

38
439 Phil. 440 (2002).

39
Id. at 470-471. cralawred

People v. Paldo, G.R. No. 200515, December 11, 2013, 712 SCRA 659, 676-677, citingPeople v.
40

Cayabyab, 503 Phil. 606, 618 (2005).

41
CA rollo, p. 17.

42
Id. at 16.

43
Id. at 5-7.

44
People v. Cial, G.R. No. 191362, October 9, 2013, 707 SCRA 285, 297.

45
REVISED PENAL CODE, Art. 266-B.

46
People of the Philippines v. Domingo Gallanoy Jaranilla, G.R. No. 184762, February 25, 2015.

47
Id.

Page 7 of 169
 FIRST DIVISION

G.R. No. 209040, December 09, 2015

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. RODOLFO PATEO DAYAPDAPAN, Accused-

Appellant.

RESOLUTION

PEREZ, J.:

The subject of this review is the Decision 1 of the Court of Appeals (CA) in CA-G.R. CR-HC No. 0G788 dated
23 May 2013 which affirmed the Decision2 of the Regional Trial Court (RTC) of Bais City, Branch 45, in
Criminal Case Nos. F-03-12-A, F-03-13-A, F-03-14-A, F-03-15-A, and F-03-16-A finding accused-appellant
Rodolfo Pateo y Dayapdapan guilty beyond reasonable doubt of five (5) counts of rape.

Except for the dates, the five (5) Informations identically charge accused-appellant of rape committed as
follow:

That on or about March 25, 2002 at about 10:00 o'clock in the evening at x x x, Negros Oriental, Philippines,
and within the jurisdiction of this Honorable Court, the said accused, who is the father of 14-year old
[AAA],3 did then and there willfully, unlawfully and feloniously by force, threat or intimidation, insert his
penis into the vagina of his said daughter and had carnal knowledge of her against her will and consent. 4 ChanRoblesVirtualawlibrary

On arraignment, accused-appellant pleaded not guilty. During pre-trial, both parties made the following
factual stipulations:

1. That the accused admits his identity in the five (5) cases that whenever his name is mentioned in
the proceedings he is the same accused in this case;

2. That accused admits that he is the father of the victim [AAA];

3. That accused admits that he is living at [x x x],5 Negros Oriental; and

4. That private complainant admits that she was a contestant in a beauty pageant involving money
contribution wherein the winner is determined with the amount of money raised on occasion of
the barangay fiesta of [x x x] on 5 April 2002.6

AAA related that she was only four years old when her parents left her to the care of her aunt, BBB. AAA
started living with accused-appellant only in 2000 in a two-bedroom house. On 25 March 2002 at around
10:00 p.m., AAA, then 14 years old, was awakened by accused-appellant who removed her short pants and
underwear. Accused-appellant likewise took off his clothes. He threatened AAA with a scythe and ordered
her to stay quiet. He then mounted her and made pumping motions. After satisfying his lust, accused-
appellant left without saying a word. He proceeded to perform this bestial act on AAA for the four (4)
succeeding nights.7

When AAA could no longer bear it, she left the house and stayed in the house of her teacher from 30 March
to 1 April 2002 where she intimated to the latter her harrowing experience in the hands of accused-
appellant.8

On 5 April 2002, AAA underwent a medical examination, the findings and results of which are as follow:
- Contusion upper border iliac region, right

- Pelvic exam: chanRoblesvirtualLawlibrary

- With old hymenal tear at 3 & 9 o'clock positions

- Negative for discharges

- Admits 2 fingers with ease9 ChanRoblesVirtualawlibrary

Page 8 of 169
A pastor of the United Church of Christ of the Philippines (UCCP) testified on the contents of the Membership
Record Book which show that AAA was born on 10 September 1987 and was baptized on 5 June 1988. Said
document also listed accused-appellant as AAA's father.

Accused-appellant confirmed that AAA started staying with him in March 2002 but added that there were
five of them living in the house of his nephew, Rene Pateo (Rene). He denied raping AAA and claimed that
AAA is taking revenge because during a beauty contest in April of that year, he pinched AAA in front of her
fellow contestants and barangay councilors.10 Accused-appellant's nephew, Rene testified that accused-
appellant lived with him but AAA was living with his sister.11 Rene's sister Arly corroborated Rene's
statement that AAA was living with her on the dates of the alleged rape incidents. 12 Both witnesses
speculated that AAA wrongfully accused her father of rape because she harbored a grudge towards accused-
appellant who would always scold her.13

On 27 April 2007, accused-appellant was found guilty beyond reasonable doubt of five (5) counts of rape.
The dispositive portion of the Decision reads:
WHEREFORE, premises considered, this [c]ourt finds accused RODOLFO PATEO y DAYAPDAPAN,
guilty beyond reasonable doubt for the crime of rape for five (5) counts as provided under the
provisions of Article 266-A of the Revised Penal Code, and pursuant to the provisions of par. (1) of Article
266-B, he may be meted the extreme penalty of death. But, with the passage of Republic Act No. 8353, he
is thereby meted the penalty of FIVE (5) RECLUSION PERPETUAS, and with all the accessory penalties.

He is thereby ordered to pay the victim, [AAA], the amount of FIFTY THOUSAND (P50,000.00) PESOS for
actual damages and another FIFTY THOUSAND (P50,000.00) PESOS for moral damages, and to pay
costs.14
ChanRoblesVirtualawlibrary

On 23 May 2013, the CA rendered the assailed judgment affirming with modification the trial court's
decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the Appeal is DENIED. The Joint Decision dated April 27, 2007 of the
Regional Trial Court RTC), Branch 45, Bais City in Criminal Case Nos. F-03-12-A, F-03-13-A, F-03-14-A, F-
03-15-A, [and] F-03-16-A convicting Rodolfo Pateo y Dayapdapan of five (5) counts of rape and meting
him the penalty of imprisonment ofreclusion perpetua for each count, is hereby AFFIRMED with
the MODIFICATIONS as to damages.

Accused-appellant Rodolfo Pateo y Dayapdapan is ordered to pay the victim AAA Seventy Five Thousand
Pesos (P75,000.00) as civil indemnity, Seventy Five Thousand Pesos (P75,000.00) as moral damages and
Thirty Thousand Pesos (P30,000.00) as exemplary damages, for each count of rape, all with interest at the
rate of 6% per annum from the date of finality of this judgment. No costs. 15 ChanRoblesVirtualawlibrary

Accused-appellant filed the instant appeal. In a Resolution16 dated 18 November 2013, accused-appellant
and the Office of the Solicitor General (OSG) were required to file their respective supplemental briefs if they
so desired. Both parties manifested that they were adopting their respective briefs filed before the appellate
court.17

In his Brief,18 accused-appellant argues that AAA's testimony regarding the time and manner of the
purported five (5) rape incidents is incredulous. Accused-appellant insists that AAA did not feel any fatherly
love towards him and she had the motive to falsely accuse him of rape. Accused-appellant claimed that AAA
had been reprimanded numerous times by him because of her unacceptable behavior. Finally, accused-
appellant contends that the prosecution failed to prove AAA's age at the time of the commission of the
alleged crime.

The appeal is without merit.

Accused-appellant insists that AAA's claim of sequent rape identically done is highly improbable and contrary
to human experience.

In People v. Solomon,19 we held that the victim's uniform testimony regarding the manner by which she was
raped does not diminish her credibility. We explained, thus:
Men are creatures of habit and are bound to adopt a course of action that has proven to be successful. As
appellant was able to fulfill his lustful designs upon complainant the first time, it comes as no surprise that
he would repeat the horrific acts when the circumstances obtaining in the first rape again presented
themselves.20 ChanRoblesVirtualawlibrary

As in the aforestated case, AAA did not immediately report the incident to her teacher and instead, she
suffered for four more similar incidents before she broke her silence.

Page 9 of 169
There is a plausible explanation for the conduct of the victim. The Court explained in Solomon, viz.:
Complainant's youth partly accounts for her failure to escape appellant's lust. A young girl like complainant
cannot be expected to have the intelligence to defy what she may have perceived as the substitute parental
authority that appellant wielded over her. That complainant had to bear more sexual assaults from appellant
before she mustered enough courage to escape his bestiality does not imply that she willingly submitted to
his desires. Neither was she expected to follow the ordinary course that other women in the same situation
would have taken. There is no standard form of behavior when one is confronted by a shocking incident.
Verily, under emotional stress, the human mind is not expected to follow a predictable path. 21 ChanRoblesVirtualawlibrary

AAA was only able to report the incident when she was away from the custody of accused-appellant and
when she felt safe.

AAA's credibility was upheld by the trial court, which is in a position to observe the candor, behavior and
demeanor of the witness. Findings of the lower courts with respect to credibility of the rape victim are
conclusive.

We also cannot give credence to accused-appellant's claim that AAA was taking revenge when she filed the
rape charges against accused-appellant for allegedly castigating her. No woman in her right mind, especially
a young girl, would fabricate charges of this nature and severity. 22

The RTC and the CA correctly appreciated the twin qualifying circumstances of minority and relationship.
Accused-appellant admitted during the pre-trial conference that AAA was his daughter. Thus, relationship
between accused-appellant and AAA is established. Anent the element of minority, the prosecution
presented a certification23 from the UCCP Office in Ayungon, Negros Occidental stating that AAA was
baptized according to the rites and ceremonies of the UCCP. The certification shows that AAA was born on
10 September 1987 to accused-appellant and a certain Nely Fabel. A page of the UCCP Membership Book
was submitted bearing the same information.It was held that a birth certificate, baptismal certificate, school
records or documents of similar nature can be presented to prove the age of a victim. 24 In this case, the
Membership Book, which is considered an entry in official records under Section 44, 25 Rule 130 of the Rules
of Court, is admissible as prima facie of their contents and corroborative of AAA's testimony as to her age.
Moreover, entries in public or official books or records may be proved by the production of the books or
records themselves or by a copy certified by the legal keeper thereof. 26

Considering that accused-appellant committed rape qualified by the twin circumstances of minority and
relationship, the proper penalty to be imposed is death. Since the imposition of the death penalty has been
prohibited by Republic Act No. 9346, the lower courts properly imposed the penalty oireclusion
perpetua without eligibility for parole for each count of rape.

As to the award of damages, we deem it proper to further modify the CA's award. Pursuant to our ruling
in People v. Gambao,27 AAA is thus entitled to P100,000.00 as civil indemnity, PI00,000.00 as moral
damages and P 100,000.00 as exemplary damages. Finally, all damages awarded shall earn interest at the
rate of 6% per annum from date of finality of this judgment until fully paid. 28

WHEREFORE, accused-appellant Rodolfo Pateo y Dayapdapan is found GUILTY for each count of the crime
of rape, qualified by minority and relationship, charged under Criminal Case Nos. F-03-12-A, F-03-13-A, F-
03-14-A, F-03-15-A, and F-03-16-A and is hereby sentenced to suffer the penalty of reclusion
perpetua without eligibility for parole, in lieu of death. He is also ORDERED to pay AAA the amounts of
P100,000.00 as civil indemnity, P100,000.00 as moral damages, and P100,000.00 as exemplary damages,
for each count of rape, plus legal interest at the rate of 6% per annum from the finality of this Resolution
until the amounts due are fully paid.

SO ORDERED. chanroblesvirtuallawlibrary

Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Perlas-Bernabe, JJ., concur. chanrobleslaw

Endnotes:

1
Rollo, pp. 3-23; Penned by Associate Justice Carmelita Salandanan-Manahan with Associate Justices Ramon
Paul L. Hernando and Ma. Luisa C. Quijano-Padilla concurring.

Page 10 of 169
2
Records (Criminal Case No. F-03-12-A), pp. 158-166; Presided by Judge Ismael O. Baldado.

3
The real names of the victim and of the members of her immediate family are withheld pursuant to
Republic Act No. 7610 (Special Protection of Children Against Child Abuse, Exploitation and Discrimination
Act) and Republic Act No. 9262 (Anti-Violence Against Women and Their Children Act of 2004).

4
Records, p. 1.

5
The address of appellant is withheld to protect the victim who lived with him.

6
Records (Criminal Case No. F-03-12-A), p. 39.

7
TSN, 24 July 2003, pp. 4-15.

8
Id. at 16-17.

9
Records (Criminal Case No. F-03-12-A), p. 9.

10
TSN, 12 May 2005, pp. 3-7.

11
TSN, 23 August 2005, p. 4.

12
TSN, 17 July 2006, p. 5.

13
TSN, 23 August 2005, pp. 7-8, id. at 7-8.

14
Records (Criminal Case No. F-03-12-A), p. 166.

15
Rollo, pp. 22-23.

16
Id. at 29.

17
Id. at 31-33 and 37-39.

18
CA rollo, pp. 20-33.

19
434 Phil. 1 (2002).

20
Id. at 21.

21
Id.

22
People v. Cabral, 623 Phil. 809, 815 (2009).

23
Records, p. 88.

24
People v. Jacob, 413 Phil. 542, 548 (2001).

25
Section 44. Entries in official records. Entries in official records made in the performance of his duty by
a public officer of the Philippines, or by a person in the performance of a duty specially enjoined by law, are
prima facie evidence of the facts therein stated.

26
People v. Jalosjos, 421 Phil. 43, 86 (2001).

27
G.R. No. 172707, 1 October 2013,706 SCRA 508, 533.

28
People v. Colantava, G.R. No. 190348,9 February 2015.

FIRST DIVISION

Page 11 of 169
 G.R. No. 205412, September 09, 2015

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. ADRIAN GUTING Y TOMAS, Accused-Appellant.

DECISION

LEONARDO-DE CASTRO, J.:

For Our consideration is an appeal from the Decision1 dated May 23, 2012 of the Court of Appeals in CA-G.R.
CR.-H.C. No. 04596, which affirmed the Decision2 dated June 24, 2010 of the Regional Trial Court (RTC),
Camiling, Tarlac, Branch 68, in Criminal Case No. 06-93, finding accused-appellant Adrian Guting y Tomas
guilty of the crime of Parricide under Article 246 of the Revised Penal Code.

In an Information3 dated August 1, 2006, docketed as Criminal Case No. 06-93, accused-appellant was
charged before the RTC with Parricide, allegedly committed as follows:

That on or about 4:50 in the rainy afternoon of July 30, 2006 at Plaridel St., Poblacion B. Camiling, Tarlac,
Philippines and within the jurisdiction of this Honorable Court, the said accused, did then and there willfully,
unlawfully and feloniously, and with evident premeditation, that is, having conceived and deliberated to kill
his own father Jose Guting y Ibarra, 67 years old, married, while inside their residential house, and armed
with a bladed weapon, suddenly and unexpectedly stabbed several times the victim, employing means,
manner and form in the execution thereof which tender directly and specially to insure its commission
without danger to the person of said accused, the result of which attack was that said victim received
multiple stab wounds on his body which directly caused his instantaneous death.
When arraigned on September 19, 2006, accused-appellant pleaded not guilty to the crime
charged.4Thereafter, pre-trial and trial on the merits ensued.

Below is a summary of the prosecution witnesses' testimonies.

Police Officer (PO1) Fidel Torre (Torre) testified that on the rainy afternoon of July 30, 2005, at around 5:00
o'clock, he and PO1 Alexis Macusi (Macusi) were standing in front of the Camiling Police Station when
accused-appellant, all wet from the rain and with a bladed weapon in his hand, suddenly approached them
and told them that he had stabbed his father. Hearing accused-appellant's statement, PO1 Torre
immediately got the bladed weapon from accused-appellant and turned it over to PO1 Macusi for proper
disposition.5

PO1 Macusi corroborated PO1 Torre's testimony. PO1 Macusi narrated that accused-appellant suddenly
appeared before them at the Police Station, all wet and holding a knife. Accused-appellant proclaimed that
his father was already dead. Unsuspecting, PO1 Macusi asked who killed accused-appellant's father.
Accused-appellant answered, "Sinaksak ko po yong tatay ko! Napatay ko na po!" PO1 Torre then got the
knife from accused-appellant and gave it to PO1 Macusi. PO1 Macusi placed the knife in the custodian
cabinet in the Police Station. Thereafter, PO1 Macusi, Senior Police Officer (SPO) 2 Eliseo Hermosado
(Hermosado), and SPO2 Noli Felipe (Felipe) went to the residence of Jose Guting (Jose), accused-appellant's
father, to verify the reported crime, while other police officers informed Flora Guting (Flora), Jose's wife
(also accused-appellant's mother), who was still in the market with Emerlito Guting (Emerlito), Jose and
Flora's other son (accused-appellant's brother), who was then driving a tricycle for hire. While waiting for
Flora and Emerlito, PO1 Macusi, SPO2 Hermosado, and SPO2 Felipe inquired from the neighbors if anybody
had witnessed the crime, but no one did. When Flora and Emerlito arrived, they entered the house and saw
Jose's lifeless body with blood still oozing from his wounds. Immediately, Flora and Emerlito brought Jose to
the hospital where he was pronounced dead on arrival. Subsequently, Flora and Emerlito executed their
respective Sinumpaang Salaysay and filed a case for Parricide against accused-appellant.6

On cross-examination, PO1 Macusi divulged that when the knife was given to him by PO1 Torre for
safekeeping, he did not ask accused-appellant if it was the knife he used to kill his father. Neither did
accused-appellant mention to PO1 Macusi that it was the knife he used in stabbing Jose. All that accused-
appellant said was, "Sinaksak ko po yong tatay ko! Napatay ko na po!" PO1 Macusi also admitted that he did
not request for the examination of the knife because it was clean; any trace or stain of blood on it would
have been washed away by the rains at that time. PO1 Macusi was further questioned as to why he did not
put into writing accused-appellant's admission that he killed his father, and PO1 Macusi explained that it
escaped his mind as he was still new at the job then and he was carried away by the fast flow of events. 7

Page 12 of 169
Flora conceded that she was not present when Jose, her husband, was killed by accused-appellant, their
son. Flora only learned of the stabbing incident and accused-appellant's surrender from the police officers of
the Camiling Police Station. Flora declared that she spent for the wake and burial of Jose and that Jose, who
was a tricycle driver, had been earning around P200.00 a day at the time of his death. 8

Doctor Valentin Theodore Lomibao (Dr. Lomibao) conducted the autopsy of Jose's body. Dr. Lomibao
reported that Jose suffered around 39 stab wounds on the head, neck, thorax, abdomen, and extremities.
Jose's internal organs were heavily damaged by the stab wounds, resulting in his instantaneous death. Dr.
Lomibao also showed several pictures of Jose's body which were taken before he conducted the autopsy. 9

Accused-appellant opted not to present any evidence in his defense.

The RTC promulgated its Decision on June 24, 2010 finding accused-appellant guilty of Parricide based on
his verbal admission that he killed his father, Jose. Even assuming that accused-appellant's admission was
inadmissible in evidence, the RTC adjudged that the prosecution was still able to establish sufficient
circumstantial evidence which, taken collectively, pointed to accused-appellant as the perpetrator of the
brutal killing of his father. The dispositive portion of the RTC judgment reads:
WHEREFORE, accused Adrian Guting y Tomas is hereby found guilty beyond reasonable doubt of the offense
of Parricide punishable under Article 246 of the Revised Penal Code, as amended and hereby sentences him
to a penalty of Reclusion Perpetua.

Accused is likewise ordered to pay the heirs of the victim the amount of P50,000.00 as civil indemnity,
another amount of P50,000.00 as moral damages, and still another amount of P30,000.00 as temperate
damages.10
Accused-appellant appealed his conviction before the Court of Appeals, docketed as CA-G.R. CR.-H.C. No.
04596. The appellate court promulgated its Decision on May 23, 2012, decreeing thus:
WHEREFORE, the appeal is DENIED. The Decision of the Regional Trial Court of Camiling, Tarlac, Branch
68 convicting herein accused-appellant Adrian Guting y Tomas for the crime of Parricide under Article 246 of
the Revised Penal Code is AFFIRMED.11
Hence, accused-appellant comes before us via the instant appeal with the same assignment of errors he
raised before the Court of Appeals, to wit:
I

THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE ACCUSED-APPELLANT ON THE BASIS OF HIS
EXTRAJUDICIAL ADMISSION.

II

THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE ACCUSED-APPELLANT ON THE BASIS OF
INSUFFICIENT CIRCUMSTANTIAL EVIDENCE.

III

THE TRIAL COURT GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY BEYOND REASONABLE
DOUBT OF THE CRIME CHARGED DESPITE THE PROSECUTION'S FAILURE TO OVERTHROW THE
CONSTITUTIONAL PRESUMPTION OF INNOCENCE IN HIS FAVOR. 12
We find no merit in accused-appellant's appeal.

Accused-appellant argues that his oral confession to PO1 Torre and PO1 Macusi, without the assistance of
counsel, is inadmissible in evidence for having been made in blatant violation of his constitutional right
under Article III, Section 12 of the 1987 Constitution.

Section 12, paragraphs 1 and 3, Article III (Bill of Rights) of the 1987 Constitution mandate that:
SEC. 12. (1) Any person under investigation for the commission of an offense shall have the right to be
informed of his right to remain silent and to have competent and independent counsel preferably of his own
choice. If the person cannot afford the services of counsel, he must be provided with one. These rights
cannot be waived except in writing and in the presence of counsel.

xxxx

Page 13 of 169
(3) Any confession or admission obtained in violation of this or Section 17 hereof shall be inadmissible in
evidence against him.13
The "investigation" in Section 12, paragraph 1, Article III of the 1987 Constitution pertains to "custodial
investigation." Custodial investigation commences when a person is taken into custody and is singled out as
a suspect in the commission of a crime under investigation and the police officers begin to ask questions on
the suspect's participation therein and which tend to elicit an admission. 14 As we expounded in People v.
Marra15:
Custodial investigation involves any questioning initiated by law enforcement officers after a person has
been taken into custody or otherwise deprived of his freedom of action in any significant way. It is only after
the investigation ceases to be a general inquiry into an unsolved crime and begins to focus on a particular
suspect, the suspect is taken into custody, and the police carries out a process of interrogations that lends
itself to eliciting incriminating statements that the rule begins to operate. (Citation omitted.)
Applying the foregoing definitions, accused-appellant was not under custodial investigation when he
admitted, without assistance of counsel, to PO1 Torre and PO1 Macusi that he stabbed his father to death.
Accused-appellant's verbal confession was so spontaneously and voluntarily given and was not elicited
through questioning by the police authorities. It may be true that PO1 Macusi asked accused-appellant who
killed his father, but PO1 Macusi only did so in response to accused-appellant's initial declaration that his
father was already dead. At that point, PO1 Macusi still had no idea who actually committed the crime and
did not consider accused-appellant as the suspect in his father's killing. Accused-appellant was also merely
standing before PO1 Torre and PO1 Macusi in front of the Camiling Police Station and was not yet in police
custody.

Accused-appellant cites in support of his argument People v. Cabintoy,16 where we held that an uncounselled
extrajudicial confession without a valid waiver of the right to counsel - that is, in writing and in the presence
of counsel - is inadmissible in evidence. The situation of accused-appellants inCabintoy is not similar to that
of accused-appellant herein. The accused-appellants in Cabintoy, when they executed their extrajudicial
confessions without assistance of counsel, were already suspects under custodial investigation by the San
Mateo Police for robbery with homicide committed against a taxi driver. Accused-appellant in the instant
case, on his own volition, approached unsuspecting police officers standing in front of the police station with
a knife in his hand and readily confessed to stabbing his father to death. Accused-appellant was arrested
and subjected to custodial investigation by the police officers only after his confession.

Hence, herein accused-appellant's confession, even if done without the assistance of a lawyer, is not in
violation of his constitutional right under Section 12, paragraph 1, Article III of the 1987 Constitution. The
present case is more akin to People v. Andan17 wherein we allowed into evidence the uncounselled
confession of therein accused-appellant given under the following circumstances:
Under these circumstances, it cannot be successfully claimed that appellant's confession before the mayor is
inadmissible. It is true that a municipal mayor has "operational supervision and control" over the local police
and may arguably be- deemed a law enforcement officer for purposes of applying Section 12 (1) and (3) of
Article III of the Constitution. However, appellant's confession to the mayor was not made in response to
any interrogation by the latter. In fact, the mayor did not question appellant at all. No police authority
ordered appellant to talk to the mayor. It was appellant himself who spontaneously, freely and voluntarily
sought the mayor for a private meeting. The mayor did not know that appellant was going to confess his
guilt to him. When appellant talked with the mayor as a confidant and not as a law enforcement officer, his
uncounselled confession to him did not violate his constitutional rights. Thus, it has been held that the
constitutional procedures on custodial investigation do not apply to a spontaneous statement, not elicited
through questioning by the authorities, but given in an ordinary manner whereby appellant orally admitted
having committed the crime. What the Constitution bars is the compulsory disclosure of incriminating facts
or confessions. The rights under Section 12 are guaranteed to preclude the slightest use of coercion by the
state as would lead the accused to admit something false, not to prevent him from freely and voluntarily
telling the truth. Hence, we hold that appellant's confession to the mayor was correctly admitted by the trial
court.
Moreover, accused-appellant's verbal confession that he stabbed his father to death made to PO1 Torre and
PO1 Macusi, established through the testimonies of said police officers, falls under Rule 130, Section 26 of
the Rules of Court, which provides that "[t]he act, declaration or omission of a party as to a relevant fact
may be given in evidence against him." This rule is based upon the notion that no man would make any
declaration against himself, unless it is true.18 Accused-appellant's declaration is admissible for being part of
the res gestae. A declaration is deemed part of the res gestae and admissible in evidence as an exception to
the hearsay rule when these three requisites concur: (1) the principal act, the res gestae, is a startling
occurrence; (2) the statements were made before the declarant had time to contrive or devise; and (3) the
statements concern the occurrence in question and its immediately attending circumstances. 19 All the
requisites are present in this case. Accused-appellant had just been through a startling and gruesome

Page 14 of 169
occurrence, that is, his father's death. Accused-appellant made the confession to PO1 Torre and PO1 Macusi
only a few minutes after and while he was still under the influence of said startling occurrence, before he
had the opportunity to concoct or contrive a story. In fact, accused-appellant seemed to still be in shock
when he walked to the Police Station completely unmindful of the rain and the knife in his hand, and headed
directly to PO1 Torre and PO1 Macusi, who were standing in front of the Police Station, to confess to
stabbing his father to death. The police officers who immediately went to the house of Jose, accused-
appellant's father, found Jose's lifeless body with blood still oozing from his stab wounds. As res gestae,
accused-appellant's spontaneous statement is admissible in evidence against him.

Accused-appellant's confession was further corroborated by the circumstantial evidence.

To justify a conviction upon circumstantial evidence, the combination of circumstances must be such as to
leave no reasonable doubt in the mind as to the criminal liability of the accused. 20 Rule 133, Section 4 of the
Rules of Court enumerates the conditions when circumstantial evidence is sufficient for conviction, thus:
SEC. 4. Circumstantial Evidence, when sufficient. - Circumstantial evidence is sufficient for conviction if: chanRoblesvirtualLawlibrary

(a) There is more than one circumstance; ChanRoblesVirtualawlibrary

(b) The facts from which the inferences are derived are proven; and

(c) The combination of all circumstances is such as to produce conviction beyond reasonable doubt.
The RTC, affirmed by the Court of Appeals, found that the aforequoted requisites have been satisfied in this
case given the following circumstantial evidence:
1. On or about 4:50 o'clock in the afternoon of July 30, 2006, the victim was stabbed to death.

2. Thirty minutes later, [accused-appellant] personally went to Camiling Police Station and surrendered
himself and the bladed weapon he used in killing his father to the police authorities of the said police station.

3. When his mother learned about the incident, [accused-appellant] did nothing to appease his responding
mother. "It has always been said that criminal case are primarily about human nature." Here is a case of a
son doing nothing to explain the death of his father to his grieving mother. Such inaction is contrary to
human nature.

4. When he was detained after police investigation, [accused-appellant] did not object to his continued
detention.
These circumstances constitute an unbroken chain which leads to one fair and reasonable conclusion that
points to accused-appellant, to the exclusion of all others, as the guilty person. 21 The incriminating collage of
facts against accused-appellant was created by circumstantial evidence anchored on the credible and
unbiased testimony of the prosecution's witnesses. We will not disturb but shall accord the highest respect
to the findings of the RTC on the issue of credibility of the witnesses and their testimonies, it having had the
opportunity to observe their deportment and manner of testifying during the trial. 22

Article 246 of the Revised Penal Code defines Parricide as follows:

Art. 246. Parricide. - Any person who shall kill his father, mother, or child, whether legitimate or illegitimate,
or any of his ascendants, or descendants, or his spouse, shall be guilty of parricide and shall be punished by
the penalty of reclusion perpetua to death.
Parricide is committed when: (1) a person is killed; (2) the deceased is killed by the accused; and (3) the
deceased is the father, mother, or child, whether legitimate or illegitimate, or a legitimate other ascendant
or other descendant, or the legitimate spouse of the accused. The key element in Parricide - other than the
fact of killing - is the relationship of the offender to the victim. 23 All the elements are present in this case.
Jose, the victim, was killed by accused-appellant, his own son. Accused-appellant's birth certificate, which
was presented before the RTC, establishes that accused-appellant was the legitimate son of Jose and Flora.

The crime of Parricide is punishable by the indivisible penalties of reclusion perpetua to death. With one
mitigating circumstance, namely, voluntary surrender, and no aggravating circumstance, the imposition of
the lesser penalty of reclusion perpetua on accused-appellant was proper.

We modify though the monetary awards imposed by the RTC and affirmed by the Court of Appeals. When
death occurs due to a crime, the following damages may be awarded: (1) civil indemnity ex delicto for the
death of the victim; (2) actual or compensatory damages; (3) moral damages; (4) exemplary damages; and
(5) temperate damages.24
Prevailing jurisprudence pegs the amount of civil indemnity and moral damages awarded to the heirs of the

Page 15 of 169
victim of Parricide at P75,000.00 each.25 The temperate damages awarded by the RTC in the amount of
P30,000.00 should be decreased to P25,000.00 to also conform with the latest jurisprudence. 26 It is fitting to
additionally award exemplary damages in the sum of P30,000.00 considering the presence of the qualifying
circumstance of relationship.

Damages for the loss of earning capacity of Jose should be awarded as well given the testimony of his wife,
Flora, on this particular fact. We refer to our pronouncements in People v. Verde27 that:
The heirs are also entitled to damages for the loss of earning capacity of the deceased Francisco Gealon. The
fact that the prosecution did not present documentary evidence to support its claim for damages for loss of
earning capacity of the deceased does not preclude recovery of said damages. The testimony of the victim's
wife, Delia Gealon, as to the earning capacity of her husband Francisco Gealon sufficiently establishes the
basis for making such an award. It was established that Francisco Gealon was 48 years old at the time of his
death in 1991. His average income was P200.00 a day. Hence, in accordance with the American Expectancy
Table of Mortality adopted in several cases decided by this Court, the loss of his earning capacity is to be
calculated as follows:
To be able to claim damages for loss of earning capacity despite the non-availability of documentary
evidence, there must be oral testimony that: (a) the victim was self-employed earning less than the
minimum wage under current labor laws and judicial notice was taken of the fact that in the victim's line of
work, no documentary evidence is available; or (b) the victim was employed as a daily wage worker earning
less than the minimum wage under current labor laws.28

In the case at bar, Jose was 67 years old at the time of his death and was earning a daily wage of P200.00
as a tricycle driver, which was below the P252.00 to P263.50 minimum wage rate for non-agriculture
under Wage Order No. 11 dated June 16, 2005 for Region III. We take judicial notice that there is no
documentary evidence available to establish the daily earning capacity of a tricycle driver. We thus
compute the award of damages for the loss of Jose's earning capacity as follows:
Net
Gross
earning life less living expenses (50% of gross
= x annual -
capacity expectancy annual income)
income
(x)

x= 2(80-67) x [73,000.00-36,500.00]
3

= 8.67 x 36,500.00

= P316,455.00
Finally, in conformity with current policy, we impose interest on all monetary awards for damages at the
rate of six percent (6%) per annum from the date of finality of this Decision until fully paid.

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CR.-H.C. No. 04596, finding accused-
appellant, Adrian Guting y Tomas, GUILTY beyond reasonable doubt of the crime of Parricide, is
herebyAFFIRMED with MODIFICATIONS. Accused-appellant is sentenced to suffer the penalty
of reclusion perpetua and to pay the heirs of the victim the amounts of P75,000.00 as civil indemnity,
P75,000.00 as moral damages, P25,000.00 as temperate damages, P30,000.00 as exemplary damages, and
P316,455.00 as compensation for loss of earning capacity. All monetary awards for damages shall be
subject to interest of six percent (6%) per annum from date of finality of this Decision until they are fully
paid.

SO ORDERED. chanroblesvirtuallawlibrary

Sereno, C.J., (Chairperson), Bersamin, Perez, and Perlas-Bernabe, JJ., concur.

Endnotes:

Page 16 of 169
1
Rollo, pp. 2-11; penned by Associate Justice Jose C. Reyes, Jr. with Associate Justices Priscilla J. Baltazar-
Padilla and Agnes Reyes-Carpio, concurring.

2
CA rollo, pp. 12-16; penned by Presiding Judge Jose S. Vallo.

3
Records, p. 1.

4
Id. at 11.

5
TSN, June 5, 2008, pp. 3-4.

6
TSN, February 7, 2008, pp. 3-8.

7
TSN, February 7, 2008, pp. 9-13.

8
TSN, January 18, 2007, pp. 4-9.

9
TSN, August 30, 2007, pp. 3-10.

10
CA rollo, p. 16.

11
Rollo, p. 10.

12
CA rollo, p. 29.

13
Article III, Section 17 of the 1987 Constitution provides: "No person shall be compelled to be a witness
against himself."

14
People v. Pasudag, 409 Phil. 560, 570 (2001).

15
G.R. No. 108494, September 20, 1994, 236 SCRA 565, 573.

16
317 Phil. 528, 537 (1995).

17
336 Phil. 91, 105-106 (1997).

18
Bon v. People, 464 Phil. 125, 138 (2004).

19
People v. Sace, 631 Phil. 335, 348-349 (2010).

20
Belonghilot v. Hon. Angeles, 450 Phil. 265, 290 (2003).

21
People v. Lorenzo, 310 Phil. 694, 714 (1995).

22
People v. Cipriano, 353 Phil. 22, 34-35 (1998).

23
People v. Dela Cruz, 626 Phil. 280, 288 (2010).

24
People v. Nelmida, G.R. No. 184500, September 11, 2012, 680 SCRA 386, 437.

25
People v. Tibon, 636 Phil. 521, 533 (2010).

26
People v. Nelmida, supra note 24 at 439.

27
362 Phil. 305, 321 (1999).

28
People v. Dizon, 378 Phil. 261, 278 (1999).

Page 17 of 169
 FIRST DIVISION

G.R. No. 167510, July 08, 2015

ALVIN MERCADO, Petitioner, v. PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

BERSAMIN, J.:

This appeal is taken from the decision promulgated on March 18, 2005 in CA-G.R. CR No. 28263
entitledPeople of the Philippines v. Alvin Mercado and Lito Sea/Lito Senia, 1 whereby the Court of Appeals
(CA) affirmed the judgment rendered on November 25, 2003 by the Regional Trial Court (RTC), Branch 21,
in Manila convicting the petitioner of the violation of Section 3602, in relation to Section 2503, of the Tariff
and Customs Code of the Philippines (TCCP) charged herein.2 chanroblesvirtuallawlibrary

Antecedents

In the information dated October 1, 2001, the petitioner and his co-accused were charged in the RTC with
the violation of Section 3602, in relation to Section 2503, of the TCCP, committed as follows: cralawlawlibrary

That on or about July 29, 2000, at Port Area, Manila and within the jurisdiction of this Honorable Court, the
above-named accused did, then and there willfully, unlawfully and feloniously made (sic) an entry of:
a) 6,728 yards fabric;
b) 1,937 pcs. assorted bags of Ferragamo, Prada and Polo brands;
c) 3,027 pcs. jeans with Levi's brand;
d) 586 sandals;
e) 312 pairs of rainbow shoes;
f) 120 pairs step-in;
g) 77 pairs of slippers;
h) 24 pcs. of pillows;
i) 36 dozens of shirts with Polo brand;
j) 2 cartons of assorted children's wear;
k) 8 pcs. of folding chairs;
1) 3 cartons of assorted groceries;
m) 120 pcs. of mini-racer toy cars;
n) 4 pcs. of race track;
o) 48 pcs. of gripmate golf set cover:
p) 10 cartons of sampaloc in 6 packs per carton;
q) 40 pcs. raincover folf (sic) bag;
r) 1 carton of wood tray;
s) 240 pcs. golf gloves;
t) 12 pcs. of plastic vase. chanrobleslaw

by means of false and fraudulent invoice and declaration as regards the true kind, nature, quality and
quantity of the goods such that the goods indicated or declared therein were 162 cartons of "personal
effects of no commercial value", when in truth and in fact, they were the aforesaid various articles, so as to
pay less than the amount legally due to the Government, to its damage and prejudice.

CONTRARY TO LAW.3 chanrobleslaw

Only the petitioner was arraigned because Sea remained at large. The petitioner pleaded not guilty to the
information.4 Hence, the case was tried and decided only as to the petitioner.

The Prosecution established that a shipment from Bangkok, Thailand had arrived at the Manila International
Container Port (MICP) on July 29, 2000 on board the vessel Sumire; 5 that the shipment, which was declared
under Bill of Lading No. NYKS481501191 to consist of one 1 x 20 container of assorted men's and ladies'
wearing apparel, textile and accessories in 162 packages;6 that the shipment was consigned to Al-Mer Cargo
Management, an entity owned and managed by the petitioner; 7 that sensing a possible violation of the
TCCP, Atty. Angel L. Africa, then the Director of the Customs Investigation and Intelligence Services, issued

Page 18 of 169
Alert Order No. A/CI/20000731-105 on July 31, 2000 directing Customs Special Agent Roberto A. Tibayan
(SA Tibayan) to witness the 100% examination of the shipment by the assigned customs examiner; 8 that in
the meanwhile, Al-Mer Cargo Management filed an Informal Import Declaration and Entry (IIDE) and Permit
to Deliver through its broker, Consular Cargo Services, describing the items in the shipment as "personal
effects, assorted mens and ladies wearing apparels, (sic) textile and accessories;"9 that upon examination of
the shipment on August 7, 2000, Customs Examiner Rogelio Dizon and SA Tibayan found the shipment to
contain general merchandise in commercial quantities instead of personal effects of no commercial
value;10 and that, accordingly, the shipment was placed under Seizure Identification No. 00-092 MICP. 11

The Prosecution further established that pending the seizure and forfeiture proceedings, the petitioner
sought the settlement of the case in exchange for the payment of the proper taxes and duties, plus 20%
penalty; that in his 2nd Indorsement dated February 23, 2001, then Customs Commissioner Titus B.
Villanueva approved the offer of settlement amounting to P85,000.00 and the release of the shipment with
the exception of the infringing Levi's jeans and assorted bags; 12 that despite the payment of the settlement,
the petitioner and Sea were still charged with the violation of Section 3602 of the TCCP, in relation to its
Section 2503, and with the violation of the Intellectual Property Code;13 and that through his resolution
dated September 27, 2001,14 Prosecutor Juan C. Navera of the Anti-Smuggling Task Force of the
Department of Justice found probable cause against the petitioner and Sea for the violation of Section 3602
of the TCCP.

In his defense, the petitioner asserted that he had only accommodated the shipment upon the request of
Sea and Apolonio Viray, President of Worth Brokerage Corporation; 15 that Sea had represented to him
that the shipment contained only personal and household effects; 16 that he did not have any participation in
following up the clearance for the shipment; that as a licensed customs broker, his signature did not appear
in the informal entry; that he executed a deed of assignment over the shipment in favor of Benita
Ochoa;17 and that the broker prepared the import entry declaration.18

On November 25, 2003, the RTC rendered its decision finding the petitioner guilty as charged, to wit: cralawlawlibrary

WHEREFORE, premises considered, the Court finds accused ALVIN MERCADO GUILTY beyond reasonable
doubt as principal of the crime charged and is hereby sentenced to suffer the penalty of TWO (2) YEARS,
FOUR (4) MONTHS and ONE (1) DAY to FOUR (4) YEARS, TWO (2) MONTHS of prision correctional as
maximum and to pay the costs.

Accordingly, the bond posted for the provisional liberty of the accused is hereby CANCELLED.

It appearing that accused Lito Sea has not been apprehended nor voluntarily surrendered, let warrant be
issued for his arrest and the case against him be ARCHIVED to be reinstated upon his apprehension.

SO ORDERED.19
chanrobleslaw

On appeal, the petitioner assigned the following errors, to wit: cralawlawlibrary

THE COURT A QUO ERRED WHEN IT OVERLOOKED THE FACT THAT ACCUSED DID NOT IN ANYWAY
WILFULLY, UNLAWFULLY AND FELONIOUSLY MADE (sic) AN ENTRY OF THE SUBJECT IMPORTED ARTICLES
BY MEANS OF FALSE AND FRAUDULENT INVOICE AND DECLARATION.

II

THE COURT A QUO ERRED WHEN IT FOUND THAT ACCUSED IS GUILTY BEYOND REASONABLE DOUBT IN
THE ABSENCE OF CONVINCING EVIDENCE.

II

THE COURT A QUO ERRED WHEN IT FAILED TO EXPRESS CLEARLY AND DISTINCTLY THE FACTS AND THE
LAW ON WHICH IT BASED ITS DECISION TO CONVICT ACCUSED-APPELLANT OF THE CRIME CHARGED. 20
chanrobleslaw

On March 18, 2005, however, the CA affirmed the RTC, 21viz. cralawlawlibrary

Page 19 of 169
Noteworthy to stress that "unless it is shown that the trial court overlooked, misunderstood or misapplied
some facts or circumstances of weight or substance that would otherwise affect the result of the case, its
findings will not be disturbed on appeal" and "accorded finality." The rule is not, however, absolute and
admit certain exceptions which must be satisfactory established within its ambit in order for it to find
application. Contrary to accused-appellant's claim, an extensive perusal of the records do not show the
existence of the exceptions in the instant case which, if considered, would have affected the result of the
case. Moreover, from the allegations propounded, accused-appellant failed to show persuasive proof relative
to the exceptions aforesaid. The appreciation of evidence and assessment of witnesses by public respondent
could need not be disturbed on this appeal absent any showing of patent misapprehension or misapplication
involving the same. The respondent court, in this case, has not exercised its judgment in despotic or
arbitrary manner in the appreciation of the evidence or assessment of the witnesses which would warrant
reversal of the appealed decision.

In any event, this court does not subscribe on the argument raised by the accused appellant that nothing is
concrete on the findings made by public respondent court to warrant his conviction in view of the foregoing.

Lastly, the assailed decision narrated clearly the chronological incident in arriving at its conclusion and, to
reiterate, no more than the assessment of witnesses and evaluation of the evidence adduced and presented
wherefrom the assailed decision was based. Hence, the third issue above-noted finds no application in the
case at bar.

WHEREFORE, considering the foregoing, the petition is hereby DENIED and the decision of the Regional
Trial Court Branch No. 21 of Manila in Criminal Case No. 01-196770 for violation of Sec. 3602 of the Tariff
and Customs Code is hereby AFFIRMED. Accused-appellant, Alvin B. Mercado, is sentenced hereby to suffer
the indeterminate penalty ofTWO (2) YEARS, FOUR (4) MONTHS and ONE (1) DAY of prision
correctional, as minimum to FOUR (4) YEARS and TWO (2) MONTHS of prision correctional, as maximum
and to pay the costs.

SO ORDERED.22
chanrobleslaw

Issues

Hence, this appeal, with the petitioner urging the following, namely: cralawlawlibrary

I.

WHETHER OR NOT ACCUSED MAY BE HELD GUILTY FOR VIOLATION OF SECTION 3602 IN RELATION TO
SECTION 2503 OF THE TARIFF AND CUSTOMS CODE WHEN EVIDENCES PROVE THAT HE DID NOT IN ANY
WAY WILFULLY, UNLAWFULLY AND FELONIOUSLY MADE (sic) AN ENTRY OF THE SUBJECT IMPORTED
ARTICLES BY MEANS OF FALSE AND FRAUDULENT INVOICE AND DECLARATION AND IN THE ABSENCE OF
CRIMINAL INTENT.

II.

WHETHER OR NOT PETITIONER MAY BE HELD GUILTY FOR VIOLATION OF SECTION 3601 OF THE TARIFF
AND CUSTOMS CODE NOTWITHSTANDING THE FACT THAT HE WAS CHARGED FOR VIOLATION OF SEC.
3602 OF THE TARIFF AND CUSTOMS CODE.23 chanrobleslaw

The petitioner argues that it was not him, but Rolando Saganay, a licensed customs broker from Consular
Cargo Services, who had made and signed the IIDE;24 that he did not participate in following up the
clearance of the shipment;25 that the entry of the cargo was not made through a false or fraudulent invoice,
declaration, letter or paper;26 that the import declaration was made in accordance with the shipping
documents that were entirely prepared by the supplier from the country of export; 27that he relied in good
faith on the entries prepared by Saganay, which he presumed to be true and correct; 28 and that he could not
be held criminally liable for the violation of Section 3601 of the TCCP, an offense for which he was not
charged.29

Ruling of the Court

The appeal is meritorious.

Page 20 of 169
The provisions of law under which the petitioner was prosecuted and convicted were Section 2503 and
Section 3602 of the TCCP, which state: cralawlawlibrary

Section 2503. Undervaluation, Misclassification and Misdeclaralion in Entry. - When the dutiable value of the
imported articles shall be so declared and entered that the duties, based on the declaration of the importer
on the face of the entry, would be less by ten percent (10%) than should be legally collected, or when the
imported articles shall be so described and entered that the duties based on the importer's description on
the face of the entry would be less by ten percent (10%) than should be legally collected based on the tariff
classification, or when the dutiable weight, measurement or quantity of imported articles is found upon
examination to exceed by ten percent (10%) or more than the entered weight, measurement or quantity, a
surcharge shall be collected from the importer in an amount of not less than the difference between the full
duty and the estimated duty based upon the declaration of the importer, nor more than twice of such
difference: Provided, That an undervaluation, misdeclaration in weight, measurement or quantity of more
than thirty percent (30%) between the value, weight, measurement, or quantity declared in the entry, and
the actual value, weight, quantity, or measurement shall constitute a prima facie evidence of fraud penalized
under Section 2530 of this Code:Provided, further, That any misdeclared or undeclared imported
articles/items found upon examination shall ipso facto be forfeited in favour of the Government to be
disposed of pursuant to the provisions of this Code

When the undervaluation, misdescription, misclassification or misdeclaration in the import entry

is intentional, the importer shall be subject to the penal provision under Section 3602 of this
Code.

Section 3602. Various Fraudulent Practices Against Customs Revenue. - Any person who makes or attempts
to make any entry of imported or exported article by means of any false or fraudulent invoice, declaration,
affidavit, letter, paper or by any means of any false statement, written or verbal, or by any means of any
false or fraudulent practice whatsoever, or knowingly effects any entry of goods, wares or merchandise, at
less than true weight or measures thereof or upon a false classification as to quality or value, or by the
payment of less than the amount legally due, or knowingly and willfully files any false or fraudulent entry or
claim for the payment of drawback or refund of duties upon the exportation of merchandise, or makes or
files any affidavit abstract, record, certificate or other document, with a view to securing the payment to
himself or others of any drawback, allowance, or refund of duties on the exportation of merchandise, greater
than that legally due thereon, or who shall be guilty of any willful act or omission shall, for each offence, be
punished in accordance with the penalties prescribed in the preceding section.
chanrobleslaw

Section 3602 enumerates the various prohibited fraudulent practices, like the entry of imported or exported
articles by means of any false or fraudulent invoice, statement or practice; the entry of goods at less than
the true weight or measure; or the filing of any false or fraudulent entry for the payment of drawback or
refund of duties.30 The following specific acts are punishable under Section 3602: cralawlawlibrary

1. Making or attempting to make any entry of imported or exported article by means of any false or
fraudulent invoice, declaration, affidavit, letter, or paper; ChanRoblesVirtualawlibrary

2. Making or attempting to make any entry of imported or exported article by means of any false
statement, written or verbal; ChanRoblesVirtualawlibrary

3. Making or attempting to make any entry of imported or exported article by means of any false or
fraudulent practice whatsoever; ChanRoblesVirtualawlibrary

4. Knowingly effects any entry of goods, wares or merchandise, at less than true weight or measures
thereof;ChanRoblesVirtualawlibrary

5. Knowingly effects any entry of goods, wares or merchandise upon a false classification as to quality
or value; ChanRoblesVirtualawlibrary

6. Knowingly effects any entry of goods, wares or merchandise by the payment of less than the
amount legally due; ChanRoblesVirtualawlibrary

7. Knowingly and willfully files any false or fraudulent entry or claim for the payment of drawback or
refund of duties upon the exportation of merchandise; ChanRoblesVirtualawlibrary

Page 21 of 169
 8. Knowingly and willfully makes or files any affidavit abstract, record, certificate or other document,
with a view to securing the payment to himself or others of any drawback, allowance, or refund of
duties on the exportation of merchandise, greater than that legally due thereon.
chanrobleslaw

In alleging the violation of the foregoing legal provisions, the information specified that the petitioner had
made an entry - cralawlawlibrary

x x x by means of false and fraudulent invoice and declaration as regards the true kind, nature,
quality and quantity of the goods such that the goods indicated or declared therein were 162 cartons of
"personal effects of no commercial value", when in truth and in fact, they were the aforesaid various
articles, so as to pay less than the amount legally due to the Government, to its damage and
prejudice.31(Emphasis supplied) chanrobleslaw

The act thereby imputed against the petitioner - making an entry by means of false and fraudulent invoice
and declaration - fell under the first form of fraudulent practice punished under Section 3602 of the TCCP.
The elements to be established in order to convict him of the crime charged are, specifically: (1) there must
be an entry of imported or exported articles; (2) the entry was made by means of any false or fraudulent
invoice, declaration, affidavit, letter, or paper; and (3) there must be intent to avoid payment of taxes.

It is relevant to clarify that the term entry as used in the TCCP is susceptible of any of the following three
meanings, to wit: (1) the documents filed at the Customs house; or (2) the submission and acceptance of
the documents; or (3) the procedure of passing goods through the Customs house. Customs declaration
forms or customs entry forms required to be accomplished by the passengers of incoming vessels or
passenger planes are embraced in the section.32

The petitioner was not charged with making an entry of goods at less than the true weight or measure, or
the filing of any false or fraudulent entry for the payment of drawback or refund of duties, other acts
punishable under Section 3602 of the TCCP. He was specifically charged only of making an entry by means
of a false and fraudulent invoice and declaration. The importance of properly alleging the nature and cause
of the accusation in the information should not ever be taken for granted by the State. To determine
whether or not the guilt of the accused was established beyond reasonable doubt, therefore, the Court must
look at the text and tenor of the information to determine and to know what was the offense charged
against him.It is elementary that to try him for and convict him of an offense other than that charged in the
information would be violative of his Constitutional right to be informed of the nature and cause of the
accusation. As such, he could not be tried for and convicted of a crime, even if duly proved, unless the crime
was properly and fully alleged or necessarily included in the information filed against him. 33

In finding the petitioner guilty as charged, the RTC observed as follows: cralawlawlibrary

As evidence stands, there was really a misdeclaration of the shipment consigned to Aimer Cargo
Management covered by Bill of Lading No. NYKS-48150191 and Informal Entry No. 45929. Upon
examination of the shipment, the BOC officers discovered that the declaration "as personal effects and of no
commercial value" is not accurate. Contrary to the declaration of personal effects, the shipment consisted of
general merchandise on commercial quantity such as fabrics, assorted bags of Ferragamo, Prada and Polo,
children's wear, shoes, slippers etc. which were brand new and not "used". As the misdeclaration would
benefit accused, he is therefore, liable as charged.

Supreme Court ruling is to the effect that under the Tariff and Customs Code, declarations and statements
contained in the Import Entry and Permit to Deliver Imported Goods are presumed to be true and correct
under the penalties of falsification and perjury. Moreover, descriptions on entries and other documents are
admission against interest and presumptively correct. (Caltex (Phil) v. CA et al. G.R. No. 104781, July 10,
1998).

To the mind of the Court the prosecution should not have spared Benita Ochoa (alleged assignee of the
shipment) as the real owner of the shipment (par. 2 Deed of Assignment, pp. 18, record) she should have
been impleaded as a co-accused. All persons working behind the shipments should have suffered the
consequences.34 chanrobleslaw

After reviewing the records, the Court holds that the petitioner deserved an acquittal because the
Prosecution did not prove his guilt beyond reasonable doubt.

Page 22 of 169
It is undisputed that the customs documents (like the IIDE and Permit to Deliver) were filed with and the
imported goods passed through the customs authorities, thereby satisfying the first element of entry of
imported articles. However, the second and third elements were not established beyond reasonable doubt.
Although there was a discrepancy between the declaration made and the actual contents of the shipment,
the petitioner firmly disavowed his participation in securing the clearance for the shipment as well as in
preparing and filing the import documents.35 He insisted that being only the consignee of the shipment, he
did not file the informal entry in the Bureau of Customs; that based on the documents, the filer was
Consular Cargo; that he had no knowledge about the entry; that it was the broker who prepared the import
entry declaration; that the papers were submitted by Viray; 36 and that only Saganay signed the IIDE.37

In this regard, the Office of the Solicitor General (OSG) contends that the declaration made in the IIDE by
Saganay as the petitioner's agent-broker bound the latter as the consignee considering that he did not
repudiate the declaration.38

We disagree with the contention of the OSG. The only basis to hold the petitioner criminally liable under the
declaration made by Saganay would be if the two of them had acted pursuant to a conspiracy.39 But even if
they had acted pursuant to a conspiracy, there must be an allegation to that effect in the information. We
note, however, that the information did not charge Saganay as the co-conspirator of the petitioner, thereby
removing any basis for any inference in that regard. Neither did the information aver that Saganay was at
all an accomplice of the petitioner. Under Article 18 of the Revised Penal Code, an accomplice is one who,
without being a principal either by direct participation, or by inducement, or by indispensable cooperation,
cooperates in the execution of the offense by previous or simultaneous acts. It would violate the
constitutional right of the petitioner to be informed of the charge brought against him if he were held
criminally responsible for Saganay's act or omission on the basis that Saganay had been his agent in the
transaction. In other words, the importer or consignee should not be held criminally liable for any
underdeclaration or misdeclaration made by the broker unless either a conspiracy between them had been
alleged and proved, or the Prosecution sufficiently established that the importer had knowledge of and
actively participated in the underdeclaration or misdeclaration. Indeed, to allow the act or omission of
Saganay to bind the petitioner would be unacceptable under the principle of res inter alios acta embodied in
Section 28,40 Rule 130 of the Rules of Court.

The OSG further posits that the petitioner, as the importer, warranted that the declarations by Saganay,
which were under oath and subject to the penalties of falsification and perjury, were true and correct.
Hence, the petitioner should be held liable upon such declarations.

The records of the case do not support the OSG's position. Although the import documents, particularly in
the IIDE, Permit to Deliver Import Goods and Bill of Lading, showed Al-mer Cargo Management as the
consignee or importer, it was only Saganay who made the sworn declaration in the IIDE inasmuch as only
his name and signature appeared therein.41 The petitioner's name was nowhere to be found in said
documents,42 which further showed no trace of his signature, or his participation in their preparation, or his
conformity with their contents. Verily, the concrete proof showing that he had affirmed the declarations
under oath, as to thereby subject himself to criminal responsibility for either falsification or perjury, was
entirely lacking.

Even assuming that the petitioner was involved in the preparation of the import documents, a clear showing
of his intent to falsify the same in order to avoid the payment of duties and taxes would still be wanting. The
Customs officials themselves testified that the declarations made in the import documents largely depended
on the description of the goods made by the exporter or shipper from a foreign country. In his testimony,
Customs Examiner Dizon explained so: cralawlawlibrary

Q As Customs Examiner of the Informal Entry Division since 1991, are you aware of the Customs laws,
Customs procedures and practices with respect to the importation under the Informal Entry?

A Yes, Sir.

Q And you are also familiar with the documents require (sic) to be attached to the Formal Entry?

A Yes, Sir.

Q And one of the attachments what you called the commercial invoice, is that correct?

Page 23 of 169
A Yes, Sir.

Q In your experience as Customs Examiner usually this commercial invoice prepared by the exporter or
supplier, isn't it?

A Yes, Sir.

Q And this exporter or supplier is usually based in the Country where the goods were manufactured or were
bought by the importer, is that right?

A Yes, Sir.

xxxx

Q In your experience as Customs Examiner, usually the description appearing in the bill of lading is also the
description appearing in the commercial invoice, is that correct?

A Yes, Sir.

Q In the description of the cargo appearing in the bill of lading is likewise the description appearing in the
permit to deliver imported goods, is that correct?

A Yes, Sir.

xxxx

Q xxx Is it not a fact, Mr. Witness, that it is a standard practice at the Bureau of Customs that the
description appearing in the permit to deliver imported goods is a general description of the cargo, isn't it?

A Yes, Sir.

Q And that the informal entry and import declaration almost always involved the specific description of the
cargo?

A Yes Sir.

xxxx

Atty. Leabres: chanRoblesvirtualLawlibrary

So the difference in the two documents is that, the permit to deliver imported goods contained in a general
description while the informal import declaration of entry contained the specific description there of the
cargo covered by the informal entry, is that correct?

A Yes, Sir.43 chanrobleslaw

Similarly, Atty. Domingo Leguiab stated: cralawlawlibrary

Q In your experience, Mr. witness, as a Hearing Officer of the Bureau of Customs, is that a fact that these
shipment documents are prepared not by the importer but by the supplier?

A That is the procedure.

Q And, therefore, the importer has no hand in the preparation of this shipping document?

A Precisely.

Q And, whatever declaration misrepresentations are made not by the importer but by the supplier?

A Correct, because it's the supplier which prepare (sic) the shipping documents where the declaration are
being made.44 chanrobleslaw

Page 24 of 169
The petitioner's assertion that he had relied in good faith on the declarations made by his broker, who had
based them on the information provided in the shipping documents by the foreign exporter, stood
unrebutted by the Prosecution. If that was so, his intentional or deliberate participation in any
misdeclaration or underdeclaration could not be properly presumed. In so saying, we cannot but conclude
that the trial court wrongly found him criminally liable, for, as aptly observed in Transglobe International,
Inc. v. Court of Appeals:45 cralawlawlibrary

In the appeal before the CTA, respondent Commissioner of Customs contended that the seizure of the
shipment was made also upon a finding that the documents covering it were forged, thus constituting fraud
as defined in Sec. 1, par. 1. a., CMO-87-92. This Section is of the same tenor as Sec. 2530, pars, (f) and
(m), subpars. 3, 4 and 5, which for emphasis deals with falsities committed by the owner, importer,
exporter or consignee or importation/exportation through any other practice or device. In Aznar, as
reiterated in Farolan, we clarified that the fraud contemplated by law must be actual and not constructive. It
must be intentional, consisting of deception willfully and deliberately done or resorted to in order to induce
another to give up some right. The misdeclarations in the manifest and rider cannot be ascribed to petitioner
as consignee since it was not the one that prepared them. As we said in Farolan, if at all, the wrongful
making or falsity of the documents can only be attributed to the foreign suppliers or shippers. Moreover, it
was not shown in the forfeiture decision that petitioner had knowledge of any falsity in the shipping
documents. District Collector Rosqueta's comment on petitioner's second motion for reconsideration is
enlightening: "While the shipment was misdeclared in the rider and the manifest, the consignee is innocent
of the facts stated therein as it had no hand in their preparation or issuance." We mention in passing that in
having thus stated, she in effect nullified her prior finding that petitioner violated the cited provisions of
the Tariff and Customs Code as amended. Consequently, we agree with the finding of the CTA that fraud
was not committed by petitioner in the importation of the shipment. chanrobleslaw

We also made a similar observation in Remlgio v. Sandiganbayan46 which involved a customs broker, to
wit:cralawlawlibrary

Petitioner Remigio did not make or attempt to make an entry of imported articles by means of any false or
fraudulent invoice, declaration, affidavit, letter, paper, or by means of any false statement, verbal or oral, or
by means of any false or fraudulent practice whatsoever, x x x

xxxx

Accused Erwin C. Remigio, as customs broker, prepared the entry covering the shipment based on the bill of
lading, the invoice, the packing list, letter of credit, the import entry declaration and the Central Bank
Release Certificate. The given address of Borham Trading was at 37 Harvard Street, Quezon City. There was
nothing in the documents to show that there was anything amiss in the shipment or the covering
documents. A customs broker is not required to go beyond the documents presented to him in filing an
entry on the basis of such documents.

Section 3601 provides that x x x Any person who shall fraudulently import or bring into the Philippines, or
assist in so doing, any article, contrary to law, or shall receive, conceal, buy, sell or in any manner facilitate
the transportation, concealment, or sale of such article after importation, knowing the same to have been
imported contrary to law, shall be guilty of smuggling and shall be punished with x x x.

Accused Remigio did not fraudulently assist in the importation of any article contrary to law nor facilitated its
transportation, knowing the same to have been imported contrary to law. All accused Remigio did was to
prepare the import entry based on the shipping and other documents required by the Bureau of Customs
and file the same. chanrobleslaw

Lastly, the petitioner's participation in the settlement payment and in the release of the shipment could not
be given any meaning or import adverse to his penal interest. Such payment and release were actually
irrelevant to the criminal act charged against him.

As a final word, it is timely to reiterate People v. Mamalias,47 where the Court has reminded with emphasis
about the main objective of the courts in the dispensation of justice in criminal prosecutions: cralawlawlibrary

We emphasize that the great goal of our criminal law and procedure is not to send people to the gaol but to
do justice. The prosecution's job is to prove that the accused is guilty beyond reasonable doubt. Conviction
must be based on the strength of the prosecution and not on the weakness of the defense - the obligation is
upon the shoulders of the prosecution to prove the guilt of the accused, not on the accused to prove his

Page 25 of 169
innocence. Thus, when the evidence of the prosecution is not enough to sustain a conviction, it must be
rejected and the accused absolved and released at once. chanrobleslaw

WHEREFORE, the Court REVERSES and SETS ASIDE the decision promulgated on March 18, 2005 by the
Court of Appeals in C.A.-G.R. CR No. 28263 entitled People of the Philippines v. Alvin Mercado andLito
Sea/Lito Senia; and ACQUITS petitioner ALVIN MERCADO for failure of the State to establish his guilt
beyond reasonable doubt.

No pronouncements on costs of suit.

SO ORDERED. chanroblesvirtuallawlibrary

Sereno, C.J., Leonardo-De Castro, Perez, and Perlas-Bernabe, JJ., concur.

Endnotes:

Rollo, pp. 7-14; penned by Associate Justice Eugenio S. Labitoria (retired), with Associate Justice Amelita
1

G. Tolentino (retired) and Associate Justice Lucenito N. Tagle (retired) concurring.

2
Id. at 62-72; penned by Judge Amor A. Reyes.

3
Records, pp. 1-2.

4
Id. at 72.

5
Id. at 35.

6
Id. at 35-37.

7
Id. at 27, 35-36.

8
Id. at 37.

9
Id. at 35-36.

10
Id. at 38-39

11
Id. at 27.

12
Id. at 23.

13
Id. at 4.

14
Id. at: 4-8.

15
Id. at 16.

16
Id.

17
Id. at 18-19.

18
Id. at 35.

19
Rollo, p. 72.

20
Id. at 11- 12.

21
Id. at 12- 13.

22
Id. at 12-13.

Page 26 of 169
23
Id. at 25-26.

24
Id. at 30.

25
Id. at 30-32.

26
Id. at 32-3.5.

27
Id. at 35.

28
Id

29
Id. at 38-44.

30
Jardeleza v. People, G.R. No. 165265, February 6, 2006, 481 SCRA 638, 662.

31
Records, p 2.

32
Jardeleza v. People, supra note 30, at 663.

33
Patula v. People, G.R. No. 164457, April 11, 2012, 669 SCRA 135 146

34
Rollo, p. 71.

35
TSN of October 1, 2002, pp. 15-16.

36
TSN of October 21, 2002, pp. 23-25.

37
Records, p. 35.

38
Rollo, p. 120.

39
Section 30, Rule 130 of the Rules of Court provides: chanRoblesvirtualLawlibrary

Section 30. Admission by conspirator. - The act or declaration of a conspirator relating to the conspiracy and
during its existence, may be given in evidence against the co-conspirator after the conspiracy is shown by
evidence other than such act of declaration. (27)

40
Section 28. Admission by third party. - The rights of a party cannot be prejudiced by an act, declaration,
or omission of another, except as hereinafter provided. (25a)

41
Records, p. 35.

42
Id. at 35-36, 152-154.

43
TSN of June 17, 2002, pp. 3-4, 6, 16-17.

44
TSN of February 24, 2003, pp. 37-38.

45
G.R. No. 126634, January 25, 1999, 302 SCRA 57, 68-69.

46
G.R. No. 145422-23, January 18, 2002, 374 SCRA 114, 122-123.

47
G.R. No. 128073, March 27, 2000, 328 SCRA 760, 773.

Page 27 of 169
 THIRD DIVISION

G.R. No. 197728, September 16, 2015

SPOUSES ARMANDO AND LORNA TRINIDAD, Petitioners, v. DONA* MARIE GLENN

IMSON,Respondent.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the
reversal and setting aside of the Decision1 and Resolution of the Court of Appeals (CA), dated December 22,
2010 and June 23, 2011,2 respectively, in CA-G.R. SP No. 110357. The assailed CA Decision reversed and
set aside the Decision3 dated June 19, 2009 of the Regional Trial Court (RTC) of Pasig City, Branch 155,
while the questioned CA Resolution denied petitioners' Motion for Reconsideration.

The factual and procedural antecedents of the case are as follows: chanRoblesvirtualLawlibrary

On August 17, 2007, herein petitioners filed with the Metropolitan Trial Court (MeTC) of Pasig City a
Complaint4 for ejectment against herein respondent. In their Position Paper,5 petitioners alleged that: they
are the owners of a condominium unit, denominated as Unit 2203, which is located at AIC Gold Tower,
Emerald Avenue, Ortigas Center, Pasig City; they purchased the condominum unit from three (3) Indian
nationals who originally contracted to buy the said property from the developer, AIC Realty Corporation
(AIC), but had not fully paid for it yet; petitioners' purchase was evidenced by a Deed of Assignment and
Transfer of Rights6 dated June 13, 2002 and, later on, a Deed of Absolute Sale 7 dated July 13, 2007 in the
name of petitioner Armando; at the time of petitioners' purchase of the subject condominium unit, the same
was being leased by respondent from the original owners; the period of lease was from April 1, 2002 to
March 1, 2003; petitioners respected the contract of lease between respondent and the original owners;
however, since June 2002 up to the time of the filing of the complaint for ejectment, respondent neither
remitted nor consigned the monthly rentals due to petitioners for her continued use of the condominium
unit; the rental arrears amounted to a total of P2,130,000.00; petitioners sent a letter of demand to
respondent requiring that she, together with any and all persons using the said unit with her approval,
vacate the premises and pay her arrears; respondent ignored petitioners' demand letter; petitioners tried to
settle the case amicably but no agreement was reached.

In her Answer with Compulsory Counterclaims, 8 respondent countered that: she, indeed, entered into a
contract of lease with the original owners of the disputed condominium unit which was to commence on April
1, 2002 and would end on March 1, 2003; sometime in June 2002, she decided to purchase the unit;
however, since she was then undergoing proceedings to annul her previous marriage and thinking that her
purchase of the subject property would disrupt the property arrangements already agreed upon, she
thought it best not to have the condominium unit registered yet in her name; instead, she requested
Armando Trinidad, who was her confidante, to purchase the unit and register it under his name with the
understanding that the said property would actually be owned by respondent; Armando agreed without
objection, which led to the execution of the Deed of Assignment and Transfer of Rights in his name;
payments for the purchase price were made by respondent through cash and checks paid to the original
owners who acknowledged said payments; aside from paying the purchase price, respondent also paid the
real property taxes due on the condominium unit as well as the association dues, water bills, common area
real estate tax, building insurance and other charges billed by the developer; having full trust in Armando,
coupled with her hectic schedule, respondent did not bother to transfer ownership of the subject unit in her
name; since April 2002 up to the time of filing her Answer, respondent has been in open and public
possession of the subject property; in 2007, while respondent was out of the country, Armando, without
respondent's knowledge, annotated his claim on the condominium certificate of title; he also executed a
Deed of Absolute Sale in his favor on July 13, 2007; as a result, respondent was surprised to receive a copy
of petitioners' demand letter and complaint.

On August 8, 2008, the MeTC of Pasig City, Branch 70, rendered its Decision 9 dismissing petitioners'
complaint and ordering them to pay respondent the amount of P250,000.00 as attorney's fees and cost of
suit.

Page 28 of 169
The MeTC found that respondent is the true owner of the subject property and that the true intention of the
parties is for Armando to hold the condominium unit in behalf of respondent until the property could be
placed in the latter's name.

Petitioners filed an appeal with the RTC of Pasig City.

On June 19, 2009, the RTC of Pasig City, Branch 155, rendered its Decision which reversed the MeTC
Decision. The dispositive portion of the RTC judgment reads, thus:

WHEREFORE, premises considered, the Decision dated August 8, 2008 rendered by the Metropolitan Trial
Court, Branch 70, Pasig City is hereby ordered REVERSED and SET ASIDE and a new one
ENTERED ordering the defendant-appellee [herein respondent] and all persons claiming rights under her to
vacate Unit 2203, AIC Gold Tower, Emerald Avenue, Ortigas Center, Pasig City and to pay rental arrearages
from July 13, 2007, at the rate of P30,000.00 per month, until such arrearages shall have been fully paid
and the premises vacated and possession thereof restored to plaintiffs-appellants.

SO ORDERED.10
The RTC held that, by preponderance of evidence, the question of ownership is resolved in favor of
petitioners. The RTC held that the subject Deed of Assignment and Transfer of Rights and the Deed of
Absolute Sale in the name of Armando is superior to the evidence presented by respondent, which merely
consisted of bills of payments of association dues, utility bills, real estate tax on the common areas and
building insurance.

Aggrieved by the RTC Decision, respondent filed a petition for review with the CA.

On December 22, 2010, the CA promulgated its assailed Decision setting aside the RTC judgment and
ordering petitioners to return possession of the subject condominium unit to respondent.

The CA ratiocinated that, based on the evidence adduced by the parties, respondent's claim of ownership
deserves more credence. The CA ruled that records of payment of the purchase price of the subject
property, through respondent's personal checks, acknowledgment of these payments by the former owners
by way of receipt and affidavit, and respondent's exercise of acts of ownership prove that she is the owner
of the disputed condominium unit and, thus, is entitled to the possession thereof.

Petitioners filed a Motion for Reconsideration,11 but the CA denied it in its Resolution dated June 23, 2011.

Hence, the instant petition for review on certiorari, raising the following issues, to wit:
Do the pieces of evidence shown by the Respondent suffice to provisionally declare her as owner of the
subject condomunium unit?12

Does the evidence of the Respondent suffice to make an impression that it was the Respondent who paid the
consideration for the Deed of Assignment and Transfer of Rights?13

[Was there] an implied trust?14

The petition should be denied.

At the outset, the Court notes that both parties anchor their right to possess the disputed property on their
supposed ownership of the same. Thus, the courts are left with no recourse but to resolve the issue of
ownership for the sole purpose of determining as to who between the parties is entitled to possess the
subject condominium unit. However, as held by the CA, where the issue of ownership is inseparably linked
to that of possession, adjudication of the ownership issue is not final and binding, but only for the purpose
of resolving the issue of possession.15 The adjudication of the issue of ownership is only provisional, and not
a bar to an action between the same parties involving title to the property. 16

The resolution of the issue of ownership, however, would entail going into factual matters. Settled is the rule
that questions of fact are not reviewable in petitions for review on certiorari under Rule 45 of the Rules of
Court.17 Section 1 of Rule 45 states that petitions for review on certiorari shall raise only questions of law
which must be distinctly set forth. Doubtless, in the instant case, the issue of whether respondent possesses
the subject property as owner, or whether she occupies the same as a lessee, is a question of fact. Thus, as
a rule, it is not reviewable.

Page 29 of 169
Nonetheless, the Court has, at times, allowed exceptions from the abovementioned restriction. Among the
recognized exceptions are the following:
(a) When the findings are grounded entirely on speculation, surmises, or conjectures; ChanRoblesVirtualawlibrary

(b) When the inference made is manifestly mistaken, absurd, or impossible; ChanRoblesVirtualawlibrary

(c) When there is grave abuse of discretion; ChanRoblesVirtualawlibrary

(d) When the judgment is based on a misapprehension of facts; ChanRoblesVirtualawlibrary

(e) When the findings of facts are conflicting; ChanRoblesVirtualawlibrary

(f) When in making its findings the CA went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; ChanRoblesVirtualawlibrary

(g) When the CA's findings are contrary to those of the trial court; ChanRoblesVirtualawlibrary

(h) When the findings are conclusions without citation of specific evidence on which they are based; ChanRoblesVirtualawlibrary

(i) When the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed
by the respondent; ChanRoblesVirtualawlibrary

(j) When the findings of fact are premised on the supposed absence of evidence and contradicted by the
evidence on record; and

(k) When the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion.18
In the present case, the findings of fact of the MeTC and the CA are in conflict with those of the RTC. It thus
behooves this Court to look into the factual findings of the lower courts to determine the nature of
respondent's possession of the disputed property.

After a careful review of the records at hand, the Court finds that the petition must fail as it finds no error in
the findings of fact and conclusions of law of the CA and the MeTC that respondent is, indeed, entitled to the
possession of the subject property.

As earlier stated, petitioners relied heavily on the Deed of Assignment and Transfer of Rights as well as the
Deed of Absolute Sale, which were executed in Armando's favor, to prove their ownership of the subject
property. Having been notarized, they contend that these documents outweigh all the pieces of evidence
presented by respondent.

The Court is not persuaded.

It is true that the subject Deed of Assignment and Transfer of Rights and Deed of Absolute Sale are
notarized. It is well settled that a document acknowledged before a notary public is a public document that
enjoys the presumption of regularity.19 It is a prima facie evidence of the truth of the facts stated therein
and a conclusive presumption of its existence and due execution. 20However, the CA correctly held that the
existence and due execution of these documents are not in issue. Moreover, the presumption of truth of the
facts stated in notarized documents is merely prima facie, which means that this presumption can be
overcome by clear and convincing evidence.21 Hence, the truth of the facts stated in the disputed Deed of
Assignment and Transfer of Rights as well as the Deed of Absolute Sale may be rebutted by evidence.

In the present case, what is being asserted by respondent is that the above documents do not embody the
true intent and agreement of the parties. To this end, respondent submitted sufficient proof to refute the
contents of the aforementioned documents and to establish the real intent of the parties, to wit: (1) nine [9]
checks drawn from the personal account of respondent, variously dated from October 11, 2002 to June 11,
2003, each of which amounts to P416,666.67 and paid to the order of Amarnath Hinduja; 22(2)
Acknowledgment Receipt recognizing the various payments made by respondent to the former owners of the
subject property;23(3) Real Property Tax Receipts evidencing respondent's payment of the real estate taxes
due on the property;24 (4) Certification issued by AIC Golden Tower Condominium acknowledging
respondent's regular payment of association dues, water bills, common area real estate tax, building
insurance and other charges billed by AIC;25 (5) Affidavit executed by the former owners acknowledging the
supposed agreement of the parties that the condominium unit shall be purchased in the name of Armando

Page 30 of 169
with the understanding that he will hold it in behalf of respondent until the same could be placed in her
name.26

The MeTC and the CA were one in holding that the foregoing pieces of evidence submitted by respondent,
coupled with the surrounding circumstances in this case, are sufficient to overcome theprima
facie presumption of the truth of the facts stated in the questioned Deed of Assignment and Transfer of
Rights and Deed of Absolute Sale. The Court agrees.

Indeed, petitioners failed to offer any credible explanation why payments of the purchase price were made
by respondent by using her personal checks if she is not, in fact, the buyer of the property. Neither was
there any justification why respondent paid the real property taxes due on the property, as well as the utility
bills, association dues, common area real estate tax and building insurance. More importantly, petitioners
also fell short in advancing a plausible refutation why the former owners would execute an affidavit
indicating therein that the agreement among the parties is that the subject property shall be purchased in
the name of Armando with the understanding between the latter and respondent that Armando would hold
the property in respondent's behalf until it will be placed in her name, thus exposing themselves to possible
perjury charges, if such agreement is not really true.

In addition, if petitioners are the real owners of the subject condominium unit, why did they wait until
February 19, 2007,27 or almost four (4) years after the supposed expiration of respondent's lease contract,
to demand that she vacate the disputed premises and pay rentals. Moreover, as the MeTC has noted, it was
only in 2007 that Armando annotated his claim on the condominium certificate of title, executed the subject
Deed of Absolute Sale and requested certification of his ownership from the developer.

Petitioners argue that under the Parole Evidence Rule, when the terms of an agreement have been reduced
to writing, it is considered as containing all the terms agreed upon and there can be, as between the parties,
no evidence of such terms other than the contents of the written agreement. 28Based on this rule, petitioners
contend that since the former owners, as well as respondent, are all parties to the Deed of Assignment and
Transfer of Rights, they are bound by the said Deed and they cannot allege terms which are not found
within the said agreement.

The Court is not convinced.

The fact that the Deed of Assignment and Transfer of Rights was put in writing and notarized does not
accord it the quality of incontrovertibility otherwise provided by the Parole Evidence Rule. 29 The rule on
parole evidence is not, as it were, ironclad. Thus, the second paragraph of Section 9, Rule 130 of the Rules
of Court provides the exceptions, to wit:
Section 9. Evidence of written agreements. - x x x

However, a party may present evidence to modify, explain or add to the terms of written agreement if he
puts in issue in his pleading:
(a) An intrinsic ambiguity, mistake or imperfection in the written agreement; ChanRoblesVirtualawlibrary

(b) The failure of the written agreement to express the true intent and agreement of the parties
thereto;

(c) The validity of the written agreement; or

(d) The existence of other terms agreed to by the parties or their successors in interest after the execution
of the written agreement.

The term "agreement" includes wills.30

As observed by the CA, respondent squarely put in issue in her Answer 31 that the Deed of Assignment and
Transfer of Rights did not express the true intent of the parties. Hence, the exception applies.

The Court is neither convinced by petitioners' argument that when ley bought the subject property from its
former owners, they stepped into the shoes of the latter who were the lessors of respondent and that, as
lessee, respondent is barred from contesting the title of her lessor or her lessor's sjuccessor-in-interest, who
are herein petitioners.

Article 1436 of the Civil Code provides that "[a] lessee or bailee is estopped from asserting title to the thing

Page 31 of 169
leased or received, as against the lpssor or bailor." In addition, the conclusive presumption found in Section
2(b), Rule 131 of the Rules of Court known as estoppel against tenants provides as follows:
Sec. 2. Conclusive presumptions. The following are instances of conclusive presumptions:
xxxx

(b) The tenant is not permitted to deny the title of his landlord at the time of the commencement of the
relation of landlord and tenant between them.

It is clear from the above-quoted provision that what a tenant is stopped from denying is the title of his
landlord at the time of the commencement of the landlord-tenant relation. 32 If the title asserted is one that
is alleged to have been acquired subsequent to the commencement of that relation, the presumption will not
apply.33 Hence, the tenant may show that the landlord's title has expired or been conveyed to another or
himself; and he is not estopped to deny a claim for rent, if he has been ousted or evicted by title
paramount.34 In the present case, what respondent is claiming is her title to the subject property which she
acquired subsequent to the commencement of the landlord-tenant relation between her and the former
owners of the questioned condominium unit. Thus, the presumption under Section 2 (b), Rule 131 of the
Rules of Court does not apply and respondent is not estopped from asserting title over the disputed
property.

As to whether or not an implied trust was created in respondent's favor, the first sentence of Article 1448 of
the Civil Code provides that "[t]here is an implied trust when property is sold and the legal estate is granted
to one party but the price is paid by another for the purpose of having the beneficial interest of the
property." This is sometimes referred to as a purchase money resulting trust, the elements of which are: (a)
an actual payment of money, property or services, or an equivalent, constituting valuable consideration; and
(b) such consideration must be furnished by the alleged beneficiary of a resulting trust. 35 The principle of a
resulting trust is based on the equitable doctrine that valuable consideration, and not legal title, determines
the equitable title or interest and are presumed always to have been contemplated by the parties. 36 They
arise from the nature or circumstances of the consideration involved in a transaction whereby one person
thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of
another.37

Intention - although only presumed, implied or supposed by law from the nature of the transaction or from
the facts and circumstances accompanying the transaction, particularly the source of the consideration - is
always an element of a resulting trust and may be inferred from the acts or conduct of the parties rather
than from direct expression of conduct.38 Certainly, intent as an indispensable element, is a matter that
necessarily lies in the evidence, that is, by evidence, even circumstantial, of statements made by the parties
at or before the time title passes.39 Because an implied trust is neither dependent upon an express
agreement nor required to be evidenced by writing, Article 1457 of our Civil Code authorizes the admission
of parole evidence to prove their existence.40 Parole evidence that is required to establish the existence of an
implied trust necessarily has to be trustworthy and it cannot rest on loose, equivocal or Indefinite
declarations.41 In the instant petition, the Court finds no cogent reason to depart from the findings of the
MeTC and the CA that, under the circumstances of the case, the parole evidence presented by respondent
sufficiently proves that an implied trust was created in her favor.

Finally, a trust, which derives its strength from the confidence one reposes on another, does not lose that
character simply because of what appears in a legal document.42 Applying this principle to the present case,
petitioner Armando, as trustee, cannot repudiate the trust by simply relying on the questioned Deed of
Assignment and Transfer of Rights and the Deed of Absolute Sale.

WHEREFORE, the instant petition is DENIED. The Decision and Resolution of the Court of Appeals, dated
December 22, 2010 and June 23, 2011, respectively, in CA-G.R. SP No. 110357, are AFFIRMED.

SO ORDERED. chanroblesvirtuallawlibrary

Velasco, Jr., (Chairperson), Villarama, Jr., Perez,** and Jardeleza, JJ., concur.

Endnotes:

*
Also spelled "Donna."

Page 32 of 169
**
Designated Acting Member in lieu of Associate Justice Bienvenido L. Reyes, per Special Order No. 2112
dated July 16, 2015.

1
Penned by Associate Justice Michael P. Elbinias, with Associate Justices Remedios A. Salazar-Fernando and
Celia C. Librea-Leagogo, concurring; rollo, pp. 52-67.

2
Annex "F" to Petition, id. at 68-69.

Penned by Judge Luis R. Tongco; Annex "B" to Petition, id. at 43-47.

3

4
CA rollo, pp. 187-191.

Id. at 246-262.
5

Id. at 199-202.
6

Id. at 204-206.
7

Id. at 216-223.
8

9
Penned by Judge Marina Gaerlan-Mejorada; Annex "A" to Petition, rollo, pp. 33-42.

10
Id. at 47. (Emphasis in the original)

11
CA rollo, pp. 510-523.

12
Rollo, p. 13.

13
Id. at 18.

14
Id. at 21.

15
Corpuz v. Spouses Agustin, 679 Phil. 352, 360 (2012).

16
Id. at 360-361.

17
Abalos, et al. v. Heirs of Vicente Torio, 678 Phil. 691, 699 (2011).

18
Angeles v. Pascual, et al., 673 Phil. 499, 506 (2011).

Ocampo, et al. v. Land Bank of the Philippines, Urdaneta, Pangasinan Branch, et al., 609 Phil. 337, 348
19

(2009).

20
Id.

Tamani, et al. v. Salvador, et al., 662 Phil. 495, 513 (2011); Chua v. Westmont Bank, et al., 683 Phil. 56,
21

66 (2012).

22
CA rollo, pp. 141-149.

23
Id. at 150.

24
Id. at 151-153.

25
Id. at 154.

26
Id. at 158-159.

27
See Letter of Demand, id. at 213.

28
See Rules of Court, Rule 130, Sec. 9, par. 1.

Page 33 of 169
29
Rebusquillo v. Gualvez, G.R. No. 204009, June 4, 2014, 725 SCRA 259, 270.

30
Emphasis supplied.

31
CA rollo, pp. 216-217; 220.

Ermitao v. Paglas, G.R. No. 174436, January 23, 2013, 689 SCRA 158, 167, citingSantos v. National
32

Statistics Office, 662 Phil. 708, 721 (2011).

33
Id.

34
Id. at 721-722.

35
Tong v. Go Tiat Kun, G.R. No. 196023, April 21, 2014, 722 SCRA 623, 635-636.

36
Id. at 635.

37
Id.

38
Estate of Margarita D. Cabacungan v. Laigo, et al., 671 Phil. 132, 149 (2011).

39
Id. at 149-150.

40
Id. at 150.

41
Id.

42
Tong v. Go Tiat Kun, supra note 35, at 636.

3. G.R. No. 181892

EN BANC

G.R. No. 181892, September 08, 2015

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY EXECUTIVE SECRETARY EDUARDO R. ERMITA,

THE DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, AND MANILA INTERNATIONAL
AIRPORT AUTHORITY, Petitioners, v. HON. JESUS M. MUPAS, IN HIS CAPACITY AS ACTING
PRESIDING JUDGE OF THE REGIONAL TRIAL COURT, NATIONAL CAPITAL JUDICIAL REGION,
BRANCH 117, PASAY CITY, AND PHILIPPINE INTERNATIONAL AIR TERMINALS CO.,
INC., Respondents.

[G.R. No. 209917]

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY EXECUTIVE SECRETARY EDUARDO ERMITA,

DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, AND MANILA INTERNATIONAL
AIRPORT AUTHORITY, Petitioners, v. PHILIPPINE INTERNATIONAL AIR TERMINALS COMPANY,
INC., TAKENAKA CORPORATION AND ASAHIKOSAN CORPORATION,Respondents.

[G.R. No. 209696]

TAKENAKA CORPORATION AND ASAHIKOSAN CORPORATION, Petitioners, v. REPUBLIC OF THE

PHILIPPINES, REPRESENTED BY EXECUTIVE SECRETARY EDUARDO ERMITA, DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, MANILA INTERNATIONAL AIRPORT AUTHORITY,
AND PHILIPPINE INTERNATIONAL AIR TERMINALS COMPANY, INC.Respondents.

[G.R. No. 209731]

PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC. PETITIONER, VS. REPUBLIC OF THE

Page 34 of 169
PHILIPPINES, AS REPRESENTED BY EXECUTIVE SECRETARY EDUARDO ERMITA, DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, MANILA INTERNATIONAL AIRPORT AUTHORITY,
TAKENAKA CORPORATION, AND ASAHIKOSAN CORPORATION, Respondents.

DECISION

BRION, J.:

Before the Court are the consolidated petitions for review on certiorari assailing the Decision dated August
22, 2013, and the Resolution dated October 29, 2013, of the Court of Appeals (CA) in CA-G.R. CV No.
98029; and the petition for certiorari assailing the May 3, 2007; May 18, 2008; and January 7, 2008
Decision of the Regional Trial Court (RTC) of Pasay City, Branch 117, in Civil Case No. 04-0876.1 cralawrednad

In CA-G.R. CV No. 98029, the CA ordered petitioners Republic of the Philippines, Department of
Transportation and Communications, and Manila International Airport Authority (Government for brevity) to
pay the Philippine International Airport Terminals Co., Inc. (PIATCO) the amount of $371,426,688.24 with
interest at 6% per annum as just compensation for the expropriation of the Ninoy Aquino International
Airport Passenger Terminal III (NAIA-IPT III).2cralawrednad

In Civil Case No. 04-0876, the RTC appointed DG Jones and Partners as an independent appraiser of the
NAIA-IPT III, and ordered the Government to submit a Certificate of Availability of Funds to cover DG Jones
and Partners appraisal fee of $1,900,000.00.

For ease of presentation, the Courts discussion shall be under the following structure: ChanRoblesvirtualLawlibrary

I. The Factual Antecedents

A. The NAIA-IPT IIII Contract and PIATCO

1. The NAIA-IPT III Contract

2. PIATCO

3. PIATCO and the Services of Takenaka and Asahikosan

B. The Agan v. PIATCO Case, G.R. No. 155001

1. The Case and the Decision dated May 5, 2003

2. The Motion for Reconsideration and the Resolution dated January 21, 2004

C. The Expropriation Case, Civil Case No. 04-0876

D. The Republic v. Gingoyon Case, G.R. No. 166429

1. The Case and the Decision dated December 19, 2005

2. The Motion for Reconsideration and the Resolution dated February 1, 2006

E. Proceedings in Civil Case No. 04-0876 after the Finality of the Gingoyon Case

1. The Appointment of DG Jones and Partners as an Independent Appraiser

2. The BOCs Expenses

F. The Parties and the BOCs Appraisal of the NAIA-IPT III

1. The Governments Appraisal

2. PIATCOs Appraisal

Page 35 of 169
 3. Takenaka and Asahikosans Appraisal
4. The BOCs Appraisal

II. The RTC Rulings in Civil Case No. 04-0876

A. The Main Decision

B. The RTCs Interlocutory Order on the Validity of the Escrow Account

1. The Government and the Creation of an Escrow Account for the Payment of Just
Compensation
2. The Omnibus Order dated October 11, 2011

III. The CA Rulings

A. CA-G.R. CV No. 98029

B. CA-G.R. SP. No. 123221

IV. The Action to Enforce the London Awards, Civil Case No. 06-171

V. The Parties Positions

A. The Governments Position

B. PIATCOs Position

C. Takenaka and Asahikosans Position

VI. The Issues

VII. The Courts Rulings

A. G.R. Nos. 209917, 209696, and 209731

1. The parties were afforded procedural due process despite their non-receipt of the
BOC Final Report prior to the promulgation of the May 23, 2011 Decision in Civil
Case No. 04-0876.

2. Framework: Eminent domain is an inherent power of the State

2.a. The power of eminent domain is a fundamental state power that is inseparable
from sovereignty

2.b. Just compensation is the full and fair equivalent of the property taken from the
owner by the condemnor

2.b.1. Fair market value is the general standard of value in determining just
compensation

2.b.2 Replacement cost is a different standard of value from fair market value

Page 36 of 169
 2.b.3. Replacement cost is only one of the standards that the Court should consider
in appraising the NAIA-IPT III

2.b.4. The use of depreciated replacement cost method is consistent with the
principle that the property owner should be compensated for his actual loss

3. Construction cost of the NAIA-IPT III

3.a. The base valuation of the NAIA-IPT III

3.b. Structural defects on the NAIA-IPT III

3.b.1. The Court cannot consider the additional evidence submitted by Takenaka
and Asahikosan before the Court of Appeals

3.b.2. Equiponderance of evidence on the alleged structural defects of the NAIA-

IPT III favors PIATCO, Takenaka, and Asahikosan

3.c. The unnecessary areas

4. Attendant cost of the NAIA-IPT III

4.a. PIATCOs attendant cost

4.b. The BOC and the RTCs attendant cost
4.c. The Governments attendant cost

5. Deductions to the Replacement Cost of the NAIA-IPT III

5.a. Depreciation should be deducted from the replacement cost

5.b. Rectification for contract compliance should not be deducted from the
replacement cost

6. Adjustments to the Replacement Cost

6.a. The replacement cost should be adjusted to December 2004 values

7. Interests, Fruits, and Income

7.a. Computation of Interests

7.b. PIATCO is not entitled to the fruits and income of the NAIA- IPT III

8. The BOCs Expenses

8.a. Takenaka and Asahikosan should not share in the BOCs expenses

9. PIATCO as the Proper Recipient of Just Compensation

9.a. Takenaka and Asahikosans intervention in the case as unpaid subcontractors

is proper
9.b. The property owner is entitled to just compensation
9.c. A final disposition in the eminent domain case with respect to the order of
payment to a particular person shall be final and executory
9.d. The determination of whether the NAIA-IPT III shall be burdened by liens and
mortgages even after the full payment of just compensation is premature

10. The exercise of eminent domain from the perspective of taking.

10.a. The Government may take the property for public purpose or public use upon
the issuance and effectivity of the writ of possession

Page 37 of 169
 B. G.R. No. 181892

1. The issue on the appointment of an independent appraiser is already moot and

academic

I. The Factual Antecedents

A. The NAIA-IPT III Contract and PIATCO

1. The NAIA-IPT III Contract

On October 5, 1994, Asias Emerging Dragon Corp. (AEDC) submitted an unsolicited proposal to the
Government through the Department of Transportation and Communications (DOTC) and the Manila
International Airport Authority (MIAA) for the construction and development of the NAIA-IPT III under
a build-operate-and-transfer (BOT) arrangement. The DOTC and the MIAA invited the public to submit
competitive and comparative proposals to AEDCs unsolicited proposal in accordance with the BOT Law 3 and
its implementing rules.4cralawrednad

2. PIATCO

On September 20, 1996, Paircargo Consortium composed of Peoples Air Cargo and Warehousing Co., Inc.
(Paircargo), Philippine Air and Grounds Services, Inc. (PAGS), and Security Bank Corporation (Security
Bank) submitted its competitive proposal to the Prequalification Bids and Awards Committee (PBAC).5 cralawrednad

Both AEDC and Paircargo Consortium offered to build the NAIA-IPT III for at least $350 million at no cost to
the Government and to pay the Government: 5% share in gross revenues for the first five years of
operation, 7.5% share in gross revenues for the next ten years of operation, and 10% share in gross
revenues for the last ten years of operation. However, Paircargo Consortium offered to pay the Government
a total of P17.75 billion as guaranteed payment for 27 years while AEDC offered to pay the Government a
total of P135 million for the same period.6 cralawrednad

After finding that Paircargo Consortium submitted a bid superior to the AEDCs unsolicited proposal and after
the AEDCs failure to match the competitive bid, the DOTC awarded, through a notice of award, the NAIA-
IPT III project to the Paircargo Consortium (that later organized itself as PIATCO). 7 cralawrednad

On July 12, 1997, the Government executed a Concession Agreement with PIATCO for the construction,
development, and operation of the NAIA-IPT III under a build-operate-transfer scheme. On November
26, 1998, the Amended and Restated Concession Agreement (ARCA) superseded the 1997 Concession
Agreement. The Government and PIATCO likewise entered into a series of supplemental agreements,
namely: the First Supplement signed on August 27, 1999; the Second Supplement signed on September 4,
2000; and the Third Supplement signed on June 22, 2001. 8 cralawrednad

Under the 1997 Concession Agreement, the ARCA and the Supplemental Agreement (for brevity, PIATCO
contracts), the Government authorized PIATCO to build, operate, and maintain the NAIA-IPT III during the
concession period of twenty-five (25) years. 9 cralawrednad

3. PIATCO and the Services of Takenaka and Asahikosan

On March 31, 2000, PIATCO engaged the services of Takenaka, a local branch of a foreign corporation
duly organized under the laws of Japan and doing business in the Philippines, for the construction of the
NAIA-IPT III under an Onshore Construction Contract.10 cralawrednad

On the same date, PIATCO, through an Offshore Procurement Contract,11 likewise contracted the
services of Asahikosan, a foreign corporation duly organized under the laws of Japan, for the design,
manufacture, purchase, test and delivery of the Plant 12 in the NAIA-IPT III.

In May 2002, PIATCO defaulted on its obligation to pay Takenaka and Asahikosan pursuant to their
respective contracts. To settle the problem, Takenaka and Asahikosan agreed to defer PIATCOs payments
until June 2003, conditioned on their receipt of adequate security from PIATCO as stipulated in the Fourth
Supplemental Agreement (relating to the Onshore Construction Contract) 13 and the Fourth Supplement
Agreement (relating to the Offshore Procurement Contract), respectively. 14 cralawrednad

Page 38 of 169
On November 29, 2002, President Gloria Macapagal Arroyo declared in her speech that the Government
would not honor the PIATCO contracts. On the same day, Takenaka and Asahikosan notified PIATCO
that they were suspending the construction of the NAIA-IPT III for PIATCOs failure to provide
adequate security.15 cralawrednad

B. The Agan v. PIATCO Case, G.R. No. 155001

The Case and the Decision dated May 5, 2003

On September 17, 2002, petitioners Demosthenes Agan, et al., asked the Court to nullify the PIATCO
contracts, and to prohibit the DOTC and the MIAA from implementing these contracts for being contrary to
law. The case, entitled Agan v. PIATCO, was docketed as G.R. No. 155001.16 cralawrednad

On May 5, 2003, the Court nullified the PIATCO contracts after finding that Paircargo Consortium (that later
incorporated into PIATCO) was not a duly pre-qualified bidder for failure to meet the minimum equity
requirements for the NAIA-IPT III project, as required under the BOT Law and the Bid Documents. The Court
also ruled that Security Bank (member of the Paircargo Consortium) invested its entire net worth in a
single undertaking or enterprise in gross violation of Section 21-B of the General Banking Act (which
limits a commercial banks equity investment, whether allied or non-allied, to fifteen percent (15%) of its
net worth).17 The Court further found that the PIATCO contracts contained provisions that substantially
departed from the draft Concession Agreement. These substantial modification of the PIATCO contracts
violated the public policy for being repugnant to the principle that all bidders must be on equal footing
during the public bidding.18 cralawrednad

The Motion for Reconsideration and the Resolution dated January 21, 2004We denied PIATCO, et
al.s motion for reconsideration in our January 21, 2004 resolution. 19 Significantly, we stated in the
resolution that the Government should first pay PIATCO as a prerequisite before taking over the
NAIA-IPT III, to wit: ChanRoblesvirtualLawlibrary

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 cannot unjustly enrich itself at the expense of PIATCO and its investors. 20 (Underlines
and emphases ours)

C. The Expropriation Case, Civil Case No. 04-0876 21 cralawrednad

On December 21, 2004, the Government filed a complaint for expropriation of the NAIA-IPT III before
the RTC of Pasay, Branch 117. The Government informed the RTC that it had deposited with the Land Bank
of the Philippines (Land Bank) the amount of P3,002,125,000.00, representing the NAIA-IPT IIIs assessed
value.22
cralawrednad

On the same day, the RTC issued a writ of possession in favor of the Government. Citing City of Manila v.
Serrano,23 the RTC held that that it had the ministerial duty to issue a writ of possession upon: (1) the filing
of the complaint for expropriation sufficient in form and substance, and (2) the Governments deposit of the
amount equivalent to the propertys assessed value, pursuant to Rule 67 of the Rules of Court. 24 cralawrednad

On January 4, 2005, the RTC modified its December 21, 2004 order and directed: (1) the Land Bank to
immediately release to PIATCO the amount of US$62,343,175.7725 that would be deducted from the just cralawred

compensation; (2) the Government to submit to the RTC a Certificate of Availability of Funds for the
payment of just compensation; and (3) the Government to maintain and preserve the NAIA-IPT III pending
the expropriation proceedings and the full payment of just compensation. The RTC likewise prohibited the
Government from performing acts of ownership over the NAIA-IPT III such as awarding concessions or
leasing any part of the NAIA-IPT III to other parties.26 cralawrednad

The Government sought reconsideration of the January 4, 2005 Order, arguing that Rule 67 of the Rules of
Court, and not RA 8974, applied to the case since the NAIA-IPT III was not a national government
infrastructure project.27 cralawrednad

RA 8974 is 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.

Page 39 of 169
The Government argued that under Section 2, Rule 67 of the Rules of Court, it shall have the right to a writ
of possession upon deposit with the authorized government depositary of an amount equivalent to the
assessed value of the property for purposes of taxation, which amount shall be held by the depositary
subject to the orders of the court. In contrast, Section 4 of RA 8974, as a rule, requires the Government to
immediately pay the property owner the amount equivalent to 100% of the value of the property based on
the BIRs relevant zonal valuation and the value of the improvements/and or structures, upon the filing of
the complaint and after due notice to the defendant.

On January 7, 2005, the RTC appointed three Commissioners 28 to determine just compensation
without consulting the Government and PIATCO. 29Due to these successive adverse rulings, the Government
sought to inhibit Judge Henrick F. Gingoyon, the RTCs presiding judge, from hearing the case. 30(The judge
was ambushed and killed on December 31, 2005.)31 cralawrednad

On January 10, 2005, the RTC denied the Governments urgent motion for reconsideration and motion for
inhibition.32
cralawrednad

On December 14, 2005, Asahikosan filed a motion for leave to intervene in Civil Case No. 04-0876 (the
expropriation case).33 On the other hand, Takenaka filed a Manifestation dated December 15, 2005, 34 with
the attached Manifestation and Motion dated December 14, 2005. 35 Takenaka alleged that the Government
impleaded it as an additional defendant in an amended complaint for expropriation of the NAIA-IPT III, but
was not served summons. Takenaka thus manifested its voluntary appearance before the RTC. 36 cralawrednad

Takenaka and Asahikosan informed the RTC that they had previously filed two collection cases against
PIATCO, docketed as Claim Nos. HT-04-248 and HT-05-269, before the High Court of Justice, Queens Bench
Division, Technology and Construction Court in London, England, (London Court) on August 9, 2004.

In both instances, the London Court ruled in their favor. The dispositive part of the judgment award in Claim
No. HT-04-248 provides: ChanRoblesvirtualLawlibrary

IT IS ORDERED THAT:
1. Judgment be entered for the First Claimant37 in the sum of 6,602,971.00 United States dollars,
together with interest in the sum of 116,825,365.34 Philippine pesos up to and including 18
February 2005.
2. Judgment be entered for the Second Claimant 38 in the sum of 8,224,236.00 United States dollars,
together with interest in the sum of 2,947,564.87 United States dollars up to and including 18
February 2005, being a total of 11,171,800.87 United States dollars.

3. Save for the costs of and caused by the amendment of the particulars of claim, which will be the
subject of a separate Order, the Defendant do pay the First Claimants and the Second Claimants
costs in the action, to be subject to detailed assessment if not agreed.

DATED this 18th day of February 2005.39

On the other hand, the dispositive part of the judgment award in Claim No. HT-05-269 states: ChanRoblesvirtualLawlibrary

IT IS ORDERED THAT:
1. Judgment be entered for the First Claimant in the sum of 21,688,012.18 United States dollars,
together with interest in the sum of 6,052,805.83 United States dollars.
2. Judgment be entered for the Second Claimant in the sum of 30,319,284.36 United States dollars,
together with interest in the sum of 5,442,628.26 United States dollars.

3. The defendant to pay the Claimants costs in the action, to be subject to detailed assessment if not
agreed.

DATED this 2 (sic) day of December 2005.40

Takenaka and Asahikosan asked the RTC to: (a) hold in abeyance the release of just compensation to
PIATCO until the London awards are recognized and enforced in the Philippines; and (b) order that the just
compensation be deposited with the RTC for the benefit of PIATCOs creditors. 41cralawrednad

Page 40 of 169
During the hearing of the motions, the Government clarified that it neither filed an amended complaint for
expropriation nor impleaded Takenaka as a necessary party in the case.42 cralawrednad

The RTC initially denied Takenaka and Asahikosans respective motions43 in the August 8, 2006 Order, but
subsequently reconsidered its ruling.44In a March 12, 2007 Order, the RTC treated Takenakas
Manifestation with the attached Manifestation and Motion as a motion to intervene and allowed
Takenaka and Asahikosan to intervene in the case as PIATCOs creditors.45 cralawrednad

Pending the RTCs resolution of Takenaka and Asahikosans motions for leave to intervene in the
expropriation case, the Government went directly to the Court seeking Judge Gingoyons inhibition from the
case; the nullification of the order of release of the sum of $62.3 million to PIATCO; and the nullification as
well of the appointment of the commissioners.

D. The Republic v. Gingoyon Case, G.R. No. 166429

1. The Case and the Decision dated December 19, 2005

On January 12, 2005, the Government, et al., filed a petition for certiorari with the Court assailing the
validity of the January 4, 7, and 10, 2005 orders of the RTC in the expropriation case. 46 The case,
entitled Republic v. Gingoyon, was docketed as G.R. No. 166429.

The Government argued that the RTC should not have ordered the release of $62.3 Million since the NAIA-
IPT IIIs assessed value was only P3 billion. Moreover, the RTCs prohibition against the Government to
perform acts of ownership on the NAIA-IPT III was contrary to the essence of a writ of possession.
It47 asserted that Rule 67 of the Rules of Court governed the expropriation of the NAIA-IPT III since it was
not a national government infrastructure project.

The Government likewise contended that the commissioners appointment was void. It claimed that it had
been deprived of due process since it was not given the opportunity to contest the appointment of the
commissioners. The Government likewise sought Judge Gingoyons inhibition from the case due to his
alleged manifest partiality to PIATCO.48cralawrednad

The Court partly granted the petition and rendered the following rulings: ChanRoblesvirtualLawlibrary

First, under the 2004 Resolution in Agan: (a) PIATCO must receive payment of just compensation
determined in accordance with law and equity; and (b) the Government is barred from taking over the
NAIA-IPT III until just compensation is paid.

Second, RA 8974 applies in the expropriation case insofar as the law: (a) requires the Government to
immediately pay PIATCO at least the proffered value of the NAIA-IPT III; and (b) provides valuation
standards in determining the amount of just compensation.

RA 8974 is the governing law in cases where the national government expropriates property for the purpose
of commencing national government infrastructure projects such as the construction of the NAIA-IPT III.
However, Rule 67 of the Rules of Court applies in determining the assessed value and the mode of deposit of
just compensation if the national government initiates the expropriation complaint for purposes other
than national infrastructure projects.

Under both Rule 67 of the Rules of Court and RA 8974, the Government initiates the expropriation by filing
an expropriation complaint. However, the rules on the mode of deposit differ because Rule 67 of the Rules of
Court merely requires the Government to deposit the assessed value of the property sought to be
expropriated with an authorized government depositary before the issuance of a writ of possession.

In contrast, RA 8974 commands the Government to make a direct payment to the property owner prior to
the issuance of a writ of possession. Under RA 8974, the payment shall be based on: (a) the BIRs
zonal valuation in case of land; and (b) the value of the improvements or structures under the
replacement cost method. If the completion of a government infrastructure project is of utmost
urgency and importance and if there is no existing valuation of the property, the implementing
agency shall immediately pay the proffered value of the property. 49 cralawrednad

We thus observed that Section 2, Rule 67 of the Rules of Court is contrary to our January 21, 2004
Resolution which required the Government to make prior payment of just compensation to PIATCO before it

Page 41 of 169
could take over the NAIA-IPT III.

The Court at the same time qualified the applicability of RA 8974 to the expropriation of the NAIA-IPT III.
We held that the Congress may legislate on the valuation standards of just compensation and the manner of
its payment since these are substantive matters. We made clear, however, that the Congress cannot
legislate on the procedural aspects of expropriation since this power lies with the Court. In fact,
Section 14 of RA 8974 IRR provides that Rule 67 of the Rules of Court shall apply to 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.

Third, we held in abeyance the implementation of the writ of possession until the Government directly pays
to PIATCO the proffered value of P3 billion. The zonal valuation method under Section 4 of RA 8974 shall not
apply since the Government owns the land on which the NAIA-IPT III stands. Consequently, PIATCO should
only be paid the value of the improvements and/or structures using the replacement cost
method.50 Pending the determination of just compensation, the Government shall pay the sum of P3 billion
as the provisional amount of just compensation because there was no expedited means by which the
Government could immediately take possession of the NAIA-IPT III.

We also stated that the replacement cost method is only one of the factors to be considered in
determining just compensation. Equity should likewise be considered in determining just
compensation.

Fourth, we authorized the Government to perform acts essential to the operation of the NAIA-IPT
III as an international airport terminal once the writ of possession becomes effective. This
authority covers 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. This is consistent with Section 4 of RA 8974 which provides 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 upon fulfillment of certain conditions.

This ruling qualified the Courts statement in its January 21, 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.
Nonetheless, we clarified that the title to the NAIA-IPT III shall pass to the Government only upon full
payment of the just compensation since the proffered value is merely a provisional determination of just
compensation.

Fifth, we ordered the RTC to complete its determination of just compensation within sixty (60) days from
finality of our decision since it was no longer possible for the RTC to determine just compensation within
sixty (60) days from the filing of the complaint under Section 4 of RA 8974.

Sixth, the RTC did not gravely abuse its discretion in appointing the commissioners. Neither Rule 67 of the
Rules of Court nor RA 8974 requires the RTC to consult the parties in the expropriation case prior to the
appointment of commissioners. We also stated that Rule 67 of the Rules of Court shall apply insofar
as it is consistent with RA 8974, the IRR, and the Courts rulings in Agan.

Considering that the expropriation proceedings were effectively suspended seven days after the
appointment of the commissioners, the parties may file their objections with the RTC within five days from
finality of the decision in accordance with Section 5, Rule 67 of the Rules of Court.

Seventh, there was no ground to order Judge Gingoyons inhibition since the Government failed to show his
alleged partiality.51
cralawrednad

The dispositive portion of the Decision states: ChanRoblesvirtualLawlibrary

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: cralawlawlibrary

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-IPT III facilities;

2) Petitioners, upon the effectivity of the Writ of Possession, are authorized [to] start the implementation of

Page 42 of 169
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.52

2. The Motion for Reconsideration and the Resolution dated February 1, 2006

On January 2, 2006, the Government, et al., filed a motion for partial reconsideration of the Courts
December 19, 2005 Decision.53 Asahikosan, Takenaka, and Rep. Salacnib F. Baterina also filed a motion for
leave to intervene and asked the Courts reconsideration of its December 19, 2005 Decision. 54 cralawrednad

The Government raised the question of who between PIATCO, on the one hand, and Takenaka and
Asahikosan, on the other was the NAIA-IPT IIIs builder. The Government informed the Court that
Takenaka and Asahikosan, as the unpaid contractors in the NAIA-IPT III project, claimed significant liens on
the NAIA-IPT III. The Government opined that it would end up expropriating the NAIA-IPT III with liens and
claims in excess of its actual value if the proffered value would be directly released to PIATCO.

As PIATCOs unpaid creditors, Takenaka and Asahikosan intervened in the case. They relied on Mago v.
Court of Appeals55 as basis for their intervention. In that case, the Court took the extraordinary step of
allowing the motion for intervention even after the challenged order of the trial court had already become
final. On the other hand, Rep. Baterina invoked his prerogative as legislator and taxpayer to curtail the
payment of just compensation without any appropriation in PIATCOs favor.

The Court denied the motions and held that the alleged liens over the NAIA-IPT III have not been judicially
established. Takenaka and Asahikosan were not parties to Gingoyon and did not present their claims before
the Court. The Court did not make any declaration regarding Takenaka and Asahikosans rights to any form
of compensation for the construction of the NAIA-IPT III.

Moreover, the Court did not recognize the London awards in favor of Takenaka and Asahikosan. Under
Section 48, Rule 39 of the Rules of Court, a foreign judgment would not bind Philippine courts unless the
judgment is recognized and enforced in this jurisdiction. Philippine courts may annul a foreign judgment for
lack of jurisdiction, lack of notice to the party, collusion, fraud, clear mistake of law or fact, or when the
foreign judgment is contrary to public policy. Even assuming that PIATCO is indeed liable to other parties,
the creditors have other judicial avenues to ventilate and prove their claims against PIATCO.

The Court also categorically stated that PIATCO, as builder of the NAIA-IPT III, must first
receive just compensation in accordance with law and equity before the Government may take
over the NAIA-IPT III.

The Court likewise denied the motions for intervention for serious procedural errors. Under Section 2, Rule
19 of the Rules of Court, the motion to intervene should be filed before the courts rendition of judgment,
and not after the resolution of the case. Moreover, Takenaka and Asahikosan failed to establish their legal
interest in the case since their claims against PIATCO have not been conclusively established in this
jurisdiction.56
cralawrednad

E. Proceedings in Civil Case No. 04-0876 after the Finality of the Gingoyon Case

1. The Appointment of DG Jones and Partners as an Independent Appraiser

On April 11, 2006, the RTC ordered the BOC to resume its duties. In compliance, the BOC submitted its
Inception Report and Inception Framework to the RTC. On April 24, 2007, the parties and the BOC conferred
to set the ground rules and procedure in determining the just compensation due to the NAIA-IPT III.

On April 26, 2006, the Government asked the RTC to stop the payment of P3 billion proffered value in view

Page 43 of 169
of an alleged supervening event the collapse of the ceiling of the arrival lobby section of the north side of
the NAIA-IPT III on March 27, 2006. The Government claimed that the collapse created a 100-square foot
hole in the ceiling and caused heavy asbestos pipes to fall on the floor of the NAIA-IPT III. The Government
likewise informed the Court that the MIAA requested the Association of Structural Engineers of the
Philippines (ASEP) to investigate the cause of the collapse. 57 In its Final Report dated June 2006, the ASEP
identified the following factors that contributed to the collapse: ChanRoblesvirtualLawlibrary

a. Incomplete design coordination as shown by the absence of detailed shop drawings during the
construction, an absence described as unusual for a BOT project of this size

b. Wrong choice of ceiling and wall components and fixing materials, e.g., use of rivets instead of clips,
screws or wire; use of furring channels instead of stronger C channels; use of wall angles thinner
than required; and

c. Poor workmanship, e.g., uneven distribution and improper attachment of rivets, lack of ceiling
supports in the presence of mechanical fixtures.58

The ASEP concluded that the likely cause of the collapse was the syncretic effect of all these factors
working over time since the construction of the ceiling.59 cralawrednad

Upon the BOCs request,60 on May 5, 2006, the RTC ordered the engagement of the services of an
internationally accepted independent appraiser who shall conduct the valuation of the NAIA-IPT III. 61 cralawrednad

On May 23, 2006, the Government manifested that it engaged the services of: (a) TCGI Engineer to
determine the structural integrity of NAIA-IPT III; (b) Ove Arup & Partners Massachusetts, Inc. (Ove Arup)
to conduct a design and technical review of the NAIA-IPT III and to conduct a peer review of TCGI
Engineers methodology and test results; and (c) Gleeds International to determine the value of the NAIA-
IPT III.62
cralawrednad

On June 20, 2006, the RTC ordered Land Bank to immediately release the amount of P3 billion to PIATCO.
The RTC ruled that the collapse of a portion of the NAIA-IPT III was not a supervening event that would
hinder the payment of the proffered value to PIATCO. In compliance with this order, the Government
tendered to PIATCO a P3 billion check on September 11, 2006. On the same day, the RTC
reinstated the writ of possession in favor of the Government.63 cralawrednad

Thereafter, the Government and PIATCO submitted their list of nominees for the appointment of an
independent appraiser.64 On May 3, 2007, the RTC appointed DG Jones and Partners as independent
appraiser.65 cralawrednad

On May 18, 2007, the RTC directed the Government to submit a Certificate of Availability of Funds to cover
DG Jones and Partners $1.9 Million appraisal fee.66cralawrednad

The Government sought the reconsideration of the May 3 and 18, 2007 orders. The Government complained
that the appointment of an appraiser apart from those hired by the Government would result in the
unnecessary depletion of its funds since it would be compelled to pay two appraisers. 67 cralawrednad

In response, PIATCO argued that the RTC has the inherent power to appoint an independent appraiser
pursuant to Section 5 (g), Rule 135 of the Rules of Court. The RTC has wide discretion on how it shall carry
its mandate under RA 8974 and Rule 67 of the Rules of Court. 68 cralawrednad

In an order dated January 7, 2008, the RTC sustained the appointment of DG Jones and
Partners. The RTC ruled that its power to appoint the members of the BOC under Section 5, Rule 67 of the
Rules of Court includes the power to appoint an independent appraiser. 69 cralawrednad

The Government directly challenged before the Court the May 3, May 18, and January 7, 2008 orders in a
petition for certiorari with prayer for the issuance of a temporary restraining order and/or a writ of
preliminary injunction. The case was docketed as G.R. No. 181892. 70 cralawrednad

On January 9, 2008, the Court issued a temporary restraining order against the implementation
of the May 3 and 18, 2007 Orders as well as the January 7, 2008 Order. 71 cralawrednad

Page 44 of 169
2. The BOCs Expenses

On June 15, 2006, the BOC filed a request for the release of a mobilization fund of P1,600,000.00 to support
the discharge of its functions.72 The RTC approved the request and directed the Government and PIATCO to
equally share the BOCs expenses.73The Government and PIATCO complied with this order and tendered the
sum of P1,600,000.00 to the BOC. 74 cralawrednad

On November 24, 2009, the BOC requested additional funds in the amount of P5,250,000.00. 75 On
December 7, 2010, the RTC directed the Government and PIATCO to equally defray the BOCs
expenses.76 The Government contested this order and insisted that Takenaka and Asahikosan should
likewise shoulder the BOCs expenses as intervenors in the case. 77 cralawrednad

In an order dated March 11, 2011, the RTC ordered Takenaka and Asahikosan to share in the BOCs
expenses. The RTC thus ordered each party to pay P1,750,000.00. PIATCO complied with this order and
paid the amount of P1,750,000.00 to the BOC.78 cralawrednad

Takenaka and Asahikosan sought the partial reconsideration of this order. They argued that they should not
be made to pay the BOCs expenses since their prayer to defer the release of a portion of the just
compensation pending the conclusion of the enforcement proceedings was addressed to the RTC [,] and not
to the BOC.79
cralawrednad

F. The Parties and the BOCs Appraisal of the NAIA-IPT III

After the Court issued the January 9, 2008 temporary restraining order, the parties and the BOC
conducted a preliminary conference on April 22, 2010, to adopt an alternative course of action to avoid
further delay in the determination of just compensation. 80cralawrednad

The Government manifested that it was ready to present its own valuation of the NAIA-IPT III and other
supporting evidence. PIATCO, Takenaka, and Asahikosan did not object to this manifestation. 81cralawrednad

On August 5, 2010, the RTC ordered the parties to submit their appraisal reports of NAIA-IPT III with
supporting documents and affidavits.82 TheGovernment appraised the NAIA-IPT III
at $149,448,037.00 while PIATCO concluded that its replacement cost was $905,867,549.47. On the
other hand, Takenaka and Asahikosan claimed that the NAIA-IPT IIIs construction cost amounted
to $360,969,790.82.

1. The Governments Appraisal

Based on the Gleeds Report dated November 15, 2010, the Government computed the valuation of the
NAIA-IPT III as follows: 83cralawrednad

December December
2002 2004
CCV CCV
Base valuation $USD @3Q01 $300,206,693 $300,206,693
Deterioration $USD @2Q09 $0 $1,738,318
Depreciation $USD 3Q01 $0 $35,076,295
Total Base CCVs $USD $300,206,693 $263,392,081
Rectification for Contract Compliance
$USD@2Q09
Not compliant with bid documents -$30,670,894 -$30,670,894
Inferior quality -$7,702,640 -$7,702,640
Additional areas to be built (63,490 m2) -$75,570,510 -$75,570,510
Total Contract Compliance -$113,944,044 -$113,944,044
Deductions $USD

Page 45 of 169
Total CCVs $USD $186,262,649 $149,448,037

$300,206,693.00 as base current cost valuation (CCV). Based on the Gleeds report, the
construction cost of the NAIA-IPT III as of December 2002 was $300,206,693.00, consisting of the
cost of constructing the terminal building, aprons, car park, elevated roadways, and other related
items.

Gleeds appraised the NAIA-IPT III by multiplying the structures dimensions (i.e., quantities) by a
price (i.e., rate) for constructing the works at a designated time and specific location, adding the
cost of works in, on, and around the structure, and then accounting for inferior and nonperforming
works, and rectification of those works.84]

Gleeds arrived at the CCV by considering the rates and prices for the third quarter of 2001, which
represented the midpoint of the construction period from June 2000 (the commencement of
construction) to December 2002 (the suspension of construction). It claimed that calculating the
cost of construction based on its midpoint was a recognized standard practice in the construction
industry. The base CCV excluded the following items: ChanRoblesvirtualLawlibrary

1. Failed structural elements of the Terminal, as identified in the Arup Seismic Evaluation
Report and Gravity Loading and Element Capacity Assessment;

2. The inferior quality of material used and works, including floor tiling, plasterboard wall
finishes and ceilings, internal and external metal paneling;

3. Constructed areas that are unnecessary to the functioning of an international aiport

terminal and therefore of no benefit to the Republic. These areas identified in the Arup Site
Observation Report include areas where the requirements stated in the Bid Documents
have been grossly overprovided. They also include the multilevel retail mall that, with its
own internal circulation, is functionally separate from the Terminal and accessible only
through the multi-storey car park (20,465 m2), and excess retail concession space (1,727
m2);

4. The cost of seismic and gravity load structural retrofits for the failed elements in the
terminal buildings and multi-storey car park structures, as those retrofits are described in
Arups Drawings listed in Appendix B Drawing List 2 and other rectification works required
to bring the terminal to compliance with applicable building and airport codes (as indicated
in the Appendices of Arups Site Observation Report);

5. The cost of completing the items listed in the JAC project status summary report of 28
February 2003;85 and

6. The cost of seismic and gravity load structural retrofits for the failed elements in the
elevated roadway structures as those retrofits were described in Arups Drawings listed in
Appendix B Drawing List 3, Arup Review on TCGI Report of Civil Design Review and
Evaluation Elevated Roadway, dated March 2009, and other rectification works required
to bring the elevated roadways to compliance with applicable building and airport codes (as
indicated in the Appendices of Arups Site Observation Report). 86

$263,392,081 as total base CCV as of December 2004. The Government asserted that the
NAIA-IPT III suffered from depreciation and deterioration in the sum of US$36,814,612.00 from
December 2002 until December 2004. The base value CCV at the time of expropriation should be
US$263,392,081.00 after deducting depreciation and deterioration.
$113,944,044 as total contract compliance deductions. The Government further deducted
items which were non-compliant with bid documents, including, among others: ChanRoblesvirtualLawlibrary

a. FIDS monitors not flat screen

b. Moving walkways underprovision

Page 46 of 169
 c. Sun shading to external glazing
d. Lack of 400hz PC air to loading bridges
e. Completion of testing, commissioning, and operation of the facility
f. Provision of as-built documentation

The Government likewise deducted the replacement cost of inferior quality items and additional
areas that the Government had to build to finish the NAIA-IPT III project. 87

2. PIATCOs Appraisal

PIATCO claimed that the total replacement value of the NAIA-IPT III as of December 31, 2010 amounted
to $905,867,550.00.

Actual Costs @ Inflation Base Valuation

2002 Rate @ 2004
I. Materials, Equipment and 360,969,791 1.0971 396,019,958
Labor Engineering &
Procurement
II. Attendant Costs
Engineering and Architecture 19,372,539 1.0971 21,253,613
Quality Assurance 6,923,720 1.0971 7,596,013
Construction Supervision 4,302,227 1.0971 4,719,973
Construction Insurance 4,329,272 1.0971 4,749,644
Site Development 8,358,169 1.0971 9,169,747
Other Costs 308,985 1.0971 338,987
Attendant Costs exclusive 43,594,911 1.0971 47,827,977
of Financing Costs
Financing Costs 26,602,890 26,602,890
Total Attendant Costs 70,197,802 74,430,868
TOTAL 431,167,593 470,450,825

In US Dollars

REPLACEMENT COST 470,450,825

Add:
Interest from 21 Dec 2004 to 11 Sept 2006 104,014,531
Interest from 12 Sept 2006 to 31 Dec 2010 331,402,193
Total Interests 435,416,724
Total Replacement Value 905,867,550
Less: Payment on 11 Sept 2006 59,438,604

Page 47 of 169
 Amount Still Due 846,428,946

Computation of Interest in US Dollars

Period Interest No. of Days Amount in

Rates USD
Replacement (a) 470,450,825
Cost
Interests
From takeover of December 21 12% 11 1,724,986
NAIA T3 on 21 to December
Dec 2004 31, 2004
January 1 to 12% 365 57,448,057
December
31, 2005
January 1 to 12% 254 44,881,488
September
11, 2006
Total Interest from 21 December (1) 104,014,531
2004 to 11 September 2006
TOTAL AMOUNT DUE AS OF 11 (a) + (1) 574,465,356
SEPTEMBER 2006
Less: Amount Paid on 11 September 2006 (Php 59,438,604
3,002,125,000/50.508)
NET AMOUNT STILL DUE AS OF 11 (b) 515,026,752
SEPTEMBER 2006
Additional September 12% 112 19,227,665
Interests 12 to
December
31, 2006
January 1 to 12% 365 65,000,954
December
31, 2007
January 1 to 12% 366 73,109,155
December
31, 2008
January 1 to 12% 366 82,028,472

Page 48 of 169
 December
31, 2009
January 1 to 12% 366 92,035,946
December
31, 2010
Additional Interests up to 31 (2) 331,402,193
December 2010
AMOUNT STILL DUE AS REPLACEMENT (b) + (2) 846,428,946
VALUE
Replacement 470,450,825
Cost
Total Interests 435,416,724
(1+2)
TOTAL AMOUNT 905,867,550
OF
REPLACEMENT
VALUE

$360,969,791 as base value. PIATCO adopted Takenaka and Asahikosans actual construction
cost of $360,969,791 which is supported by As-Built Drawings and Bills of Quantities. PIATCO stated
that the Japanese Airport Consultants (JAC), the quality assurance inspector for the NAIA-IPT III
project, validated the works of Takenaka and Asahikosan. PIATCO alleged that the Government and
PIATCO entered into a Quality Assurance Agreement with JAC. 88]

Attendant costs. Under RA 6957 IRR, the replacement cost includes the overhead and all other
attendant costs associated with the acquisition and installation in place of the affected
improvements/structures. The items under the attendant costs correspond to these overhead and
other attendant costs which are necessary to construct an airport project. 89
cralawrednad

It is necessary to hire quality assurance surveyors to check and monitor the work of Takenaka.
PIATCO hired Pacific Consultants, Inc. as construction supervisor in the NAIA-IPT III project.
PIATCO claimed that the planning and design consultancy fees are even below the international
norms which are in the range of 8.5% to 11.5% of the Construction Contract cost. 90 Financing costs
are also attendant costs because loans and guarantees were obtained to finance the NAIA-IPT III
project.91]

Conversion to 2004 values. Since the NAIA-IPT III shall be appraised at the time of taking, the
total construction cost shall be converted to December 21, 2004 values by considering the inflation
rate of 1.0971.92 Inflation was computed using the Consumer Price Index (CPI) from 2002 to
2005. The reckoning period was from November 29, 2002, when Takenaka and Asahikosan
suspended their works in the NAIA-IPT III project, until December 21, 2004, when the Government
filed a complaint for expropriation.93]

Interests on replacement cost. The twelve (12%) interest rate shall be added to the
replacement cost pursuant to the principles of law and equity. 94 In Benguet Consolidated v. Republic
of the Philippines,95 the Court ruled that the property owner is entitled to the payment of interest
where the payment of compensation does not accompany the taking of property for public use but
is postponed to a later date. The interest shall compensate for the Governments delay in the
payment of just compensation.96

Page 49 of 169
3. Takenaka and Asahikosans Appraisal

On the other hand, Takenaka and Asahikosan, computed the NAIA-IPT IIIs replacement cost as
follows:ChanRoblesvirtualLawlibrary

In US dollars
Total payments of PIATCO 275,119,807.88

Add: Awards by the London Court 84,035,974.44

Award by the Makati Court 1,814,008.50

Total Construction Cost 360,969,790.82

$360,969,790.82 as total construction cost. Takenaka and Asahikosan claimed that the initial
contract price for the construction of the NAIA-IPT III was $323,753,238.11. Thereafter, changes
were made in the course of the construction that increased its construction contract price. Pursuant
to the Onshore Construction and Offshore Procurement Contracts, PIATCO paid Takenaka and
Asahikosan the amounts of $231,312,441.28 and P1,796,102,030.84 (a total of $275,119,807.88).

After PIATCO defaulted on its payments, Takenaka and Asahikosan instituted Claim Nos. HT-04-248
and HT-05-269 in England. The London court ruled in their favor and awarded them the amounts of
$81,277,502.50, P116,825,365.34 and 65,000.00 or a total of $ 84,035,974.44.

Thereafter, they filed an action to enforce Claim Nos. HT-04-248 and HT-05-269 before the RTC of
Makati which awarded them the sum of $1,814,008.50.97

4. The BOCs Appraisal

On March 31, 2011, the BOC submitted its Final Report recommending the payment of just compensation
of $376,149,742.56 with interest at the rate of 12% per annum computed from the time of the
taking of the property until the amount is fully paid, plus commissioners fees equivalent to 1%
of the amount fixed as part of the costs of the proceedings.

In arriving at the replacement cost of the NAIA-IPT III, the BOC proposed the following
computation:ChanRoblesvirtualLawlibrary

Formula In US Dollars
Amount paid by PIATCO to Takenaka and Asahikosan 275,119,807.88
Add:
Award in Claim No. HT-04-248 Relating to the Construction 14,827,207.0098 cralawrednad

Cost of NAIA-IPT III

Award in Claim No. HT-05-269 Relating to the 52,007,296.5499
Construction Cost of NAIA-IPT III 341,954,311.42
Construction Cost of NAIA-IPT III
Add: 34,195,431.14
Attendant Cost (10% of the Construction Cost) 376,149,742.56
Replacement Cost of NAIA-IPT III

Page 50 of 169
 $341,954,311.42. In computing the construction cost, all actual, relevant and attendant costs for
the construction of the NAIA-IPT III, including its market price, shall be considered. The BOC
divided the construction cost into: (a) the amount paid by PIATCO to Takenaka and Asahikosan for
the construction of NAIA-IPT III; and (b) the awards by the London Court in Claim Nos. HT-04-248
and HT-05-269 relating solely to construction cost, excluding interest, attorneys fees, and costs of
the suit. The BOC relied on Takenaka and Asahikosans construction cost since these corporations
shouldered the actual cost of constructing the NAIA-IPT III.

$34,195,431.14. According to the BOC, PIATCO failed to substantiate its attendant costs. In
pegging the attendant cost at 10% of the construction cost, the BOC relied on the Scott Wilson
Report, which states that the accepted industry range for architecture, civil and structural, electrical
and mechanical, quantity surveyor and project management cost is 8.5% to 11.5% of the
construction cost.

Depreciation shall not be deducted from the construction cost. The BOC explained that the
inventory of materials comprising the NAIA-IPT III does not reflect its replacement cost. Rather, it is
the actual cost of replacing an existing structure with an identical structure that is considered in the
replacement cost method. For this reason, depreciation shall not be deducted from the construction
cost; otherwise, the NAIA-IPT III would have been fully depreciated since the Government
estimated that the NAIA-IPT IIIs useful life was only ten years.

The replacement cost shall earn interest at 12% per annum from December 21, 2004,
until full payment. The BOC stated that legal interests shall accrue from the time of taking of the
property until actual payment of just compensation. The delay in the payment of just compensation
is equivalent to a forbearance of money.

The commissioners fees shall be equivalent to 1% of just compensation. According to the

BOC, the commissioners fees shall be equivalent to 1% of just compensation, similar to the
arbitrators fees. Commissioners and arbitrators perform similar responsibilities since both act as
independent and uninterested third parties in resolving difficult factual issues. 100

II. The RTC Rulings in Civil Case No. 04-0876

A. The Main Decision

In a decision dated May 23, 2011, the RTC directed the Government, Takenaka, and Asahikosan to pay the
commissioners fees in the amount of P1,750,000.00 each; and ordered the Government to pay PIATCO just
compensation in the amount of $116,348,641.10. In determining the amount of just compensation, the
RTC adopted the following computation:ChanRoblesvirtualLawlibrary

Formula In US Dollars
Just compensation as determined by the Republic 149,448,037.00
Add: Attendant cost (10% of $263,992,081.00, CCV as of 26,339,208.10
December 21, 2004) 175,787,245.10
Just Compensation (59,438,604.00)
Less: Proffered value paid to PIATCO 116,348,641.10
Net Just Compensation

$149,448,037.00. The RTC adopted the Governments computed just compensation of

$149,448,037.00, and ruled that the Government should not pay for the portions of the NAIA-IPT
III that were defective. The RTC thus excluded the following from the computation of the CCV: ChanRoblesvirtualLawlibrary

(a) failed structural elements in the NAIA-IPT III;

(b) inferior quality of material works;
(c) constructed areas that are unnecessary to the use of an international airport terminal;
(d) cost of seismic and gravity load structural retrofits for the failed elements;

Page 51 of 169
 (e) cost of completing the items listed in the JAC project status summary report of February 28,
2003; and
(f) cost of seismic and gravity load structural retrofits for the failed elements in the elevated
roadway structures.

The RTC rejected PIATCO, Takenaka, Asahikosan, and the BOCs computation for lack of factual and legal
basis. The court criticized the BOCs computation of construction cost and stated that the BOC erroneously
relied on the amounts allegedly paid by PIATCO to Takenaka and Asahikosan. The RTC pointed out that
PIATCO failed to present proof that it had indeed paid Takenaka and Asahikosan the sum of
$275,119,807.88. The RTC further posited that the BOC did not take into account the actual cost of the
NAIA-IPT III at the time of taking which was in a state of collapse and deterioration.

The RTC stated that just compensation is limited to the value of the improvement at the time of the filing of
the expropriation complaint. The payment of just compensation does not include the right to be
compensated of the franchise to operate the airport, and the increased value of improvements due to
inflation rate.

$26,339,208.10. Similar to the BOC, the RTC pegged the attendant cost at 10% of the CCV at the
time of the filing of the expropriation complaint. The RTC agreed with the BOC that the computation
of the attendant cost based on the 10% of the CCV was an accepted industry practice.

$59,438,604.00. After deducting the proffered value of $59,438,604.00, the RTC fixed the net
compensation at $116,348,641.10, without interest. The RTC stated that no interest shall accrue on
the net just compensation since the Concession Agreement was nullified by the Court in Agan.

The dispositive portion of the decision states: ChanRoblesvirtualLawlibrary

IN THE LIGHT OF THE FOREGOING, Plaintiffs are hereby ordered to pay respondent PIATCO the amount of
US$175,787,245.10 less the proffered value (P3,002,125,000.00) actually paid to and received by
defendant, as the just compensation for the improvements of NAIA-IPT III.

Moreover, both plaintiff Republic and intervenors Takenaka and Asahikosan Corporations are directed to pay
their proportionate shares of the Commissioners Fees in the amount of P1,750,000.00 each with dispatch.

Finally, insofar as both intervenors Takenaka and Asahikosan Corporations are concerned, resolution of their
claim before this Court is held in abeyance owing to the pendency of the outcome of the appeal on certiorari
before the CA, and in any of their claims, as contractors are solely as against defendant PIATCO.

SO ORDERED. 101

PIATCO, Takenaka, and Asahikosan immediately appealed the RTCs decision before the CA while the
Government opted to seek partial reconsideration of the attendant costs awarded to PIATCO. 102 cralawrednad

PIATCO, Takenaka, and Asahikosan sought to nullify the RTC decision for alleged violation of their right to
due process. They complained that they were only furnished copies of the BOC Final Report only after the
promulgation of the May 23, 2011 decision.103 They averred that the RTC violated Sections 7 and 8, Rule 67
of the Rules of Court which provide that the clerk of court shall serve copies of the commissioners report on
all interested parties, with notice that they be allowed ten days within which to file objections to the findings
of the report, if they so desire. 104 cralawrednad

The Government subsequently partially appealed the case to the CA after the RTC denied its motion for
partial reconsideration.105
cralawrednad

B. The RTCs Interlocutory Order on the Validity of the Escrow Accounts

The Government and the Creation of an Escrow Account for the Payment of Just CompensationOn
July 8, 2011, the Government filed a Manifestation and Motion 106 with the RTC stating that it was ready and
willing to pay PIATCO, through an escrow account, the amount of $175,787,245.10 less the proffered
value of P3 billion.

Page 52 of 169
The Government expressed its desire to exercise full ownership rights over the NAIA-IPT III. However, it
could not directly pay PIATCO who had various creditors Takenaka, Asahikosan, and Fraport, among them.
The Government asserted that just compensation should only be paid to claimants who are legally entitled
to receive just compensation.

The Government thus asked the RTCs leave to deposit the just compensation due in an escrow account that
shall be subject to the following conditions:ChanRoblesvirtualLawlibrary

8.1.The claimant(s) shall have been held to be entitled to receive the sum
claimed from the Just Compensation (NAIA Terminal 3) Fund in
accordance with Philippine law and regulation, by a final, binding and
executory order or award of the expropriation court;
8.2.The claimant(s) shall have been held to have accepted or otherwise
become subject to the jurisdiction of the expropriation court and other
relevant courts of the Republic of the Philippines, by reason of or in
connection with the expropriation of NAIA Terminal 3 by the ROP,
directly or indirectly;
8.3.The claimant(s) shall have executed a valid and effective quitclaim in
favor of the Republic of the Philippines acknowledging that claimant(s)
against the ROP or any agency or instrumentality or corporation of the
ROP, by reason of, or in connection with, the expropriation of NAIA
Terminal 3 by the ROP, directly or indirectly, in any capacity whatsoever;
8.4.The claimant(s) has complied with in good faith any condition or
undertaking required from it/him/her by the expropriation court by
reason of or in connection with the expropriation of NAIA Terminal 3 by
the ROP, directly or indirectly, in any capacity whatsoever. 107
The Government thus prayed: ChanRoblesvirtualLawlibrary

1. Pending determination of the entitled claimants, to allow the Government to deposit just
compensation less the proffered value in an escrow account with a reputable bank whose senior
unsecured obligations are rated at least BBB by Standard and Poors Investors Service, Inc. or
Baa2 by Moodys Service Investors Service, Inc. to be designated by the RTC;

2. After depositing the amount in an escrow account, to confirm the Governments right to fully
exercise any and all acts of ownership over the NAIA-IPT III; and

3. To order the release of just compensation, or of any portion thereof from the escrow account to the
entitled claimants provided that the entitled claimants have fully complied with all the conditions
and requirements set forth under paragraphs 8.1 to 8.4 of the Manifestation and Motion. 108

PIATCO opposed the Manifestation and Motion and argued that the Government could not vary the terms of
the May 23, 2011 Decision as well as the Courts rulings in Agan and Gingoyon commanding the
Government to make a direct payment of just compensation to PIATCO. It insisted that the offer to pay
through an escrow account is not equivalent to direct payment. PIATCO further denied the Governments
allegations that there were several claimants on the just compensation. 109 cralawrednad

On the other hand, Takenaka and Asahikosan agreed with the Government that just compensation should
only be paid to entitled claimants. They posited that the Courts directive in Agan (with respect to the direct
payment to PIATCO) was premised on the erroneous assumption that PIATCO was the builder of the NAIA-
IPT III. Takenaka and Asahikosan insisted that they were the actual builders of the NAIA-IPT III.
Nonetheless, they contended that the RTC had no jurisdiction over the Manifestation and Motion because the

Page 53 of 169
parties already filed their respective Notices of Appeal before the CA. 110 cralawrednad

The Omnibus Order dated October 11, 2011In an Omnibus Order dated October 11, 2011, the RTC
granted the Manifestation and Motion.

The RTC ruled that it has residual jurisdiction to adjudicate the Governments Manifestation and Motion
considering that the motion was filed prior to the parties filing of the Notice of Appeal. The RTC opined that
the Manifestation and Motion was akin to a motion for execution pending appeal. The Manifestation and
Motion showed the Governments intent to voluntarily comply with the May 23, 2011 decision which was
pending appeal before the CA. Under Section 9, Rule 41 of the Rules of Court, the RTC has the residual
power to issue orders for the protection and preservation of the parties rights, and to order the execution of
a decision pending appeal. Furthermore, Section 6, Rule 136 of the Rules of Court provides that courts have
incidental power to issue orders that are necessary to effectuate their judgments.

The RTC held that the creation of an escrow account conforms with the Courts rulings in Gingoyon that just
compensation shall be paid in accordance with law and equity. Since the Government had no legal obligation
to create an escrow account, it could impose conditions for the release of just compensation in the escrow
account, including: (a) PIATCOs submission of a warranty that the NAIA-IPT III shall not be burdened by
liens and encumbrances and an undertaking that PIATCO shall be solely liable for any claims from third
persons involving the NAIA-IPT III; and (b) PIATCOs execution of a Deed of Conveyance of the NAIA-IPT III
in favor of the Government. Equity dictated that the Governments payment of just compensation should
free the NAIA-IPT III from liens and encumbrances. The Deed of Conveyance should be without prejudice to
the appellate courts determination of just compensation.

Conversely, PIATCO had likewise no legal obligation to accept or reject the Governments offer of payment.

The RTC clarified that PIATCO is the sole entity entitled to receive the payment from the
Government. The RTC pointed out that the Court has remanded the Gingoyon case for the sole
purpose of determining the amount of just compensation to be paid to PIATCO.

Moreover, the Government did not raise the alleged dispute in the ownership of the NAIA-IPT III during the
expropriation proceedings. The RTC stated that it could not take judicial notice of the allegation that PIATCO
was indebted to various creditors, apart from Takenaka and Asahikosan, since these alleged creditors were
not impleaded in the expropriation complaint.

The RTC likewise observed that compliance with the Governments conditions under 8.1 and 8.3 for the
release of just compensation from the escrow account pending appeal was legally impossible. For this
reason, the payment through an escrow account was not the payment that would transfer the title of the
NAIA-IPT III to the Government.

The RTC lastly ruled that the payment of just compensation through an escrow account shall be payment of
just compensation within a reasonable time. Consequently, the Government may exercise full rights of
ownership over the NAIA-IPT III upon the creation of an escrow account. 111 cralawrednad

The dispositive portion of this order provides: ChanRoblesvirtualLawlibrary

IN THE LIGHT OF THE FOREGOING, plaintiffs Manifestation and Motion is GRANTED in part: ChanRoblesvirtualLawlibrary

1. Plaintiffs prayer for the court to determine who is/are legally entitled to receive just compensation
is DENIED for lack of merit.

2. Plaintiffs prayer that they be allowed to deposit the payment of just compensation (less the
proffered value) to an escrow account is hereby GRANTED, provided that only the following
conditions may be imposed for the release of the money deposited: ChanRoblesvirtualLawlibrary

a. PIATCO must submit a Warranty that the structures and facilities of NAIA IPT III are free
from all liens and encumbrances;

b. PIATCO must submit an Undertaking that it is assuming sole responsibility for any claims
from third persons arising from or relating to the design or construction of any structure or
facility of NAIA IPT III structures, if any; and

Page 54 of 169
 c. PIATCO must submit a duly executed Deed transferring the title of the NAIA IPT III
structures and facilities to the Republic of the Philippines, without however, prejudice to the
amount which will finally be awarded to PIATCO by the appellate court;

The Land Bank of the Philippines and the Development Bank of the Philippines are hereby jointly
appointed [a]s the Escrow Agents for the above purpose.

Upon payment of the plaintiffs of the said just compensation in an escrow account, this court
recognizes the Republic of the Philippines right to exercise full rights of ownership over the NAIA
IPT III structures and facilities in accordance [with] 2 (c).

3. Plaintiffs Formal Offer of Evidence and defendant PIATCOs Comment and Opposition thereto are
NOTED.

4. Defendant PIATCOs motion for reconsideration with plaintiffs comment/opposition of the order of
this court denying the motion for inhibition is hereby denied.

SO ORDERED.112

The RTC subsequently denied PIATCOs as well as Takenaka and Asahikosans respective motions for partial
reconsideration of the above-quoted order,113opening the way for PIATCOs petition for certiorari with prayer
for the issuance of a temporary restraining order and/or a writ of preliminary injunction, filed with the
CA.114 This petition was docketed as CA-G.R. SP. No. 123221.

III. The CA Rulings

A. CA-G.R. CV No. 98029

In a decision dated August 7, 2013,115 the CA upheld the validity of the RTCs May 23, 2011 decision. The CA
ruled that the parties did not need to be furnished the BOC Final Report since RA 8974 is silent on the
appointment of the BOC, as held in Gingoyon.

However, the CA modified the RTC rulings and arrived at its own formula of the NAIA-IPT IIIs replacement
cost, to wit:ChanRoblesvirtualLawlibrary

Construction
Cost
Add: Attendant
Cost
= Replacement
Cost
Add: Equity
Just
Compensation
Substituting:
Replacement =$300,206,693.00 + 0 (because attendant cost already
Cost imputed in construction cost)
=$300,206,693.00 + 6% interest from December 21, 2004
to September 11, 2006 less $59,438,604.00 + 6%
interest from September 12, 2006 until finality of
judgment

Page 55 of 169
 In US dollars
Replacement Cost 300,206,693.00
Less: Proffered value paid to PIATCO (59,438,604.00)
Just Compensation as of September 11, 2006 240,768,035.00
Add: Interest Due as of July 31, 2013 130,658,653.24
Just Compensation as of July 31, 2013 371,426,742.24

The CA justified its computation as follows:

$300,206,693.00 as Replacement Cost. Under Section 10 of RA 8974 IRR, replacement cost
shall consist of the construction and attendant costs.

$300,206,693.00 as construction cost. The CA relied on the Gleeds Report which it

characterized as more particularized, calculable and precise. 116 The Governments construction
cost did not vastly differ from the BOC and PIATCOs computed construction costs of
$341,954,311.42 and $360,969,791.00, respectively. But the BOC and PIATCOs computed
construction costs were unreliable since they lacked detailed proof that the quoted amounts were
directly related to the construction of NAIA-IPT III.

$0 as attendant cost. The CA stated that there was no need to award additional attendant costs
since these costs had already been included in the Governments computations under the
heading General Requirements and Conditions. The inclusion of attendant cost in the
construction cost was justified since the attendant cost becomes part of the total construction
cost once the construction of a project is completed. Based on the Bills of Quantities, the
Government provided the following detailed list of attendant costs in the construction of the
NAIA-IPT III:

Attendant Cost In US Dollars

Design 6,439,680
Staff and labour 10,491,139.54
Insurance 925,210.78
PI Insurance 2,200,000.00
Consequential Loss 800,000.00
Setting out 364,647.00
Health and safety 403,224.00
Enviro Management 176,490.00
Design 2,631,100.00
Staff and labour 2,590,774.19
Insurance 71,109.77
Total 25,293,376.28117

The CA likewise observed that PIATCOs summarized computation of attendant costs was self-serving and
unsubstantiated by relevant evidence. On the other hand, the BOC and the RTCs computation of attendant
costs at 10% of the construction cost lacked factual and legal support. Pegging attendant costs at 10% of
the construction cost was only relevant during the pre-construction stage since the costs of the construction

Page 56 of 169
at that time could only be estimated. This estimate carried no relevance at the post-construction stage since
the total construction costs, including the attendant costs, could already be determined.

Depreciation, costs for noncompliance with contract specifications, and unnecessary

areas of NAIA-IPT III shall not be deducted from the replacement cost. The CA reversed
the RTCs finding that the NAIA-IPT III suffered from massive structural defect. The CA opined that
the collapse of the portion of the NAIA-IPT III merely relates to finishing rather than to
structural defects. In construction lingo, finishing pertains to aesthetics, convenience, and
functionality of a built structure while structural refers to the very integrity and stability of the
built structure.

The CA disagreed with the RTCs conclusion that depreciation, costs for non-compliance with
contract specifications, and unnecessary areas of the NAIA-IPT III, shall be excluded from the
computation of construction cost. Depreciation should not be deducted since it merely measures the
book value of the property or the extent of use of the property. Depreciation is inconsistent with the
replacement cost method since the replacement cost merely measures the cost of replacing the
structure at current market price at the time of taking.

Furthermore, the market price of a building increases over time; thus, if the construction cost of
NAIA-IPT III in 2002 was $300,206,693.00, its replacement cost in 2004 should be equal to or
higher than $300,206,693.00.

Interest. The CA further held that interest shall be added to just compensation as of September
11, 2006. Citing Gingoyon, the CA explained that law and equity dictated that the Government
shall be liable for legal interests as a result of the delay in the payment of just compensation to
PIATCO. Since there was no stipulation on interests, the CA fixed the interest rate at 6%. Upon
finality of the judgment, the interest shall be 6% until fully paid. As of July 31, 2013, the CA
computed the interest as follows:

In US Dollars
Interest from December 21, 2004 to December 21, 2005 18,012,401.58
$300,206,693*6%
Interest from December 22, 2005 to September 11, 2006 13,225,544.17
$300,206,693*6%*268 days/365 days
Interest from September 12, 2006 to September 12, 2012 86,676,492.60
$240,768,035*6%*6 years
Interest from September 13, 2012 to July 31, 2013 12,744,214.89
$240,768,035*6%*322 days/365 days
Total Interest as of July 31, 2013 130,658,653.24

The CA further ordered Takenaka and Asahikosan to share in the expenses of the BOC. Since Takenaka and
Asahikosans inputs on the construction costs of the NAIA-IPT III were heard by the RTC, they should share
in the expenses of the BOC.

The CA likewise denied Takenaka and Asahikosans prayer to set aside in an escrow account a portion of the
just compensation corresponding to the amounts owed them by PIATCO. RA 8974 expressly provides that
the Government shall directly pay the property owner upon the filing of the complaint as a prerequisite to
the issuance of a writ of possession.

The dispositive portion of the CA decision provides: ChanRoblesvirtualLawlibrary

Page 57 of 169
WHEREFORE, the decision appealed from is MODIFIED. Just compensation is fixed at US$300,206,639.00
less US $59,438,604.00 paid in September 2006 or the net sum of US$240,768,035.00 with legal interest at
6% computed as above. The Republic is thus ordered to pay PIATCO just compensation as herein
determined and which sum has reached the total of US $371,426,688.24 as of 31 July 2014.

Upon finality of judgment, interest on the sum due by then shall be at 12% until fully paid.

IT IS SO ORDERED.118
On August 22, 2013, the CA amended its decision in view of the BSPs recent issuance, BSP Circular No.
799, series of 2013, which took effect on July 1, 2013. BSP Circular No. 799 lowered the legal interest rate
on loan or forbearance of money, goods or credit to 6% per annum. 119 The CA amended decision
provides:ChanRoblesvirtualLawlibrary

WHEREFORE, the decision appealed from is MODIFIED. Just compensation is fixed at US $300,206,639.00
less US $ 59,438,604.00 paid in September 2006 or the net sum of US$240,768,035.00 with legal interest
at 6% computed as above. The Republic is thus ordered to pay PIATCO just compensation as herein
determined and which sum has reached the total of $371,426,688.24 as of 31 July 2013.

Upon finality of judgment, interest on the sum due by then shall be at 6% per annum until fully
paid pursuant to BSP Circular No. 799, series of 2013 which took effect on 01 July 2013, and
which effectively modified the interest rate rulings in Eastern Shipping Lines, Inc. v. Court of
Appeals. Eastern Shipping was the basis of the Courts earlier imposition of a 12% interest from
finality of judgment.

IT IS SO ORDERED.120 [Emphasis supplied]

The CA likewise denied the Governments, PIATCOs, Takenakas, and Asahikosans motions for partial
reconsideration in a resolution dated October 29, 2013.121 cralawrednad

The CAs denial of their motions cleared the way for the elevation of CA-G.R. CV No. 98029 to this Court
through a petition for review on certiorari. The Government, PIATCO, and Takenaka and Asahikosans
consolidated petitions are docketed as G.R. Nos. 209917, 209731, and 209696, respectively.

B. CA-G.R. SP No. 123221

In a decision dated October 18, 2014, the CA reversed the Omnibus Order dated October 11, 2011, for
having been issued with grave abuse of discretion. The dispositive portion of the decision states: ChanRoblesvirtualLawlibrary

WHEREFORE, in view of the foregoing, the instant Petition is hereby GRANTED. Parenthetically, the
Omnibus Order dated 11 October 2011 and Order dated 5 December 2011 of the Pasay City RTC, Branch
117, in Civil Case No. 04-0876-CFM for Expropriation, are herebyNULLIFIED and SET ASIDE for having
been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.

SO ORDERED.122

IV. The Action to Enforce the London Awards, Civil Case No. 06-171

On February 27, 2006, Takenaka and Asahikosan filed an action to enforce the London awards in Claim Nos.
HT-04-248 and HT-05-269 before the RTC of Makati, Branch 143. The case was docketed as Civil Case No.
06-171.123 cralawrednad

In a decision dated September 6, 2010, the RTC recognized the validity of the London awards in Claim
Nos. HT-04-248 and HT-05-269 and declared these awards as enforceable in the Philippine jurisdiction. The
RTC thus ordered PIATCO to pay Takenaka and Asahikosan the sum of $85.7 million. 124 cralawrednad

PIATCO appealed the case to the CA125 which affirmed the RTC rulings in a decision dated March 13,
cralawred

2012.126 The CA likewise denied PIATCOs motion for reconsideration in a resolution dated May 31, 2012. 127 cralawrednad

PIATCO responded by filing a petition for review on certiorari with this Court assailing the CAs ruling. The
case was docketed as G.R. No. 202166 and is still pending before the Court separately from the present
petitions.

Page 58 of 169
To summarize, the cases pending before the Court are the consolidated cases: G.R. Nos. 209917, 209696,
209731, and 181892, and G.R. No. 202166 as a separate case.

G.R. No. 209917 is the Governments petition for review on certiorari128 to partially reverse the CAs August
22, 2013 Amended Decision129 and its October 29, 2013 Resolution130 in CA-G.R. CV No. 98029.

G.R. No. 209696 is a petition for review on certiorari filed by Takenaka and Asahikosan to partially reverse
the CAs August 22, 2013 Amended Decision and its October 29, 2013 Resolution in CA-G.R. CV No.
98029.131cralawrednad

G.R. No. 209731 is PIATCOs petition for review on certiorari to reverse the CAs August 22, 2013 Amended
Decision, and October 29, 2013 Resolution in CA-G.R. CV No. 98029. 132 cralawrednad

G.R. Nos. 209917, 209696 & 209731 originally arose from the Governments complaint for expropriation of
the NAIA-IPT III filed with the RTC of Pasay, Branch 117 in Civil Case No. 04-0876. The main issue before
the Court in these petitions is the valuation of the just compensation due for the Governments
expropriation of the NAIA-IPT III.

G.R. No. 181892 is the Governments petition for certiorari with prayer for the issuance of a temporary
restraining order,133 assailing the May 3, 2007, May 18, 2008; and January 7, 2008 orders of the RTC of
Pasay City, Branch 117 in Civil Case No. 04-0876.134cralawrednad

This petition likewise arose from the Governments complaint for expropriation of the NAIA-IPT III. The main
issue in this petition is the propriety of the appointment of DG Jones and Partners as an independent
appraiser of the NAIA-IPT III.

G.R. No. 202166 is PIATCOs petition for review on certiorari135 to assail the CAs March 13, 2012
decision136 and May 31, 2012 Resolution137 in CA-G.R. CV No. 96502. The petition arose from Takenaka and
Asahikosans action to enforce the London awards before the RTC of Makati, Branch 143 in Civil Case No.
06-171. As previously mentioned, this case was not consolidated with the four (4) cases above and shall
thus be separately ruled upon by the Court.

V. The Parties Positions

A. The Governments Position (G.R. Nos. 209917, 209731, and 209696)

G.R. No. 209917

In G.R. No. 209917, the Government asks the Court to partially reverse the CA rulings and to deduct from
the replacement cost of US$300,206,693.00 the following items: (a) depreciation in the amount of
US$36,814,612.00; and (b) PIATCOs non-compliance with contract specifications in the amount of
US$113,944,044.00. The Government also refutes the CAs imposition of a legal interest on just
compensation.

The Government asserts that the CA did not consider equity in computing the replacement cost of the NAIA-
IPT III. Contrary to the Courts pronouncement in Gingoyon, the CA computed just compensation based
solely on RA 8974 and its IRR. The CCV of $300,206,639.00 only reflects the valuation of the NAIA-IPT III
as of November 2002 when PIATCO stopped the construction of the terminal, and did not take into account
other factors that lowered its valuation as of December 2004.

The Government posits that there are two standards in measuring the replacement cost. The implementing
rules of RA 8974 failed to provide a complete formula to arrive at the replacement cost of an expropriated
property.

The first and common standard is the depreciated replacement cost method which measures the cost of
replacing an asset at current prices but in its actual condition, i.e., adjusted for age, wear and tear.
The Chartered Institute of Public Finance and Accounting defines depreciated replacement cost as a method
of valuation which provides the current cost of replacing an asset with its modern equivalent asset less
deductions for all physical deterioration and all relevant forms of obsolescence and optimization and as the
replacement value of property minus physical depreciation and obsolescence; insurance adjusters estimate
the actual cash value of property based on its depreciated replacement cost. 138cralawrednad

Page 59 of 169
In other words, depreciated replacement cost adjusts the cost of replacing the actual asset in accordance
with the assets age in order to take into account the lower economic utility of an asset that is not brand
new. As an asset ages, higher economic cost is required to maintain that asset to the level of utility of a
brand new one.

The second and less common standard is the new replacement cost method which measures the cost of
replacing an asset at current prices with no adjustment for age, wear, and tear. It refers to the cost to
replace damaged property with like property of the same functional utility without regard to depreciation
(physical wear and tear) and obsolescence.139cralawrednad

The Government asks the Court to adopt the depreciated replacement cost method where depreciation is
deducted from the replacement cost. The Government asserts that it is an internationally accepted practice
to consider depreciation and other forms of obsolescence and optimization in measuring the replacement
cost of an asset.

The Government argues that the new replacement cost method usually applies in cases where the property
must be rebuilt. For example, an insurance policy for a house would usually use the new replacement cost
method because a house, which was destroyed by fire or other natural disaster, must be rebuilt. On the
other hand, an insurance policy for an automobile would use the depreciated replacement cost because it
presupposes that a new automobile must be purchased to replace the old automobile that suffered from
wear and tear.

The Government disputes the CAs opinion that the replacement cost cannot be lower than the actual
construction because market prices tend to move upward over time. The Government contends that the
replacement cost may be lower than the construction cost if the price of the materials such as steel, cement,
and copper used during the construction stage decreases after the construction of the improvement.
Moreover, labor productivity and technological advancements affect the replacement cost since these
counter-balance inflation. The depreciated replacement cost method is utilized in setting user rates for
public utilities precisely because this standard of value will tend to result in lower prices over time, not
higher prices.140cralawrednad

The Government likewise disagrees with the CA that the depreciation adjustment would irrationally result in
[a] book value which continues to be lower and lower over time. Since an asset must be maintained, the
cost of performing maintenance and repairs increases the assets replacement cost. Consequently, repairs
and maintenance cost counter-balance depreciation. The recognition that an asset depreciates impliedly
acknowledges that the owner will spend more costs in maintaining the assets utility than on a brand new
asset.

The Government agrees with the CA that depreciation is a cost allocation method and not a valuation
method. However, the Government stresses that depreciation is also an economic cost; depreciation thus
recognizes that an asset suffers from wear and tear and would require higher cost to maintain an assets
economic utility. Depreciation, as both economic and accounting concepts, represents cost adjustments to
reflect the fair value of the asset due to age, wear, and tear.

The Government adds that the premise of the replacement cost method is to measure the cost of replacing
an asset at current prices with an asset that has the same economic utility.141 Thus, the CA erred when it
held that the depreciation adjustment was inconsistent with the replacement cost method for the reason
that this method factors in the current market price to measure the cost of replacing an asset.

For instance, if the Government would expropriate a ten-year-old automobile, the new replacement cost
method would compensate the owner the amount of an asset that has more economic utility than the ten-
year-old automobile. On the other hand, if the Government would use the depreciated replacement cost
method, it would only pay the value of an asset that has economic utility of a ten-year-old automobile.

The Government likewise insists that the CA erred in not deducting from the replacement cost the
construction costs for deviations from the original contract, the inappropriate and defective structures, and
structures that were built in violation of international standards. It asserts that the NAIA-IPT III suffers from
structural defects, as evidenced by the following:ChanRoblesvirtualLawlibrary

(a)In the August 2007 Site Observation Report, Ove Arup found that the
NAIA-IPT III suffered from structural defects.

Page 60 of 169
(b)In its Scott Wilson Report, PIATCO admitted that the NAIA-IPT III
suffered from structural defects. The relevant portions of the Report
provide:
Section 3.3.23. The cracking noted in the 2004 report at the upper storey
beam/column interface appears to have worsened particularly in the
outer faces of a number of columns at high level adjacent to the internal
ramps.
Section 3.3.37. As far as the building structure is concerned the
outstanding issues are the Taking Over Inspection Defects List,
outstanding Quality Observation Report issues and the Non-Compliance
Schedule x x x.142
(c)The ASEP made the following observation in its June 23, 2006 Report:
Results of material tests carried out identified that the materials
used were adequate and meet or exceed the ER specification.
However, the thickness of the wall angle used (0.4 mm) does not
meet the minimum plate thickness for metals to be fastened by
power-actuated anchors, which requires a minimum of 0.6 mm
(Hilti Catalogue). ASEP recommended further tests.

ASEP considered that the quality of workmanship of the installation

is not considered to be within minimum acceptable practice.

Structural design of the ceiling system provided by Takenaka and

independently assessed by ASEP concluded that the factor of safety
of individual components is high. However, ASEP stated that the
overall factor of safety of the total ceiling system is expected to be
lower due to poor workmanship of the connections. The positioning
of the air-conditioning ducts, fire protection system pipes, and
other systems above the ceiling has affected the standard spacing
of the ceiling hangers and may have contributed to the uneven
distribution of loads to the various ceiling components, although
without some of the riveted joints failing, the ceiling hangers are
still adequate.

ASEP concluded that a combination of poor workmanship and wrong

choice of system in some areas particularly if repeated access is
required for inspection and maintenance. 143
(d)In its June 23, 2006 Report, the ASEP opined that the NAIA-IPT III may
be partially opened provided that retrofitting works are done prior to its
full operation. Thus, the MIAA initiated the structural remediation
program of the NAIA-IPT III.144
(e)TCGI documented the heaving of homogenous tiles and cracks
underneath the slabs in the head house airline lounges (Level 3, Sector
4),145attributable to the 5.4 magnitude earthquake that hit Lingayen,
Pangasinan, on November 27, 2008. The earthquake was felt in Pasay
Page 61 of 169
 with a 3.0 magnitude. PIATCO failed to refute TCGIs findings. 146
The Government insists that the operation of the NAIA-IPT III is not an implied admission of the
nonexistence of structural defects. The Government clarifies that the structurally defective sectors of the
NAIA-IPT III remain unoccupied. Out of the 10 Sectors of the NAIA-IPT III, the MIAA fully occupies Sectors
1, 3, 5, and 6, and partially occupies Sectors 2 and 4. The MIAA did not occupy Sections 7, 8, 9, and the car
park due to structural issues.

That the Court declared the PIATCO contracts as null and void should not impede the deductibility of
construction costs for deviations from the original contract, the inappropriate and defective structures, and
structures that were built in violation of international standards. The Government emphasizes that when the
Court nullified the PIATCO contracts, the NAIA-IPT III was almost complete. Consequently, the Government
had every reason to expect that PIATCO would build the NAIA-IPT III according to the agreed specifications.
PIATCO, however, acted in bad faith in not complying with the nullified PIATCO contracts. PIATCO should not
benefit from its violation of the concession agreements and the gross deviations from the original design of
the NAIA-IPT III.

The Government maintains that the imposition of legal interest on just compensation is erroneous.

First, the present expropriation case is sui generis. The Government was forced to expropriate the NAIA-IPT
III due to PIATCOs violation of the Constitution and the law. To award legal interest to PIATCO is to
condone its illegal acts. In Hulst v. PR Builders, Inc.,147 the Court held that the illegality should not be
rewarded. In Valderama v. Macalde,148 the Court deleted the payment of interest on the ground that a
person should not be allowed to profit from an illegal act. As between two parties, he who, by his acts,
caused the loss shall bear the same. He, who comes to court for equity must do so with clean hands.

Second, PIATCO itself caused the delay of the expropriation proceedings before the RTC. PIATCO did not
produce the vouchers, purchase orders, and as-built documents which were in its possession despite the
Governments filing of a Motion for Production and Inspection of Documents dated May 25, 2006, before the
RTC.149cralawrednad

Third, in Eastern Shipping Lines v. CA,150 the Court pronounced that unliquidated claims are not subject to
legal interest, such as the present case.

Fourth, the law and jurisprudence on the imposition of interest does not address the peculiar situation
where the NAIA-IPT III is being expropriated as a direct result of the nullification of the PIATCO contracts.
The application of the law and jurisprudence on the imposition of interest would not result in a fair and
equitable judgment for the Government. The Court must apply equity in the absence of a specific law
applicable in a particular case or when the remedy afforded by the law would be inadequate to address the
injury suffered by a party.

The Government additionally complains that, since November 2002, long before the institution of the
expropriation [complaint] in December 2004, Takenaka and Asahikosan prevented it from entering the
NAIA-IPT III.151 cralawrednad

G.R. No. 209696

The Government alleges that it is willing to pay just compensation to the lawful claimant. However, just
compensation should not be set aside in favor of Takenaka and Asahikosan since their claim against PIATCO
has not yet been resolved with finality.

The Government disputes the applicability of Calvo v. Zandueta152 in the present case. In that case, the
Court allowed Juana Ordoez to be subrogated to Aquilino Calvo as defendant because Ordoez obtained a
final judgment in her favor which entitled her to levy the land sought to be expropriated. Furthermore,
Ordoez was not a party to the expropriation case.

The Government asserts that Takenaka and Asahikosan should share in the BOCs expenses. Under Section
12, Rule 67 of the Rules of Court, the rival claimants should shoulder their costs in litigating their claim
while the property owner should shoulder the costs of the appeal if he appeals the case and the appellate
court affirms the lower courts judgment.

To divide the BOCs expenses between the Government and PIATCO would result in unjust enrichment.

Page 62 of 169
Under Section 1, Rule 142 of the Rules of Court, the court shall have the power to divide the costs of an
action as may be equitable.

Furthermore, Takenaka and Asahikosan actively participated in and benefited from the proceedings before
the BOC, which included the London awards in the computation of just compensation. Takenaka and
Asahikosan likewise relied on the Final Report in their Appellants Brief dated October 3, 2012, and in their
Reply Brief dated January 20, 2013.

The Government contends that Takenaka and Asahikosans computations of actual construction cost of the
NAIA-IPT III are conflicting.

In their Manifestation dated December 9, 2010, Takenaka and Asahikosan stated that the actual
construction cost amounted to $360,969,790.82. However, in his report, Mr. Gary Taylor appraised the
actual construction cost at US$323 million, plus other costs that were incurred by various parties during its
conception and construction plus any property appreciation. 153 Mr. Gary Taylor further stated that the true
value of the NAIA-IPT III facility is nearer to US$408 million, given the fact that the Republics expert,
Gleeds, failed to recognize or include any values for [the] design and other consultants (10%) or property
inflation based on GRP schedules (15%).154 However, Mr. Taylor did not explain how he arrived at the
amount of $408 million.

The Government adds that Takenaka and Asahikosans actual construction cost of $360,969,790.82 is
erroneous as the London and Makati awards include interests, attorneys fees and costs of litigation.
Furthermore, Takenaka and Asahikosans as-built drawings are not truly as-built. The drawings do not
reflect the quality and exact detail of the built portions of the NAIA-IPT III. 155 cralawrednad

G.R. No. 209731

The Government disputes PIATCOs claim that it was denied due process when it was not furnished a copy of
the Final Report. The Government points out that all the parties in the case were not given a copy of the
Final Report. Furthermore, PIATCO belatedly raised this issue; it was brought for the first time on appeal
before this Court.

The Government also emphasizes that PIATCO immediately filed a notice of appeal a day after its receipt of
the RTC decision. This is contrary to PIATCOs claim that it wanted to secure a copy of the Final Report and
subject it to clarificatory hearing.

Even assuming that the RTC erred in not furnishing the parties copies of the Final Report, the lapse is
merely an innocuous technicality that should not nullify the RTC rulings.

The Government claims that PIATCO failed to substantiate the attendant costs. The documents attached to
the Compliance dated December 14, 2010, are mostly summary of payments that PIATCO allegedly paid to
the consultants. However, PIATCO failed to prove that the alleged consultants rendered actual service
related to the construction of the NAIA-IPT III. Reyes Tacandong & Co. merely verified the mathematical
accuracy of the schedules, including the computation of the inflation rate. Furthermore, the receipts that
PIATCO submitted are not enough to cover its claimed just compensation. 156 cralawrednad

G.R. No. 181892

The Government disputes the RTCs appointment of an independent appraiser of the NAIA-IPT III. It claims
that Section 11 of RA 8974 IRR solely authorizes the implementing agency to engage the services of an
appraiser in the valuation of the expropriated property, while under Section 10 of RA 8974 IRR, it is
the implementing agency that shall determine the valuation of the improvements and/or structures on the
land to be acquired using the replacement cost method. Pursuant to these provisions, the Government
engaged the services of Gleeds, Ove Arup and Gensler for purposes of appraising the NAIA-IPT III.

The Government also argues that the appointment of an independent appraiser would only duplicate the
efforts of the existing appraisers. A court-appointed appraiser and the existing appraisers would perform the
same task of determining the just compensation for the NAIA-IPT III. Thus, the RTC should have relied
instead on the opinion of the internationally-renowned appraisers that the Government hired.

The Government likewise avers that the appointment of an independent appraiser would only render the
expropriation proceedings more costly. The Government would be forced to pay for the services of two

Page 63 of 169
appraisers, which is not the intention of RA 8974. The court-appointed appraiser, too, would render the
BOCs functions useless. Under Rule 67 of the Rules of Court, it is the BOC that is required to receive
evidence in the determination of just compensation. Rule 67 of the Rules of Court does not require the
appointment of an appraiser in eminent domain cases.

Lastly, the Government complains that the RTC order requiring it to submit a Certificate of Availability of
Funds is vague because the RTC did not specify the costs of the expropriation proceeding. 157 cralawrednad

B. PIATCOs Position

G.R. No. 209731

PIATCO argues that the RTC rulings are null and void for the failure of the RTC clerk of court to furnish them
copies of the BOC Final Report. Sections 7 and 8, Rule 67 of the Rules of Court require that the parties be
given ten days within which to file their objections to the findings of the commissioners.

On its base value of $360,969,790.82, PIATCO insists that its valuation is supported by a preponderance of
evidence, particularly by the As-Built Drawings and the Bills of Quantities submitted by Takenaka and
Asahikosan. The CA should not have relied on the Governments self-serving evidence in computing the base
value of the NAIA-IPT III.

PIATCO also cites the CAs failure to include the attendant costs in the valuation of the NAIA-IPT III as an
omission; the CA merely recognized the construction cost valuation of the terminal pursuant to the Gleeds
Report. PIATCO alleges that it incurred attendant costs of $70,197,802.00 apart from the construction cost
of $360,969,790.82. It also emphasizes that its consultancy fees are even below the international norms, as
shown in the Scott Wilson Report. It also claims that site preparation costs, legal costs in planning and
constructing the development, and financing costs form part of attendant costs since these costs are
indispensable in completing a complex infrastructure project.

PIATCO further alleges that its attendant costs are supported by the attachments in its Compliance dated
December 14, 2010, including the summary of payments for incurred attendant costs, official receipts,
statements of account, sales invoices, endorsements, insurance policies and other related documents,
acknowledgement receipts, agreements, invoices, and bonds. It claims that Reyes Tacandong & Co
examined these documents and confirmed that the attendant costs amount to $70,197,802.00 in its Report
of Factual Findings dated December 14, 2010.

PIATCO asserts that its submission of the summary computation is justified under Section 3 (c), Rule 130 of
the Rules of Court which allows the party to submit non-original copies if the original consist of numerous
accounts or other documents that the court cannot examine without great loss of time; the fact sought to be
established from these, after all, is only the general result of the whole.

PIATCO likewise argues that the total construction cost of $431,167,593.00 which is the sum of
$360,969,791.00 and $70,197,802.00 should be converted to 2004 values since the reckoning period of
just compensation is the date of taking or the date when the complaint was filed, whichever is earlier. It
posits that the amount of $431,167,593.00 should thus be multiplied by 1.0971 the prevailing inflation
rate from November 29, 2002, to December 21, 2004 for a total amount of $470,450,825.00.

The sum of $470,450,825.00 should further earn an interest rate of 12% per annum beginning December
21, 2004, until full payment. PIATCO maintains that the Governments deposit in an escrow account of a
portion of just compensation is not equivalent to payment; hence, interest on the full amount of just
compensation shall continue to apply.

PIATCO contends that the CAs reduction of interest rate to 6% is erroneous because the Court, in numerous
cases, has consistently imposed 12% interest per annum on just compensation. PIATCO emphasizes that
the imposition of interest on just compensation is not based on contract, but on the owners right to be
immediately paid just compensation.

Finally, PIATCO prays that it be paid all income generated from the operations of the NAIA-IPT III, from the
date of taking up to the present.158
cralawrednad

G.R. No. 209917

Page 64 of 169
PIATCO asserts that the NAIA-IPT III does not suffer from massive structural defects; that the Governments
reliance on the Ove Arup Report is self-serving. The Government would not have expropriated the NAIA-IPT
III if it truly believed that the terminal suffered from massive structural defects. Furthermore, the MIAAs
Project Management Office oversaw the construction of the NAIA-IPT III to ensure that the terminal
complied with the agreed specifications under the relevant contracts between PIATCO and the Government.

PIATCO contends that the depreciation, deterioration, and costs for non-compliance with contract
specifications should not be deducted from the base value of the NAIA-IPT III. The base value of
$300,206,693.00 should be the least amount that the Government should pay. The measure of just
compensation is the fair and full equivalent for the loss sustained by the property owner, not the gain that
would accrue to the condemnor.

PIATCO also asks this Court to strike from the record the affidavit of Kaczmarek and other attachments in
the Governments motion for partial reconsideration dated August 22, 2013. The Government should not be
allowed to present new evidence on the valuation of the NAIA-IPT III before the CA. PIATCO points out that
Kaczmarek was not cross-examined and his identity, knowledge, and credibility were not established before
the trial court. The Government is estopped from introducing new evidence before the appellate court since
it objected to Takenaka and Asahikosans introduction of new and additional evidence before the CA.

As its last point, PIATCO posits that Section 10 of RA 8974 IRR does not allow the deduction of depreciation,
deterioration, and costs for non-compliance with contract specifications from the replacement cost.
Depreciation is merely an accounting concept that facilitates the standard of decreasing asset values in the
books of accounts. It is not a method of valuation, but of cost allocation; an asset may still be valuable and
yet appear fully depreciated in the financial statements. If at all, depreciation was only relevant after the
Government took possession and operated the NAIA-IPT III.159 cralawrednad

G.R. No. 209696

PIATCO agrees with the CA that just compensation must be directly paid to it as the owner of the NAIA-IPT
III. It stresses that RA 8974 and its implementing rules clearly provide that the owner of the expropriated
property shall receive the entire amount of just compensation.

PIATCO insists that it would be erroneous to create an escrow account in favor of Takenaka and Asahikosan
since the enforceability of Claim Nos. HT-04-248 and HT-05-269 in Philippine jurisdiction has yet to be
decided by the Court in G.R. No. 202166. It points out that the main issue in G.R. Nos. 209731, 209917,
and 209696 is the amount of just compensation, not the determination of Takenaka and Asahikosans
money claims against PIATCO. Takenaka and Asahikosans insistence to enforce their money claims against
PIATCO in G.R. Nos. 209731, 209917 & 209696 constitutes forum shopping and is still premature.

PIATCO contends that Takenaka and Asahikosan have no standing to demand the creation of an escrow
account in their favor. Section 9, Rule 67 of the Rules of Court does not apply in this case because there are
no conflicting claims regarding the ownership of the NAIA-IPT III. Furthermore, the Court categorically
stated in Gingoyon that PIATCO owns the NAIA-IPT III.

PIATCO further argues that the rules on preliminary attachment do not apply to this case. Mere
apprehension that PIATCO would abscond from its financial liabilities is not a ground for the attachment of
the creditors assets. Moreover, an artificial entity cannot abscond. PIATCO likewise denies that it refuses to
pay Takenaka and Asahikosans money claims. PIATCO posits that the eminent domain case is not the
proper venue for the adjudication of Takenaka and Asahikosans money claims. 160 cralawrednad

G.R. No. 181892

PIATCO agrees with the RTCs appointment of DG Jones and Partners as an independent appraiser. The
determination of just compensation is essentially a judicial function. The trial courts power to appoint
commissioners is broad enough to include the power to appoint an appraiser who shall assist the
commissioners in ascertaining the amount of just compensation. The latter power is inherent in the courts
task to receive evidence and to arrive at a fair valuation of the expropriated property. Section 5 (g), Rule
135 of the Rules of Court allows the court to amend and control its processes and orders so as to make
them consistent with law and justice. Furthermore, nothing in RA 8974 IRR that prohibits the trial court from
appointing an independent appraiser.

Page 65 of 169
Section 6, Rule 67 of the Rules of Court provides that all parties may introduce evidence on the valuation of
the property sought to be expropriated. The trial court is not bound by the report of the commissioners and
of the independent appraisers, much less of the findings of the Government-hired appraisers.

PIATCO asserts that the Government is estopped from assailing the appointment of an independent
appraiser. The Government voluntarily participated in the nomination of an independent appraiser, and in
fact, submitted its own nominees before the trial court.

Contrary to the Governments claim, the RTC did not arbitrarily appoint DG Jones and Partners as an
independent appraiser. The RTC in fact required the nominees to submit their written proposals and invited
them to personally appear before the commissioners and the trial court prior to the issuance of the May 3,
May 18, and January 7, 2008 orders.

PIATCO argues that the Government should solely bear the expenses of DG Jones and Partners. Section 12,
Rule 67 of the Rules of Court provides that all costs, except those of rival claimants litigating their claims,
shall be paid by the plaintiff, unless an appeal is taken by the owner of the property and the judgment is
affirmed, in which event the costs of the appeal shall be paid by the owner. 161
cralawrednad

C. Takenaka and Asahikosans Positions

G.R. No. 209696 and G.R. No. 209731

Takenaka and Asahikosan argue that law and equity dictate that just compensation of at least
$85,700,000.00 should be set aside to answer for their money claims against PIATCO. RA 8974 does not
prohibit the creation of an escrow account pending the determination of the parties conflicting claims on the
property and on the just compensation.

Takenaka and Asahikosan allege that PIATCO is a shell corporation with no significant assets, that has
repeatedly defaulted on its monetary obligations. They emphasize that PIATCO did not pay Takenaka and
Asahikosan despite its receipt of the P3 billion proffered value from the Government. Takenaka and
Asahikosan seek the creation of an escrow account to preserve their property rights against PIATCO. They
posit that PIATCO may abscond after its receipt of the remaining just compensation from the Government.

PIATCO would profit by at least $155,000,000.00 if it solely receives the entire amount of
$431,167,593,000.00 (PIATCOs claimed just compensation as of December 2002). PIATCO has judicially
admitted that it has paid Takenaka and Asahikosan only $275,000,000.00.

Takenaka and Asahikosan assert that the interest of justice will be served if the Court allows the creation of
an escrow account in their favor. They point out that the lower courts already ruled on the enforceability of
Claim Nos. HT-04-248 and HT-05-269. Furthermore, the Court, in Gingoyon, merely ordered the direct
payment of just compensation to PIATCO in order to ensure that the builder of the NAIA-IPT III is
compensated by the Government as a matter of justice and equity. Takenaka and Asahikosan underscore
that they are the real builders of the NAIA-IPT III as PIATCOs subcontractors.

Takenaka and Asahikosan maintain that Section 9, Rule 67 of the Rules of Court apply with respect to the
adjudication of the parties conflicting just compensation claims. The Court did not declare in Gingoyon that
Rule 67 of the Rules of Court shall not apply to the payment of final just compensation. The Court merely
applied RA 8974 in Gingoyon insofar as the law prescribes direct payment as a prerequisite for the issuance
of a writ of possession in eminent domain cases.

Under Section 9, Rule 67 of the Rules of Court, if there are conflicting claims on the property, the court may
order the just compensation to be paid to the court for the benefit of the person adjudged in the same
proceeding to be entitled thereto. Takenaka and Asahikosan argue that they are the lawful recipients of just
compensation as the real builders of the NAIA-IPT III and as the prevailing parties in Claim Nos. HT-04-248
and HT-05-269.

Even assuming that PIATCO is the owner of the NAIA-IPT III, the owner of the expropriated property is not
solely entitled to the full amount of just compensation.

In Republic v. Mangotara,162 citing de Knecht v. CA,163 the Court held that just compensation is not due to
the property owner alone; the term owner likewise includes those who have lawful interest in the property
such as a mortgagee, a lessee, and a vendee in possession under an executory contract. InPhilippine

Page 66 of 169
Veterans Bank v. Bases Conversion Development Authority,164 the Court held that just compensation may be
deposited with the court when there are questions regarding the ownership of the expropriated property.
In Calvo v. Zandueta,165 the Court deferred the release of just compensation pending the determination of
the ownership of the expropriated property, despite the finality of the order allowing the release of just
compensation.

Takenaka and Asahikosan refuse to share in the expenses of the BOC. Under Section 12, Rule 67 of the
Rules of Court, the costs of the expropriation suit shall be shouldered by the Government. The Government
would be unjustly enriched if other parties are required to shoulder the costs of the suit. It would also be
unfair to require Takenaka and Asahikosan to share in the expenses of the BOC since they were not
furnished copies of the BOC Final Report, in violation of their right to due process. 166 cralawrednad

G.R. No. 209917

Takenaka and Asahikosan argue that deductions for depreciation and deterioration are inconsistent with the
concept of replacement cost as a measure of appraising the actual value of the NAIA-IPT III. In exercising
the power of eminent domain, the Government takes the property on as is, where is basis. Takenaka and
Asahikosan point out that the Government has the option not to expropriate the terminal. Consequently, the
Government cannot base the value of the building on whether or not the building caters to the
Governments needs.

Furthermore, RA 8974 IRR provides that only the costs necessary to replace the expropriated property
should be considered in appraising the terminal. Statutes authorizing the deprivation of private property, as
in expropriation cases, must be strictly complied with because these are in derogation of private rights. The
Courts intent in Agan when it declared that equity should likewise be considered in appraising the NAIA-IPT
III is to prevent the Government from undervaluing the property and enriching itself at the expense of
private parties.

Takenaka and Asahikosan also insist that a multi-level retail mall is not an unnecessary area. They point out
that modern airports are subsidized by income from retail malls and cannot operate profitably without this
additional income.

Takenaka and Asahikosan agree with the CAs finding that the NAIA-IPT III is structurally sound. There is no
clear evidence that the collapse of the ceiling of the NAIA-IPT III was caused by the terminals structural
defects. The CA correctly concluded that the ceilings collapse is merely a finishing and aesthetic issue.

They emphasize that Mr. Gary Taylor, their hired appraiser, assailed the qualifications, the methodology,
and the findings of Ove Arup in its August 2007 Site Observation Report. Furthermore, Ove Arup made
several conflicting findings on the structural soundness of the NAIA-IPT III. Ove Arup concluded that the
number of structural members failing the Demand Capacity Rate (DCR) /m.1.10 criteria was more than
those used for the retrofit design. The DCR measures the capacity of a portion of the NAIA-NAIA-IPT III
to carry the load it was designed to bear, with an optimal rate being less than 1.0. It likewise opined that
the distance of the gap between the NAIA-IPT IIIs bridge and building structure had a potential for seismic
pounding.

Takenaka and Asahikosan posit that all the structural members of the NAIA-IPT III have a DCR of less
than 1.0 based on the 1992 National Structural Code of the Philippines (NSCP), the code applicable when
the NAIA-IPT III was designed and constructed. Takenaka and Asahikosan opine that Ove Arup did not use
the 1992 NSCP in the August 2007 Site Observation Report.

Ove Arups finding that the NAIA-IPT III has a potential for seismic pounding is baseless. The terminal is
designed and built to address the possibility of seismic pounding, taking into consideration that the NAIA-IPT
III is built on Type I soil. Takenaka and Asahikosan claim that Ove Arups finding was not based on the
AASHTO Standard Specification for Highway Bridges (16th Ed., 1996), the code applicable at the time the
NAIA-IPT III was designed and built.

Takenaka and Asahikosan likewise argue that Scott Wilson did not admit that the NAIA-IPT III suffered from
structural defects. They clarify that the statements in the Scott Wilson report were merely intended to
accommodate [the] changes that the client wished to effect. 167 They also point out that the Government
stated in its petition (in G.R. No. 209917) that additional work is required to complete the terminal
structure to make it compliant with the standards of Takenaka and Asahikosan. 168 cralawrednad

Page 67 of 169
To lay the structural issue to rest, Takenaka and Asahikosan consulted Meinhardst (Singapore) Pte Ltd.,
their Structural Design Consultant, to rebut TCGIs findings. They also hired disinterested American experts
in the construction industry Mr. S.K. Ghosh of S.K. Ghosh Associates, Inc.; Mr. Robert F. Mast, PE, SE of
Berger/Abram Engineers, Inc.; and Mr. Mete A. Sozen to validate Meinhardsts conclusions. These experts
unanimously concluded that the NAIA-IPT IIIs design is structurally sound because it complied with the
1992 NSCP, thus, effectively negating the Governments claim that the NAIA-IPT III suffers from structural
defects.

Takenaka and Asahikosan impugn the ASEP Report. They reiterate that they constructed the NAIA-IPT III in
accordance with the Onshore Construction and Offshore Procurement Contracts and the prevailing building
code at the time of the design and construction of the NAIA-IPT III. The statement in the ASEP Report that
the NAIA-IPT III may be partially opened provided that retrofitting works are done prior to its full
operation does not mean that the terminal is defective. The remediation works were solely to ensure that
the NAIA-IPT III structures are compliant with the current standards, which were not yet in effect
when the construction of the NAIA-IPT III took place.

Messrs. Meinhardt opined that the scope of the proposed retrofitting works shows that the
structural design of the NAIA-IPT III is not defective because the proposed retrofitting works are not
related to the alleged structural defects of the NAIA-IPT III vis--vis the 1992 NSCP. He also stated that the
proposed retrofitting works are meant to reinforce the NAIA-IPT III which is already compliant with the 1992
NSCP.

Takenaka and Asahikosan likewise engaged the services of AECOM Australia Pty. Ltd. to conduct a technical
review of the Review on TCGI Report of Civil Design Review and Evaluation (Elevated Roadway prepared by
Ove Arup & Partners HK Ltd. Philippines Branch). AECOM criticized the Ove Arups review as follows: ChanRoblesvirtualLawlibrary

a. Ove Arup valuated the NAIA-IPTs Elevated Roadway using the AASHTO Manual of Bridge Evaluation
and the FHA Bridge Inspectors Reference Manual, which are irrelevant to any discussion of its
design;
b. Ove Arup evaluated the NAIA-IPT IIIs Elevated Roadway using the Seismic Retrofitting Manual for
Highway Structures, which is irrelevant because there is no need for a seismic retrofit of the NAIA-
IPT IIIs Elevated Roadway;

c. Ove Arups suggestion that an in-situ measurement of the geometry data of key structural
components be undertaken is unnecessary and irrelevant to a peer review of the design of the
NAIA-IPT IIIs Elevated Roadway;

d. Ove Arup made an incorrect assessment of the type of foundation material with respect to soil
bearing capacity;

e. Ove Arup used inappropriate codes for the assessment of the bearings of the NAIA-IPT IIIs
Elevated Roadway;

f. Ove Arups analysis suggests that 36 pier columns of the NAIA-IPT IIIs Elevated Roadway are
allegedly under strength, but fails to quantify the ratio of the column effect to the corresponding
capacity;

g. AECOM objects to Ove Arups criticism that the value of the soil-bearing capacity used for the length
of the bridge of the NAIA-IPT IIIs Elevated Roadway needs to be justified, since the design of the
NAIA-IPT IIIs Elevated Roadway must be judged on the geotechnical information available to
AECOM at the time the bridge was made. No foundation could have been built without the
foundation bearing capacity results having been submitted to the relevant overseeing authority and
approved thereby;

h. Ove Arup used an incorrect site coefficient for the sites soil type, which resulted in seriously
erroneous input data, thus, any conclusions or recommendations derived from these data are
rendered invalid;

i. Ove Arups claim that there are failures in the elastomeric bearings/bearing pads is based on an
Australian design code which did not exist at the time the NAIA-IPT IIIs Elevated Roadway was
designed;

Page 68 of 169
 j. Takenaka and Asahikosan were never provided a copy of the TCGI Report that was used as basis for
the ARUP Report;

k. There are serious discrepancies between the Ove Arup Report and the referenced, yet unseen TCGI
Report;

l. The NAIA-IPT IIIs Elevated Roadway complies with the project design codes in force at the time it
was designed; and

m. AECOM refutes Ove Arup and TCGIs suggestion that the NAIA-IPT IIIs Elevated Roadway requires
retrofitting or any remedial work.

Takenaka and Asahikosan aver that the Government would be able to lessen its expenses, operate the
NAIA-IPT III, and earn revenues sooner as there is, in fact, no need to perform retrofitting works on the
terminal.

Takenaka and Asahikosan point out that the design of the NAIA-IPT III is bilaterally symmetrical which
means the structural system of one area is virtually identical to others. Since the Government opened
certain areas of the NAIA-IPT III to the public, it follows that the unused areas are also structurally sound
considering that majority of the terminal building share the same structural design.

They also deny that they employed armed guards to prevent the MIAA and DOTC officials from entering the
premises of the NAIA-IPT III. They point out that the Government did not raise this issue before the lower
courts. They also state that they have provided the parties all documentary evidence necessary in
appraising the NAIA-IPT III, such as the Bills of Quantities.169
cralawrednad

VI. The Issues

In G.R. Nos. 209917, 209696, and 209731, we resolve the following issues:ChanRoblesvirtualLawlibrary

(1) Whether the RTCs May 23, 2011 decision in Civil Case No. 04-0876 is
null and void for violation of PIATCO, Takenaka and Asahikosans right
to procedural due process;
(2) Whether the CA legally erred in computing just compensation in the
expropriation of the NAIA-IPT III;
(a) Whether fair market value and replacement cost are similar
eminent domain standards of property valuation;
(b) Whether the depreciated replacement cost approach or the new
replacement cost approach shall be used in the appraisal of the
NAIA-IPT III;
(c) With respect to the computation of construction costs, the issues
are:
1. Whether the Governments computation of construction cost is
supported by a preponderance of evidence

2. Whether the NAIA-IPT III suffered/suffers from massive

structural defects;

3. Whether the alleged unnecessary areas should be excluded from

the computation of construction cost;
(d) With respect to the computation of attendant costs, the issues
are:

Page 69 of 169
 1. Whether PIATCOs claimed attendant cost is supported by a
preponderance of evidence;
a) Whether the Court may accord probative value to photocopied
voluminous documents allegedly proving PIATCOs attendant
costs;
b) Whether the Court may accord probative value to the
summary report prepared by Reyes Tacandong & Co., which
validated PIATCOs computation of attendant costs;

2. Whether attendant cost may be pegged at 10% of the

construction cost;

3. Whether the Government included the attendant cost in its

valuation of the NAIA-IPT III;
(e) Whether depreciation may be deducted from the replacement
cost of the NAIA-IPT III;
(f) Whether rectification for contract compliance (for failure to
comply with bid documents; for inferior quality; and for the
additional areas to be built) may be deducted from the
replacement cost of the NAIA-IPT III;
(g) Whether the replacement cost of the NAIA-IPT III shall be
adjusted to December 2004 values based on inflation;
(h) Whether the CA erred in imposing an interest rate of 6% per
annum on the replacement cost of the NAIA-IPT III;
(i) Whether PIATCO shall be entitled to the fruits and income of the
NAIA-IPT III;
(3) Whether Takenaka and Asahikosan shall share in the expenses of the
BOC;
(4) Whether the owner of the property sought to be expropriated shall
solely receive the just compensation due; and
(5) Whether the Government may take property for public purpose or
public use upon the issuance and the effectivity of the writ of
possession;
In G.R. No. 181892, the following issues are relevant:
(1) Whether the appointment of an independent appraiser issue has been
rendered moot and academic by the RTCs promulgation of its rulings
in Civil Case No. 04-0876; and
(2) Whether the issue of who shall pay the independent appraisers fees
has been rendered moot and academic by the RTCs promulgation of
its rulings in Civil Case No. 04-0876.

VII. Our Ruling

A. G.R. Nos. 209917, 209696 & 209731

Page 70 of 169
The parties were afforded procedural
due process despite their non-receipt
of the BOC Final Report prior to
the promulgation of the RTCs
May 23, 2011 Decision.
Before ruling on the substantive issues posed, we first resolve the issue of whether the CA erred in ruling
that the RTCs May 23, 2011 decision is valid.

PIATCO, Takenaka and Asahikosan challenge the validity of the RTCs decision for alleged violation of their
right to due process. They point out that the RTC promulgated its decision in Civil Case No. 04-0876 on May
23, 2011, immediately after the release of the BOCs Final Report on March 31, 2011. They complain that
since the RTCs clerk of court did not furnish the parties copies of the Final Report, the trial court violated
Sections 7 and 8, Rule 67 of the Rules of Court as they failed to object to the Final Reports contents.

Rule 67 of the Rules of Court provides that the clerk of court shall serve copies of the commissioners final
report on all interested parties upon the filing of the report. Each party shall have ten days within which to
file their objections to the reports findings.170cralawrednad

Upon the expiration of the ten-day period or after all the parties have filed their objections and after
hearing, the trial court may: (a) accept the report and render judgment in accordance therewith; (b) for
cause shown, recommit the report to the commissioners for further report of facts; (c) set aside the report
and appoint new commissioners; (d) partially accept the report; and (e) make such order or render such
judgment as shall secure to the plaintiff the property essential to the exercise of his right of expropriation;
and to the defendant, the just compensation for the property so taken. 171cralawrednad

We rule that the parties failure to receive the Final Report did not render the May 23, 2011
Decision null and void.

The essence of procedural due process is the right to be heard.172 The procedural due process
requirements in an eminent domain case are satisfied if the parties are given the opportunity to present
their evidence before the commissioners whose findings (together with the pleadings, evidence of the
parties, and the entire record of the case) are reviewed and considered by the expropriation court. It is the
parties total failure to present evidence on just compensation that renders the trial courts ruling void. The
opportunity to present evidence during the trial remains to be the vital requirement in the observance of due
process.173cralawrednad

The record will show that the parties exhaustively discussed their positions in this case before the BOC, the
trial court, the appellate court, and this Court. They had ample opportunity to refute and respond to each
others positions with the aid of their own appraisers and experts. Each party, in fact, submitted
countervailing evidence on the valuation of the NAIA-IPT III. They also filed numerous and voluminous
pleadings and motions before the lower courts and before this Court.

The mere failure of the RTCs clerk of court to send the parties copies of the BOC Final Report is not
substantial enough under the attendant circumstances to affect and nullify the whole proceedings. Litigation
is not a game of technicalities. Strong public interests require that this Court judiciously and decisively settle
the amount of just compensation in the expropriation of the NAIA-IPT III. We cannot further delay this
more-than-a-decade case and let interests accrue on just compensation by remanding the case once more
to the trial court.

Framework: Eminent domain is

an inherent power of the State

2.a. The power of eminent domain is

a fundamental state power that is
inseparable from sovereignty.Eminent domain is a fundamental state power that is inseparable from
sovereignty. It is the power of a sovereign state to appropriate private property within its territorial
sovereignty to promote public welfare. The exercise of this power is based on the States primary duty to
serve the common need and advance the general welfare.174 It is an inherent power and is not conferred by
the Constitution.175 It is inalienable and no legislative act or agreement can serve to abrogate the power of
eminent domain when public necessity and convenience require its exercise. 176cralawrednad

Page 71 of 169
The decision to exercise the power of eminent domain rests with the legislature which has the exclusive
power to prescribe how and by whom the power of eminent domain is to be exercised. Thus, the Executive
Department cannot condemn properties for its own use without direct authority from the
Congress.177cralawrednad

The exercise of eminent domain necessarily derogates against private rights which must yield to demand of
the public good and the common welfare.178However, it does not confer on the State the authority to
wantonly disregard and violate the individuals fundamental rights.

2.b. Just compensation is the full and

fair equivalent of the property taken from the
owner by the condemnor.

The 1987 Constitution embodies two constitutional safeguards against the arbitrary exercise of eminent
domain: first, private property shall not be taken for public use without just compensation; 179 and second,
no person shall be deprived of life, liberty, or property without due process of law. 180cralawrednad

Just compensation is defined as the full and fair equivalent of the property taken from its owner by the
expropriator. The word just is used to qualify the meaning of the word compensation and to convey the
idea that the amount to be tendered for the property to be taken shall be real, substantial, full and
ample.181 On the other hand, the word compensation means a full indemnity or remuneration for the loss
or damage sustained by the owner of property taken or injured for public use. 182cralawrednad

Simply stated, just compensation means that the former owner must be returned to the monetary
equivalent of the position that the owner had when the taking occurred. 183 To achieve this monetary
equivalent, we use the standard value of fair market value of the property at the time of the filing of the
complaint for expropriation or at the time of the taking of property, whichever is earlier.

2.b.1. Fair market value is the

general standard of value in determining
just compensation.

Jurisprudence broadly defines fair market value as the sum of money that a person desirous but not
compelled to buy, and an owner willing but not compelled to sell, would agree on as a price to be given and
received for a property.184cralawrednad

Fair market value is not limited to the assessed value of the property or to the schedule of market values
determined by the provincial or city appraisal committee. However, these values may serve as factors to be
considered in the judicial valuation of the property.185cralawrednad

Among the factors to be considered in arriving at the fair market value of the property are the cost of
acquisition, the current value of like properties, its actual or potential uses, and in the particular case of
lands, their size, shape, location, and the tax declarations. The measure is not the taker's gain but the
owner's loss.186 To be just, the compensation must be fair not only to the owner but also to the
taker.187cralawrednad

While jurisprudence requires the fair market value to be the measure of recovery in expropriation cases, it
is not an absolute and exclusive standard or method of valuation. 188There are exceptional cases where
the property has no fair market value or where the fair market value of the property is difficult to
determine.

Examples of properties with no or with scant data of their fair market values are specialized properties or
buildings designed for unique purposes.189 These specialized properties bear these characteristics because
they are rarely x x x sold in the market, except by way of sale of the business or entity of which it is part,
due to the uniqueness arising from its specialized nature and design, its configuration, size, location, or
otherwise.190cralawrednad

Examples of specialized properties are churches, colleges, cemeteries, and clubhouses. 191 These also include
airport terminals that are specifically built as a place where aircrafts land and take off and where there are
buildings for passengers to wait in and for aircraft to be sheltered. 192 They are all specialized properties
because they are not usually sold in the ordinary course of trade or business.

Page 72 of 169
In the Tengson Report dated December 1, 2010, Gary Taylor characterized the NAIA-IPT III as a specialized
asset.193 Tim Lunt also stated in the Reply to Tengson International Ltd. Report and Response from
Takenaka & Asahikosan dated December 7, 2010 that the market value of an airport will not be the same as
the market value of other commercial, industrial, and residential buildings within the Metro Manila
region.194cralawrednad

In cases where the fair market value of the property is difficult to ascertain, the court may use
other just and equitable market methods of valuation in order to estimate the fair market value
of a property.

In the United States, the methods employed include: (1) the cost of replacing the condemned property, less
depreciation; (2) capitalization of the income the property might reasonably have produced; (3) the fair
rental value of the property during a temporary taking; (4) the gross rental value of an item over its
depreciable lifetime; (5) the value which the owners equity could have returned, had the owner invested in
monetary instruments; (6) the cost of repair or the capitalized cost of inconvenience, whichever is less; and
(7) the loss of investment expenses actually incurred. 195 The primary consideration, however, remains the
same to determine the compensation that is just, both to the owner whose property is taken and to the
public that will shoulder the cost of expropriation.

2.b.2. Replacement cost is a

different standard of value from fair
market value.

In Gingoyon, we held that the construction of the NAIA-IPT III involves the implementation of a national
infrastructure project. Thus, for purposes of determining the just compensation of the NAIA-IPT III, RA 8974
and its implementing rules shall be the governing law.

Under Section 10 of the RA 8974 IRR, the improvements and/or structures on the land to be acquired for
the purpose of implementing national infrastructure projects shall be appraised using the replacement cost
method.

Replacement cost is a different standard of valuation from the fair market value. As we previously
stated, fair market value is the price at which a property may be sold by a seller who is not compelled to sell
and bought by a buyer who is not compelled to buy. In contrast, replacement cost is the amount
necessary to replace the improvements/structures, based on the current market prices for materials,
equipment, labor, contractors profit and overhead, and all other attendant costs associated with the
acquisition and installation in place of the affected improvements/structures. 196 We use the replacement
cost method to determine just compensation if the expropriated property has no market-based evidence of
its value.

2.b.3. Replacement cost is only one

of the standards that the Court shall
consider in appraising the NAIA-
IPT III.

In using the replacement cost method to ascertain the value of improvements that shall be expropriated for
purposes of implementing national infrastructure projects, Section 10 of RA 8974 IRR requires the
implementing agency to consider the kinds and quantities of materials/equipment used, the
location,configuration and other physical features of the properties, and the prevailing construction
prices, among other things.

Section 5 of RA 8974 in this regard provides that the court may consider the following relevant standards in
eminent domain cases:ChanRoblesvirtualLawlibrary

(a)The classification and use for which the property is suited;

(b)The developmental costs for improving the land;
(c)The value declared by the owners;
(d)The current selling price of similar lands in the vicinity;
(e)The reasonable disturbance compensation for the removal and/or

Page 73 of 169
 demolition of certain improvement on the land and for the value of
improvements thereon;
(f) The size, shape or location, tax declaration and zonal valuation of the
land;
(g)The price of the land as manifested in the ocular findings, oral as well as
documentary evidence presented; and
(h)Such facts and events as to enable the affected property owners to have
sufficient funds to acquire similarly situated lands of approximate areas
as those required from them by the government, and thereby rehabilitate
themselves as early as possible.

The Court explained in Agan and Gingoyon that the replacement cost method is only one of the factors to be
considered in determining the just compensation of the NAIA-IPT III. The Court added that the payment
of just compensation should be in accordance with equity as well.

In Agan, we stated: ChanRoblesvirtualLawlibrary

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 cannot
unjustly enrich itself at the expense of PIATCO and its investors. (Emphasis supplied)197

We also declared in Gingoyon that: ChanRoblesvirtualLawlibrary

Under RA 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. However, the replacement cost is only one of the factors to be
considered in determining the just compensation.

In addition to RA 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 RA 8974, but to principles of equity as well. (Emphasis supplied)198

The Courts pronouncements in Agan and Gingoyon are consistent with the principle that eminent domain is
a concept of equity and fairness that attempts to make the landowner whole. It is not the amount of the
owner's investment, but the value of the interest in land taken by eminent domain, that is guaranteed to
the owner.199
cralawrednad

In sum, in estimating the fair market value of the NAIA-IPT III, the Court shall use (1) the replacement
cost method and (2) the standards laid down in Section 5 of RA 8974 and Section 10 of RA 8974
IRR. Furthermore, we shall likewise consider (3) equity in the appraisal of NAIA-IPT III based on
the Agan and Gingoyon cases.

2.b.4. The use of depreciated

replacement cost method is consistent
with the principle that the property owner
shall be compensated for his actual loss.

The present case confronts us with the question of the specific replacement cost method that we should use

Page 74 of 169
in appraising the NAIA-IPT III. The Government advocates the depreciated replacement cost method
formula while PIATCO argues for the new replacement cost method formula.

The replacement cost method is a cost approach in appraising real estate for purposes of expropriation. This
approach is premised on the principle of substitution which means that all things being equal, a rational,
informed purchaser would pay no more for a property than the cost of building an acceptable substitute with
like utility.200 cralawrednad

The cost approach considers the principles of substitution, supply and demand, contribution and
externalities.201 The value of the land and the value of improvements are determined separately according
to their highest and best use.202 Buyers assess the value of a piece of property not only based on the
existing condition of the property, but also in terms of the cost to alter or improve the property to
make it functional specifically for the purposes of the buyer's use. This may include building new
structures, renovating existing structures, or changing the components of an existing structure to maximize
its utility.203
cralawrednad

There are various methods of appraising a property using the cost approach: among them are the
reproduction cost, the replacement cost new, and the depreciated replacement cost.

Reproduction cost is the estimated current cost to construct an exact replica of the subject building,
using the same materials, construction standards, design, layout, and quality of workmanship; and
incorporating all the deficiencies, superadequacies, and obsolescence of the subject building. 204 It is thecost
of duplicating the subject property at current prices 205 or the current cost of reproducing a new replica
of the property being appraised using the same, or closely similar, materials. 206cralawrednad

In the United States, the recognized and used method in eminent domain cases in appraising specialized
properties is the reproduction cost less depreciation approach.

According to AmJur, this valuation method requires the inclusion of all expenditures that reasonably and
necessarily are to be expected in the recreation of the structure, including not only the construction itself
but also collateral costs, such as the costs of financing the reproduction. Historical associations and
architectural values may enhance the market worth of a property by rendering it a specialty property; if so,
the property may fairly be worth the market price for similar properties, plus a premium for its unique
aspects. The premium value in such a case may also be determined by the cost of reproduction, minus
depreciation. The value assigned has also been described as the total of the land value, plus the specialized
value of the improvements, minus depreciation.207 cralawrednad

Alfred Jahr explains the procedure in appraising a specialized property using this method: ChanRoblesvirtualLawlibrary

In the valuation of the improvement or plant, however, market value is no criterion because they have no
market value. It is specialty property. The improvements are therefore valued on several properties. First,
consideration is given to the original book cost of the improvements, that is, the original cash expenditure
paid by the company for making the physical structures and appurtenances. Its purpose is to act as some
guide; it is not value, however, and the courts recognize the fact that it is not a value of the physical
structures. Second, evidence of reproduction cost new is then considered, for it is an element of value of
specialty property. In figuring this cost, all overhead expenses are included. These expenses include
engineering, construction, management fees, insurance, legal expenses, office overhead, and interest during
construction period. Third, from the reproduction cost new an allowance for depreciation of the
improvements must be made. This depreciation is a matter of opinion, formed after a physical examination
of the improvements as a whole and is generally not based on a straight-line depreciation according to age.
Some authorities, however, have not accepted such an item of depreciation and prefer the straight-line
method, at so much per year. Obsolescence and functional depreciation are sometimes deducted in addition
to physical depreciation depending on the type of utility involved. 208

Replacement cost new is the estimated cost to construct a building with utility equivalent to the
appraised building using modern materials and current standards, design, and layout 209 or the current cost
of a similar new property having the nearest equivalent utility as the property being valued. 210 It is the cost
of acquiring a modern, functional equivalent of the subject property and views the building as if
reconstructed with modern methods, design and materials that would most closely replace the use of the
appraised building but provide the same utility. 211 Replacement cost does not consider the most common
forms of functional obsolescence.212cralawrednad

Page 75 of 169
Depreciated replacement cost approach is the method of valuation which provides the current cost of
replacing an asset with its modern equivalent asset less deductions for all physical deterioration and all
relevant forms of obsolescence and optimisation.213 Depreciated replacement cost is a method of appraising
assets that are usually not exposed to the open market.214 A general formula of this method is as follows: ChanRoblesvirtualLawlibrary

Cost of constructing the building (s) (including fees)

Plus: Cost of the land (including fees)
= Total Costs
Less: Allowance for age and depreciation
= Depreciated Replacement Cost215

Under this method, the appraiser assesses the current gross replacement of the assets, usually comprised of
the land and the building. If the asset is an improvement, the appraiser assesses the cost of its
replacement with a modern equivalent and deducts depreciation to reflect the differences between the
hypothetical modern equivalent and the actual asset. The appraiser has to establish the size and
specification that the hypothetical buyer ideally requires at the date of valuation in order to provide the
same level of productive output or an equivalent service. 216 cralawrednad

In appraising the improvement using the cost approach, the appraiser considers the construction cost,
and attendant cost.

Construction costs are the costs that are normally and directly incurred in the purchase and installation
of an asset, or group of assets, into functional use. On the other hand, attendant costs are the costs that
are normally required to purchase and install a property but that are not usually included in the vendor
invoice.217
cralawrednad

Under Section 10 of the RA 8974 IRR, construction cost is the current market price of materials, equipment,
labor, the contractors profit and overhead, while the attendant cost is the cost associated with the
acquisition and installation in place of the affected improvement.

Once the gross replacement cost or the sum of construction and attendant costs is derived, depreciation
shall be deducted.218 Depreciation is classified into three categories: physical depreciation, functional
obsolescence, and external obsolescence.

Physical obsolescence refers to the wear and tear over the years, which might be combined with a lack
of maintenance.219 Physical depreciation is curable if capital investment can bring the building to a state in
which the degree of obsolescence is mitigated (e.g., standards of finishes and services). 220It is incurable if
no amount of capital investment can rectify the [depreciation] (for example, building structural
flexibility).221 Curable physical depreciation is measured by the cost to cure or retrofitting which could
extend the life of the building. 222 Incurable depreciation or deterioration is estimated by a variety of age-life
or economic-age calculation methods.223 cralawrednad

Functional obsolescence reflects the advances in technology which allow for a more efficient delivery of
services and goods from a building of different designs and specifications. 224 Functional obsolescence arises
where the design or specification of the asset no longer fulfills the function for which it was originally
designed.225 cralawredcralawrednad

It is usually related to operational inefficiencies that typically involve either inadequacies or

superadequacies. An inadequacy occurs when the asset is not enough (e.g., the asset is too small) for it to
operate efficiently. A superadequacy occurs when there is too much of an asset (e.g., the asset is too large)
for it to operate efficiently.226 To be feasible, the cost of replacing the obsolete item or design fault must be
equal to or less than the anticipated increase in value due to its cure. Curable functional obsolescence may
require abatement by adding or remodelling or by removing a superadequacy. 227 cralawrednad

Economic obsolescence results from the impact of changing external macro- and micro-economic
conditions on the property and should not include internal factors which affect the profitability of the
occupying business, the writing down of such factors to reflect the profitability of the business being a
matter for the occupier. Within economic obsolescence, the prospect of extending the life of the building by
capital investment should be considered, as well as the fact that lack of maintenance can accelerate the rate
of depreciation.228 cralawrednad

In these consolidated cases, we rule that the depreciated replacement cost method, rather than

Page 76 of 169
the new replacement cost method, is the more appropriate method to use in appraising NAIA-IPT
III.

Injustice would result if we award PIATCO just compensation based on the new replacement cost of the
NAIA-IPT III, and disregard the fact that the Government expropriated a terminal that is not brand new; the
NAIA-IPT III simply does not have the full economic and functional utility of a brand new airport.

Adjustments for depreciation should be made to reflect the differences between the modern equivalent asset
and the actual asset or the NAIA-IPT III. The reason is that depreciation involves the loss of value caused by
the propertys reduced utility as a result of damage, advancement of technology, current trends and tastes,
or environmental changes.229 cralawrednad

This conclusion is consistent with Section 10 of RA 8974 IRR which allows us and under the NAIA-IPT-IIIs
circumstances effectively direct us to consider the kinds and quantities of materials/equipments used,
configuration and other physical features of the properties, among other things, in determining the
replacement cost of a building. To quote Section 10: ChanRoblesvirtualLawlibrary

Section 10. Valuation of Improvements and/or Structures Pursuant to Section 7 of the Act, the
Implementing Agency shall determine the valuation of the improvements and/or structures on the land to be
acquired using the replacement cost method. The replacement cost of the improvements/structures is
defined as the amount necessary to replacement improvements/structures, based on the current market
prices for materials, equipment, labor, contractors profit and overhead, and all other attendant costs
associated with the acquisition and installation in place of the affected improvements/structures. In the
valuation of the affected improvements/structures, the Implementing Agency shall
consider, among other things, the kinds and quantities of materials/equipment used, the
location,configuration and other physical features of the properties, and prevailing construction
prices. (Emphasis supplied)

Depreciation should be deducted because modern materials and design are assumed in the replacement cost
method. In using the depreciated replacement cost method, [t]he intent is to provide a functionally similar
improvement in order to apply a meaningful level of depreciation. 230cralawrednad

If we adopt the new replacement cost method, PIATCO would be compensated for more than
what it had actually lost. We must remember that the concept of just compensation does not imply
fairness to the property owner alone. In an eminent domain situation, compensation must likewise be just to
the public which ultimately bears the cost of expropriation. The property owner is entitled to
compensation only for what he actually loses; what he loses is only the actual value of the
property at the time of the taking.231cralawrednad

Just compensation must not extend beyond the property owners loss or injury. This is the only way for the
compensation paid to be truly just, not only to the individual whose property is taken, but also to the public
who will shoulder the cost of expropriation. Even as undervaluation would deprive the owner of his property
without due process, so too would its overvaluation unduly favor him to the prejudice of the
public.232cralawrednad

In using the depreciated replacement cost method of valuation, we do not rely on Kaczmareks affidavit and
other documents not presented before the trial court, and which were belatedly attached to the
Governments motion for partial reconsideration dated August 22, 2013.

This Court exercises its judicial function to fix just compensation in eminent domain cases on the
basis of the law, the rules, and the evidence including the appraisal reports and the embedded formula on
how the parties arrived at the amounts of just compensation presented by the parties before the trial
court and the entire record of the consolidated cases.

The determination of just compensation in eminent domain cases is essentially and exclusively
a judicial function. Fixing the formula with definitiveness and particularity in just compensation is not the
function of the executive nor of the legislative branches, much less of the parties in this case. Any valuation
for just compensation laid down in the statutes may not replace the courts own judgment as to what
amount should be awarded and how this amount should be arrived at. Legislative enactments, as well as
executive issuances, providing the method of computing just compensation are treated as
mere guidelines in ascertaining the amount of just compensation.

Page 77 of 169
When acting within the parameters set by the law itself, courts are not strictly bound to apply
the formula to its minutest detail, particularly when faced with situations that do not warrant the
formulas strict application. The courts may, in the exercise of their discretion, relax the formulas
application to fit the factual situations before them.233cralawrednad

We clarify, however, that this Court is not confined to the use of the depreciated replacement cost method
in determining the just compensation in these cases. Valuation is not exclusively a technical matter used in
arriving at a numerical measure of compensation. Rather, valuation in eminent domain is a judicial question
based on equitable principles. Thus, this Court shall likewise endeavor to weigh the justness and fairness of
compensation between the condemnor and the condemnee, considering the factual circumstances of this
case.234cralawrednad

Construction cost of the NAIA-IPT III

3.a. The base valuation of the

NAIA-IPT III

The Government claims that the construction cost or the base valuation of the NAIA-IPT III amounts to
$300,206,693.00, itemized as follows:235cralawrednad

Total $USD in Manila @3Q01

General Requirements and Conditions $ 36,279,033
Site Development $ 3,293,967
Terminal North Concourse $ 6,847,663
Terminal South Concourse $ 11,169,979
Terminal Head House $ 60,763,798
Terminal Building Services $ 54,982,628
Multi Storey Car Park $ 8,791,857
Special Systems $ 69,321,503
Airside Infrastructure Works $ 31,065,288
Landside Infrastructure Works $ 11,496,552
Terminal Support Facilities $ 6,194,425
Office Fit-out $0
Builders Work in Connection with Services Included
Total $ USD $ 300,206,693

On the other hand, PIATCO, Takenaka, and Asahikosan argue that the construction cost amounts to
$360,969,791.00, viz:ChanRoblesvirtualLawlibrary

In US dollars
Total payments of PIATCO 275,119,807.88
Add: Awards by the London Court 84,035,974.44
Award by the Makati Court 1,814,008.50
Total Construction Cost 360,969,790.82

Page 78 of 169
As we had earlier explained, construction cost is the amount necessary to replace the
improvements/structures, based on the current market prices for materials, equipment, labor, contractors
profit and overhead. Construction or direct costs is also defined as the costs that are normally and directly
incurred in the purchase and installation of an asset or group of assets into functional use. Construction
costs generally take into account the labor used to construct buildings; materials, products, and equipment;
contractor's profit and overhead, including job supervision, workers' compensation, fire and liability
insurance, and unemployment insurance; performance bonds, surveys, and permits; use of equipment;
watchmen; contractor's shack and temporary fencing; materials storage facilities; and power-line
installation and utility costs.236
cralawrednad

We find the Governments computation of construction cost to be more realistic and

appropriate. As the CA aptly observed, the Gleeds Report is more particularized, calculable and precise.
Tim Lunt sufficiently explained how he arrived at the value of $300,206,693.00: ChanRoblesvirtualLawlibrary

2.2 Methodology
2.2.1 Stated simply, valuation of any given structure is derived by multiplying the structures dimensions,
i.e., quantities by a price (i.e., rate) for constructing the works at a designated time and specific location,
adding the cost of works in, on, and around the structure, and then accounting for inferior and non-
performing works, and rectification of those works.

2.2.2 I have arrived at the CCVs by carrying out the following sequence of tasks:
1) Understanding the project as bid and as eventually constructed.

2) Preparing measured quantities for the major elements of the completed works.

3) Establishing appropriate rates and prices for carrying out the works at that time in Manila, Philippines.

4) Adjusting the quantities and/or rates and prices to take into account the extent of non-performing and/or
inferior quality works, the extent of rectification and remediation of the Terminal to bring it to Code and
making it structurally safe, and 22,193 m2 of Unnecessary Areas that was built in the Terminal.

5) Making provision for the cost of remediation on items which deteriorated between December 2002 and
December 2004.

6) Making provision for the value of depreciation of Terminal 3 between December 2002 and December
2004.

7) Deducting the cost of rectification to otherwise bring the Terminal to the standards in the Bid Documents,
including the cost of building some 63,490 m2 of Necessary Operational Areas that was not built in the
Terminal.237cralawrednad

2.3 Understanding the Project

2.3.1 I visited the Terminal 3 site between May 9, 2006 and May 12, 2006; May 30, 2006 and June 2, 2006;
and June 20 and June 25, 2006, when I held meetings with the Office of the Solicitor General, White & Case,
MIAA, Arup, TCGI, and Gensler. I based myself at the Terminal 3 complex during my visits in May and June
2006 and made a number of visits to various areas both internal and external to Terminal 3 to gain a full
understanding of the scope of the works performed.

2.3.2 Members of my staff visited the Terminal 3 site between May 30, 2006 and June 25, 2006, and based
themselves in the Terminal 3 complex to prepare quantities from construction drawings made available by
Takenaka, which, as noted, are not properly designated As-built drawings. To safeguard against error or
outdated dimensional information in the drawings, my staff checked certain major dimensions against the
structures as constructed and found the dimensions to be substantially accurate. We did not check the
drawings for detailed accuracy of the contents in the drawings (i.e., what is within the dimensions).

2.3.3 Members of my staff also visited the Terminal 3 site between February 26, 2008 and March 11, 2007.
During that time, they gathered pricing information from local construction contractors to assist with the
pricing of the CCVs.

2.3.4 I have examined all of the documents listed in Appendix B and had discussions with each of the

Page 79 of 169
Republics airport architectural and engineering experts on the content of their reports to gain a full
understanding of the main issues affecting Terminal 3 and the CCVs. 238

2.4. Preparing the Quantities

Bills of Quantities

2.4.1 Construction projects are generally priced by construction contractors for the purpose of competitive
tendering using a Bill (or Bills) of quantities. Bills of Quantities are defined as:
ChanRoblesvirtualLawlibrary

A list of numbered items, each of which describes the work to be done in a civil engineering or building
contract. Each item shows the quantity or work involved. When the procedure of tendering is adopted (as is
usual), the Bill is sent out to contractors. Those contractors who wish to do the work return the bill, with an
extended price opposite each item. This priced bill constitutes the contractors offer (or tender to bid) to do
the work.239cralawrednad

2.4.5 As noted, it was apparent from commencement of preparation of the CCVs that it was doubtful that
the set of drawings listed in Appendix B that Takenaka provided were As-built or approved. Accordingly,
because of uncertainty over the accuracy of the As-built drawings, and to avoid preparing Bills of
Quantities based on potentially inaccurate information, I opted not to produce full Bills of Quantities to form
the basis of the CCVs. Instead, I relied on a Principle Quantities type approach. 240
Principle Quantities
2.4.6 The Principle Quantities type approach is common in the cost planning and cost estimating of
construction projects. CESMM3 describes Principle Quantities as a list of principle components of the works
with their approximated estimated quantities x x x given solely to assist surveyors and estimators in making
rapid assessment of the general scale and character of the proposed works prior to the examination of the
remainder of the bills of quantities and other contract documents on which construction estimates or tenders
will be based. This methodology involves the preparation of quantities for the major elements of the
construction works where the costs cannot be estimated accurately from historical data, or for those areas
which are known to vary in cost due to the quality or nature of the works. The quantities produced by
adopting this approach are what I term Principle Quantities. 241cralawrednad

2.4.7 Given the serious concerns over the accuracy of the so called As-built drawings, and in order to
make some assessment of the dimensional accuracy of the Takenaka drawings, we carried out a number of
checks of the plan dimensions against our measurement of the physical dimensions of the structures.
Overall dimensions (length and width) were checked for a single floor plate in each of the Terminal North
Concourse, the Terminal South Concourse and the Terminal Head House buildings. Our checks revealed no
major discrepancies in respect of the physical plan dimensions of the drawings against the actual dimensions
of the overall building floor plans. We therefore decided to use the drawings provided by Takenaka to
produce the Principle Quantities dimensions required for us to prepare the CCVs.

2.4.8 The Principle Quantities dimensions produced by Gleeds from the drawings made available by
Takenaka (listed in Appendix B Drawing List 1) are included in Appendix G.

2.4.9 It is standard good practice for quantities produced as part of the measurement process to be checked
by another member of the team who is not connected to the particular project. The quantities we produced
were technically checked by another member of Gleeds for consistency among inter-related items, e.g.,
consistency between floors and ceilings, and to identify any major items not measured. Another member of
Gleeds also checked the accuracy of the gross floor area, or GFA, calculations for each of the buildings and
no significant errors were identified.242
2.5. Arriving at the Rates and Prices

2.5.1 In order to derive the rates by which the quantities are produced to arrive at the CCV figures for this
project, it is necessary to establish:
The period of construction;
The geographical location of the works;

Access to the site;

Any physical restrictions that might impede construction of the works;

The duration for carrying out construction;

Page 80 of 169
 Database of costs;

The specification of the works;

The quality of the works as constructed; and

The extent of works requiring remediation and rectification

2.5.2 All of the above factors have an effect on the CCVs and it is necessary to consider the implications of
each to arrive at the CCV figures. General guidance including a number of the above items are referred to in
the document titled Guide to Carrying Out Reinstatement Cost Assessments published by the Royal
Institution of Chartered Surveyors in September 1999.243 cralawrednad

3. CCV CALCULATIONS

3.1 Calculation of Rates and Prices

3.1.1 The CCVs have been calculated in UK costs converted to $USD in Manila. x x x

3.1.2 The basic approach to producing the CCV figures entails the following steps: cralawlawlibrary

1) Establish UK pricing levels at 2nd Quarter 2006 (UK @ 2Q06) (the date when the pricing exercise was
initially carried out);

2) Convert the UK @ 2Q06 prices into UK at 3rd Quarter 2001 prices (UK @ 3Q01) (the mid point of
construction) using published and recognized indices;

3) Convert the UK @3Q01 prices into US dollars at 3rd Quarter ($USD @3Q01) (the currency of the
Termianl 3 Concession Contract) using published currency exchange rates;

4) Convert the $USD @3Q01 prices to reflect local levels of pricing by applying a Location Adjustment using
various methods and sources of information to check the accuracy of the conversion.
Each of these steps is described below.

3.1.3 First, the quantities produced for Terminal 3 were priced using a mixture of current data in Gleeds
Database of costs and published cost data, including Spons, and are priced at 2Q06 prices. These costs are
shown in the CCVs as UK @ 2Q06. The rates used are included in Appendix D. Support in respect of the
reference to the source derivation of each of the rates and prices included in the CCVs are also included in
Appendix D in the column headed Rate Source.244 cralawrednad

3.1.4 Second, it was necessary to adjust the prices to the midpoint of construction. As such the UK @
3Q01 levels to align them with required base costs for inclusion in both CCVs. This conversion is made by
using the BCIS All-in Tender Price Indices published by the Royal Institution of Chartered surveyors. These
costs are shown in the CCV as UK @ 3Q01.

3.1.5 Third, the UK @ 3Q01 costs were converted from UK pounds to US dollars using an exchange rate
of UK1 = ISD$1.4540. This exchange rate is obtained by averaging the exchange rates recorded for
October 1, November 1 and December 3, 2001 (i.e., 3Q01) using historical data from the xrates.com
website. These particular dates represent the midpoint of construction which I refer to earlier in this report.
The result of this conversion is shown in the column marked UK @ 3Q01 in Appendix D.

3.1.6 Fourth, a Location Adjustment of the $USD @ 3Q01 cost is necessary to account for the local cost
of constructing in Manila. Local cost data gathered in Manila by members of my team in February and March
2007 was compared directly with UK prices to establish a ratio between the UK and the Philippines. The cost
data gathered in Manila was compared on a like for like basis with 1st Quarter 2007 UK prices. The results of
this comparison of rates result in the Location Adjustment. The Location Adjustments resulting from this
calculation which are applied to the CCV are UK1=$USD0.7576 for the mechanical, electrical and plant
elements. The average conversion rate across the CCVs is UK1=$USD0.5370 or 53.70%. 245 cralawrednad

3.1.7 I double-checked my calculations of the Philippine prices by considering what the conditions in the
Philippines construction market were at the time the project would have been bid, and how these conditions
changed through to the end of 2002 when works stopped on site.

Page 81 of 169
During the period of 1995 to 2002 the Construction Materials Wholesale Price Index (CMWPI) published
by the Economic Indices and Indicators Division, Industry and Trade Statistics Department, Philippine
National Statistics Office, Manila, Philippines showed an average increase of 2.8% per annum.

During the periods 2000 to 2001 and 2001 to 2002 the increases where 2.1% and 3.4% respectively. The
increases are seen to be at similar levels both in the period during which the works were priced, contracts
executed and during construction and in my opinion this would have resulted in no material difference to the
pricing level of the onshore works submitted at tender stage when compared with the actual cost incurred.

3.1.8 I also have gathered information from other Chartered Surveyors published data which also indicate
that the Location Adjustment for the Philippines is in the region of 45%. This percentage is in line with the
more detailed results obtained as part of my own calculations.246

We thus rule in favor of the Governments position and reject PIATCOs claimed construction cost. For one,
PIATCO made inconsistent statements with respect to the construction cost of the NAIA-IPT III. The Scott
Wilson report states that the construction cost of the NAIA-IPT III amounted to US$338.83 million, exclusive
of attorneys fees, cost of the suit, interest rates, etc. This amount is inconsistent with PIATCOs claimed
construction cost of$360,969,790.82 in its pleadings. The relevant portion of the Scott Wilson report
states:ChanRoblesvirtualLawlibrary

2.1.4 When Scott Wilson was providing Lenders Technical Advice to the Asian Development Bank in
September 2002, the total value of the construction contracts, estimated by PCI at that time, was as
follows: cralawlawlibrary

On-Shore Contract: US$132.35 million

Off-Shore Contract: US$190.08 million
Total US$322.43 million, excluding VAT
2.1.5 The contract priceS under the EPC Contracts are as follows: ChanRoblesvirtualLawlibrary

On-Shore Contract. US$133,715,911

Off-Shore Contract. US$190,037,328
Total US$323,753,239 excluding VAT

2.1.6 The amounts certified for the costs of construction up to 23 June 2004 in payment certificate no 35
which is the last payment certificate that has been certified by PIATCO, are as follows: ChanRoblesvirtualLawlibrary

On-Shore US$133.64 Million

Off-Shore US$189.83 Million
VAT US$11.43 Million
ER Changes US $3.93 Million
TOTAL US$338.83 Million

2.2.13 Based on the certified IPC no. 35 for both Takenaka and Asahikosan, the cost of the completed and
certified works (as of IPC No. 35) are as follows:
ChanRoblesvirtualLawlibrary

On-Shore US$133.64 Million

Off-Shore US$189.83 Million
VAT US$11.43 Million
ER Changes US $3.93 Million
TOTAL US$338.83 Million

2.2.14 The construction cost stated above x x x is at 2002 prices (no adjustments for inflation/escalation)
and are exclusive for all other attendant costs, such as the engineering and architectural service fees,
quality assurance service fees, construction supervision service fees, construction insurance, site
development costs, financing costs and other associated costs.

2.2.15 We would conclude that the certified cost of construction of US$338 million and the other attendant
costs are fair and reasonable. We note that the Gleeds estimate is close to the figure in 2.2.13 above.

2.2.16 It is noted that in the Gleeds Report entitled Construction Cost Valuation for NAIA IPT3 dated

Page 82 of 169
15th November 2010 the project Base Case CCV is valued at a gross amount of US$334.61 million
(US$300.21 million + US$34.6 million deductions).247

Furthermore, PIATCO did not present detailed supporting information on how the certified construction
cost of US$338.83 million was arrived at.248 cralawrednad

PIATCOs statement that the total sum of $360,969,791.00 is evidenced by the As-Built Drawings
is misleading. Takenaka and Asahikosans computation of construction cost includes items which do not
pertain to the construction of the NAIA-IPT III. PIATCO, Takenaka, and Asahikosan erroneously included in
the construction cost the costs of the action, interest rates on the judgment award of
$14,827,207.00 and $52,008,296.54, attorneys fees, and litigation expenses.

These items were not directly incurred in the construction of the NAIA-IPT III. In Claim No. HT-04-248, only
$6,602,971.00 and $8,224,236.00 or the sum of $14,827,207.00 can possibly relate to the construction cost
of the NAIA-IPT III. On the other hand, in Claim No. HT-05-269, only the amounts of $21, 688,012.18 and
$30,319,284.36 or the total sum of $52,008,296.54 can be possibly imputed to the construction cost of the
terminal.

In any case, we cannot consider the London awards as evidence of the construction cost of the NAIA-IPT III.
To do so in this case is to recognize Claim No. HT-04-248 and Claim No. HT-05-269 when their recognition
and enforcement have yet to be decided by this Court in G.R. No. 202166. It is a basic rule that Philippine
courts cannot take judicial notice of a foreign judgment or order. 249 cralawrednad

We can only recognize and/or enforce a foreign judgment or order after a conclusive and a final finding by
Philippine courts that: (1) the foreign court or tribunal has jurisdiction over the case, (2) the parties were
properly notified, and (3) there was no collusion, fraud, or clear mistake of law or fact. 250 cralawrednad

PIATCO, Takenaka, and Asahikosan alleged that PIATCO paid Takenaka and Asahikosan the sum of
$275,119,807.88 pursuant to the Onshore Construction and Offshore Procurement Contracts. According to
the RTC (whose ruling the CA did not reverse), these parties failed to prove the fact of payment of
$275,119,807.88.

We add that the alleged payment of $275,119,807.88 does not support their allegations that this amount
pertains to the construction cost of the NAIA-IPT III. Takenaka and Asahikosans admission that the sum of
$275,119,807.88 were paid by PIATCO does not bind the Government who is not a party to the Onshore
Construction and Offshore Procurement Contracts. If at all, the Court can only recognize the sum
of $66,834,503.54 from PIATCO, Takenaka, and Asahikosans computation of construction cost, which
is much lower than the Governments computed construction cost of $300,206,693.00.

Lastly, we note that Takenaka and Asahikosans claimed construction cost is different from the amount
reflected in the Tengson Report. In this Report, Gary Taylor stated the true value of the NAIA-IPT III facility
is nearer to US$408 million, given the fact that Gleeds failed to recognize or include any values for design &
other consultants (10%) or property inflation based on GRP schedules (15%). 251 cralawrednad

3.b. Structural defects on

the NAIA-IPT III

The Government contends that that the NAIA-IPT III suffers from structural defects, as follows: ChanRoblesvirtualLawlibrary

1. Failed structural elements of the NAIA-IPT III, as identified in the Arup Seismic Evaluation Report
and Gravity Loading and Element Capacity Assessment;

2. The inferior quality of material used and works, including, for example, floor tiling, plasterboard wall
finishes and ceilings, and the internal and external metal paneling;

3. The cost of seismic and gravity load structural retrofits for the failed elements in the terminal
buildings and multi-storey car park structures, as described in Arups Drawings listed in Appendix
B Drawing List 2 and other rectification works required to bring the Terminal to compliance with
applicable building and airport codes as indicated in the Appendices of Arups Site Observation
Report; and

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 4. The cost of seismic and gravity load structural retrofits for the failed elements in the elevated
roadway structures, as described in Arups Drawings listed in Appendix B Drawing List 3, Arup
Review on TCGI Report of Civil Design Review and Evaluation Elevated Roadway, dated March
2009; and other rectification works required to bring the elevated roadways to compliance with
applicable building and airport codes, as indicated in the Appendices of Arups Site Observation
Report.252

Scott Wilson argued that no structural elements of the NAIA-IPT III actually failed. 253 He emphasized that
there were varying opinions regarding the integrity of the NAIA-IPT III: ChanRoblesvirtualLawlibrary

3.3.7 The adequacy of the structural frame, individual load bearing elements and foundations under
normal gravity loads should be able to be readily evaluated. However, there are clearly differences of
opinion between all 3 parties who have carried out design and assessments in this regard in terms of the
extent of apparent failed elements under the design appraisal which ranges from:
Meinhardt zero failures
Arup reports under gravity loading 4% of superstructure elements and less than 1% of all
substructure elements

Arup reports under seismic loading less than 1% of all primary RC and composite columns, around
3% of all primary RC beams, around 6% of all shear walls, around 8% of piles (mostly at shear
walls) and around 1% of mat footing locations. Differential settlements are considered insignificant
to cause any additional distress in the buildings. Pounding between floors of adjacent sectors is not
an issue.

TCGI extent not readily identifiable from documents reviewed although within Section 2.0 of the
TCGI July 2008 report it states that the evaluation did not yield results pointing to foundation
instability as a cause for concern.

3.3.8 On the basis of discussion in 3.3.6 above it would be reasonable to follow the assessment of the
original designer (Meinhardt) who also provided a Letter of Guarantee confirming the adequacy of their
design, (ref para3.3.30).

He also disputed the Governments allegations that some portions of the NAIA-IPT III would not be able to
sustain strong earthquakes and that some areas of the NAIA-IPT III were built using materials with inferior
quality: ChanRoblesvirtualLawlibrary

c. Seismic Activity (Terminal and Multi-Storey Carpark)

3.3.12 It is understood from press reports that, since substantial completion of the airport in 2002, Manila
has been subjected to a number of earthquakes. It has been reported that on 25 March 2010 a strong
earthquake measuring 6.2 on the Richter scale hit Metro Manila according to the government seismology
institute. It was further reported that in July 2010 intense seismic activity persists in the Philippines and
Manila continues to be struck by moderate to strong earthquakes of 6.5 to 7.6 magnitude. We can find no
record relating to any damage being reported in terms of the structure, finishes or services associated with
NAIA Terminal 3 as a result of these occurrences.

xxxx

3.3.14 Inferior quality of materials used, for example internal finishes.

3.3.15 Gleeds do (sic) not define exactly what areas they mean by this. There is a number of finished items
where deductions in excess of US$800,000 have been made but the rational for the quantification of the
deduction is not explained. If the works were inferior to that specified then this would be reflected in the
payments made to Takenaka under the EPC contract.

Scott Wilson likewise supported Takenaka and Asahikosan position that the Governments experts examined
the structural integrity of the NAIA-IPT III using the recent building codes, which were not yet in place at
the time the NAIA-IPT III was designed and built.

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3.3.18 Seismic and gravity load retrofit and other rectification works required to bring the
building to compliance with applicable building and airport codes.

3.3.22 TCGI also provided an option titled A Government Prerogative which states: cralawlawlibrary

Research in earthquake engineering has rapidly progressed to the extent that seismic design provisions for
the design of new buildings and procedures for the evaluation of existing ones have drastically evolved. The
current edition of the National Structural Code of the Philippines (NSCP) is dated 2001, whereas Meinhardt
used the 1992 edition which was applicable at the time the Terminal was designed.

There are new published guidelines for the structural safety assessment of existing buildings from such
organizations as the Federal Emergency Management Agency (FEMA) which have evolved into published
documents for the structural rehabilitation of existing buildings. TCGI have therefore suggested that MIAA
and the Philippine Government may wish to use the more recent published documents to enhance/upgrade
the facility.
3.3.23 It would appear from the Arup documents reviewed that they have taken this approach in their
assessment of design i.e., consideration of updated documents (NSCP 2001 and UBC 1997) whilst Meinhardt
used the relevant codes at the time of design which was NSCP 1992. Consequently any results from
assessments carried out to later published codes has no direct bearing on the design of the facility which
was carried out prior to the issue of these later standards. As such any assessment and proposed
strengthening/retrofit works in this regard is considered to be an enhancement of the design and has no
relevance on the value of the NAIA Terminal 3 facility as constructed under the original contract.
On the other hand, the relevant portions of the Tengson Report dated December 2010 254 states: ChanRoblesvirtualLawlibrary

In addition, we should note herein that Takenakas structural designer, Messrs. Meinhardt, concluded that its
check on the structural ductility requirements (as questioned by TCGI & Ove Arup) on elements which do
not resist lateral forces, is in full compliance of the Philippine Code NSCP 1992 and its originating design
code ACI-318 (1989), and this is supported by several members of the American Concrete Institute (ACI).
Both Takenaka and other parties (including Meinhardt and members of the ACI), have concluded that TCGI
& Ove Arup reports use several conflicting and misunderstood mathematical models. These include but are
not limited to the following:ChanRoblesvirtualLawlibrary

(i) TCGI used larger loadings than those specified in the Design & Load
Schedule Plan.
(ii) Their modeling for sector 3 uses incorrect storey elevations and the
slab thickness did not match those on the as built plans.
(iii)Beam section sizes do not match those shown on the as built plans.
(iv)TCGI used Dynamic Analysis in their modeling, whereas there is no
requirement for such an analysis in the Philippine Structural Code NSCP
1992.
(v) TCGI & Ove Arup used the updated NSCP 2001 (and UBC1997) Philipine
Codes, yet Takenakas design was based upon the NSCP 1992 code
because the 2001 updated was not available when the NAIA 3 designs
were completed in 2000.
(vi)TCGI & Ove Arup reports were based upon a system which incorporates
frame beams and columns as primary structural element, whereas the
Takenaka design used a building frame system (Sheer Wall System).
Two differing design methods will lead to different results. 255
PIATCO also argued that it is not the sole entity responsible for the completion of and/or compliance with
the outstanding items in the JAC project status summary report dated February 28, 2003. The summary
report shows that some outstanding items should be performed by the Government. 256 cralawrednad

While Scott Wilson stated that only retrofit works actually undertaken should be taken into consideration in
the valuation of the NAIA-IPT III,257 Takenaka and Asahikosan insisted that subsequent rectification works in
the NAIA-IPT III were only intended to ensure that the terminal would be compliant with the current building

Page 85 of 169
laws and standards.258 They reiterated that the design of the NAIA-IPT III was compliant with the NSCP
1992, the effective building code when the terminal was designed and built. 259 cralawrednad

3.b.1. The Court cannot consider

the additional evidence submitted by Takenaka
and Asahikosan before the Court of Appeals

At the outset, we rule that we cannot consider Takenaka and Asahikosans attachments in their (1) Motion
for Submission of Additional Documents dated July 30, 2013; 260 (2) Supplemental Motion for Submission of
Additional Documents dated October 3, 2012;261 and (3) Second Supplemental Motion for Submission of
Additional Documents dated April 11, 2013 in CA G.R. No. CV-98029. 262 These attachments sought to refute
the Governments position that the NAIA-IPT III suffered from massive structural defects.

Takenaka and Asahikosan posit that they could have submitted reports before the trial court to show that
the design of the NAIA-IPT III was structurally sound if the RTC had only furnished the parties copies of the
BOC Final Report and afforded them the opportunity to file a Comment on the Final Report.

Under Section 3, Rule 6 of the Internal Rules of the CA, the CA may receive evidence in the following
cases:ChanRoblesvirtualLawlibrary

(a) In actions falling within its original jurisdiction, such as (1) certiorari, prohibition and mandamus, (2)
annulment of judgment or final order, (3) quo warranto, (4) habeas corpus, (5) amparo, (6) habeas data,
(7) anti-money laundering, and (8) application for judicial authorization under the Human Security Act of
2007;

(b) In appeals in civil cases where the Court grants a new trial on the ground of newly
discovered evidence, pursuant to Sec. 12, Rule 53 of the Rules of Court;

(c) In appeals in criminal cases where the Court grants a new trial on the ground of newly discovered
evidence, pursuant to Sec. 12, Rule 124 of the rules of Court; and

(d) In appeals involving claims for damages arising from provisional remedies. (Emphasis supplied)

This provision qualifies the CAs power to receive evidence in the exercise of its original and appellate
jurisdiction under Section 9 of BP 129, as amended: ChanRoblesvirtualLawlibrary

Sec. 9. Jurisdiction. The Court of Appeals shall exercise: ChanRoblesvirtualLawlibrary

xxxx

The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence, and perform
any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate
jurisdiction, including the power to grant and conduct new trials or further proceedings. Trials or hearings in
the Court of Appeals must be continuous and must be completed within three (3) months, unless extended
by the Chief Justice.

Since Takenaka and Asahikosan filed an ordinary appeal pursuant to Rule 41 in relation to Rule 44 of the
Rules of Court, the CA could only have admitted newly discovered evidence. Contrary to Takenaka and
Asahikosans claim, the attachments to the motions are not newly discovered evidence. Newly discovered
evidence is evidence that could not, with reasonable diligence, have been discovered and produced at the
trial, and which, if presented, would probably alter the result.263 cralawrednad

We find it hard to believe that Takenaka and Asahikosan could only have possibly secured the attachments
after the trial court had rendered its decision. With the exercise of reasonable diligence, Takenaka and
Asahikosan could have produced these documents before the BOC since they were fully aware that the
Government presented evidence on the alleged structural defects of the NAIA-IPT III.

In fact, in their Manifestation/Submission dated November 3, 2009, Takenaka and Asahikosan attached the
Report and Response from Takenaka & Asahikosan, Contactors for the NAIA 3 Facility and Intervenors in
the Expropriation case between the GRP and PIATCO October 2009 to refute the allegations of structural
defects. Moreover, Takenaka and Asahikosan manifested that they were reserving their right to submit

Page 86 of 169
additional reports, comments, and memoranda with respect to this issue. The relevant portions of
the Manifestation/Submission dated November 3, 2009 provides: ChanRoblesvirtualLawlibrary

1. The record[s] of this case will show that to date, plaintiffs have submitted various reports prepared
by TCGI Engineers, Ove Arup & Partners Massachusetts, Inc. and Gleeds (Bristol) Partnership to this
Honorable Court. The TCGI and Ove Arup Reports point out alleged defects on the IPT 3, while
Gleeds made an attempt to establish the value of the IPT 3, taking into account the findings of the
TCGI and Ove Arup. Intervenors have not given their comments on these reports since they have
not been required to do so by this Court.

2. With the RTCs permission, intervenors respectfully submit the attached Report and
Response from Takenaka & Asahikosan, Contactors for the NAIA 3 Facility and
Intervenors in the Expropriation case between the GRP and PIATCO October 2009
prepared by Mr. Gary Taylor, in response to the above mentioned reports. Intervenors
respectfully manifest that they are reserving their right to submit additional reports,
comments and memoranda in support of this submission and to aid this Honorable Court
in determining the true value of the IPT 3.264 (Emphasis supplied)

3.b.2. Equiponderance of evidence on

the alleged structural defects of the NAIA-IPT
III favors PIATCO, Takenaka and Asahikosan.

Nonetheless, even without considering and/or giving probative value to the additional evidence presented by
Takenaka and Asahikosan before the CA, thisCourt finds that the Government failed to establish by
preponderance of evidence that the NAIA-IPT III suffered from structural defects.

Under Section 3, Rule 131 of the Rules of Court, it is presumed that a person is innocent of wrong; 265 that a
person takes ordinary care of his concerns;266that private transactions have been fair and regular;267 and
that the ordinary course of business has been followed.268cralawrednad

Based on these presumptions, we presume that Takenaka and Asahikosan built the NAIA-IPT III in
accordance with the specifications required under the Onshore Construction Contract and Offshore
Procurement Contract. We also presume that the NAIA-IPT III is structurally sound and compliant with the
applicable building codes and other laws at the time it was designed and built.

However, these presumptions are merely disputable presumptions and may be overcome by
contradicting evidence. The burden of proof lies with the Government to prove by preponderance of
evidence that the NAIA-IPT III suffered from structural defects. Preponderance of evidence is the weight,
credit, and value of the aggregate evidence on either side and is usually considered to be synonymous with
the term greater weight of evidence or greater weight of credible evidence. 269cralawrednad

In determining where the preponderance of evidence or superior weight of evidence on the issues involved
lies, the court may consider all the facts and circumstances of the case, the witness manner of testifying,
their intelligence, their means and opportunity of knowing the facts to which they are testifying, the nature
of the facts to which they testify, the probability of their testimony, their interest or want of interest, and
also their personal credibility in so far as the same may legitimately appear during trial. The court may also
consider the number of witnesses, although preponderance does not necessarily lie with the greater
number.270cralawrednad

The Governments burden of proof to show that the NAIA-IPT III is indeed defective does not shift to its
adverse parties. The burden of proof remains throughout the trial with the party upon whom it is imposed.

It is the burden of evidence that shifts from party to party during trial. 271 This means that the burden of
going forward with the evidence is met by the countervailing evidence of PIATCO, Takenaka and Asahikosan
which, in turn, balances the evidence introduced by the Government. Thereafter, the burden of evidence
shifts back to the Government.

In the present case, the experts and consultants of the Government, PIATCO, Takenaka and Asahikosa
arrived at conflicting findings regarding the structural integrity of the NAIA-IPT III. The Governments
experts detailed with particularity the alleged defects of the NAIA-IPT III, which allegations the experts of

Page 87 of 169
PIATCO, Takenaka and Asahikosan refuted with particularity.

Under the equiponderance of evidence rule, when the scale of justice shall stand on equipoise and nothing in
the evidence inclines a conclusion to one side or the other, the court will find for the
defendant. 272cralawrednad

If the facts and circumstances are capable of two or more explanations, one of which is consistent with the
allegations of the plaintiff and the other consistent with the defense of the defendant, the evidence does not
fulfill the requirement of preponderance of evidence. When the evidence of the parties is in equipoise, or
when there is a doubt as to where the preponderance of evidence lies, the party with the burden of proof
fails. 273cralawrednad

The reason for this rule is that the plaintiff must rely on the strength of his evidence and not on the
weakness of the defendant's claim. Thus, even if the evidence of the plaintiff may be stronger than that of
the defendant, there is no preponderance of evidence on his side when this evidence is insufficient in itself
to establish his cause of action.274cralawrednad

In the present case, PIATCO, Takenaka and Asahikosan, met the Governments allegations
regarding the structural integrity of the NAIA-IPT III.

A reading of the reports of the parties respective experts shows that each party presented an equally
persuasive case regarding the structural soundness or defect of the NAIA-IPT III. The Governments case on
the alleged structural defect of the NAIA-IPT III has been met by equally persuasive refutations by the
experts of PIATCO, Takenaka and Asahikosan.

As a matter of law and evidence, the Governments case regarding this matter must fail. Since PIATCO,
Takenaka and Asahikosan presented equally relevant and sufficient countervailing evidence on the structural
soundness of the NAIA-IPT III, the scales of justice tilt in their favor. Neither party successfully established a
case by preponderance of evidence in its favor; neither side was able to establish its cause of action and
prevail with the evidence it had. As a consequence, we can only leave them as they are. 275cralawrednad

We thus add to the construction cost the sum of $20,713,901, itemized below:276cralawrednad

Item In Dollars
Surface demolition 1,971,500
Structural retrofit 6,860,660
Elevated road 2,443,276
Miscellaneous
Alarms 154,460
Defective Ceiling 479,626
CUTE not working 2,774,563
Inferior FIDS 22,020
BHS Inferior Screening Software 957,881
Fire Protection Inferior coverage 924,851
Civil and HV
Apron Civil 829,619
Taxiway Civil 439,280

Page 88 of 169
 Storm Water 2,604,081
HV 252,084
Total 20,713,901

Admittedly, the Government did not open to the public certain areas of the NAIA-IPT III because of
uncertainties on their structural integrity.277 The Scott Wilson Report also recognized that some retrofit
works should also be undertaken in some of the areas of the NAIA-IPT III. It stated that only retrofit works
actually undertaken in the building should be taken into consideration in appraising the NAIA-IPT III. 278 cralawrednad

On August 14, 2012, the DOTC invited construction firms to participate in the P212.3 million NAIA-IPT III
structural retrofit project. The structural retrofit of the NAIA-IPT III that was offered for bidding had eleven
components: shear wall thickening; slab thickening; application of FRPs to columns, beams and slabs;
thickening of flat slab drop; enlarging of column size; enlarging pile cap and footings; steel jacketing;
providing shear blocks to pier headstock (elevated access roadway); enlarging of pier footings (elevated
access roadway); application of FRP to piers (elevated access roadway); and increasing seismic gap between
the elevated access roadway and adjacent structures (sector 1, 2, car park). 279 The Official Gazette further
stated:ChanRoblesvirtualLawlibrary

Shear wall thickening is meant to fortify the reinforced concrete wall to increase its capacity against
horizontal structure movement. At the same time, thickened slabs will increase their bending capacity and
resistance against heavy superimposed loadings.

Applying fiber-reinforced polymer (FRP) to columns, beams, and slabs will increase their strength and
resistance against excess loads and combined forces of elements. A thicker flat slab drop is meant to
strengthen the slab-column connection.

Bigger -sized columns will also increase their capacity against combined stresses, while enlarged pile cap
and footings will increase foundation capacity under compression. They also prevent movement of the
foundation during earthquakes.

Steel jacketing is meant to resist the additional loads. Shear blocks to pier headstock will provide a bridge
interlock is meant to distribute excess load along the carriage way.

Enlarged pier footings will prevent foundation overturning during earthquake events.

Application of FRP to piers will also increase the column capacity and ductility against combined stresses due
to earthquake forces.

Increased seismic gap between the elevated access roadway and adjacent structures will reduce the risk of
pounding between the bridge and building structure.280

However, no documents regarding the retrofit project exist as part of the record of the case. The retrofit bid
took place in 2012, or after the promulgation of the trial courts ruling. Hence, we have to disregard
Government claims pertaining to the retrofit project.

3.c. The unnecessary areas

Gleeds excluded unnecessary areas from the computation of the base value. These unnecessary areas
are the multi-level retail mall that is accessible only through the multi-storey car park (20,465 m 2), and
the excess retail concession space (1,727 m2).281 cralawrednad

We find the exclusion of the unnecessary areas from the base value unjustified. Since the
Government would expropriate the entire NAIA-IPT III, the Government should pay for the replacement cost
of the retail mall and the excess retail concession space. The Government cannot avoid payment simply
because it deems the retail mall and the retail concession space as unnecessary in its operation of the NAIA-
IPT III. To reiterate, the measure of just compensation is not the takers gain, but the owners loss. 282
cralawrednad

Consequently, we include in the computation of construction costs the excess concession space in
the amount of $1,081,272.00, and the four-level retail complex in the sum of $12,809,485.00.283 cralawrednad

Page 89 of 169
4. Attendant costs of the NAIA-IPT III

Scott Wilson criticized the Gleeds Report for excluding the attendant costs in the construction cost valuation.
He stated:ChanRoblesvirtualLawlibrary

3.1.13 Gleeds do (sic) not show any costs for planning and design consultancy fees preconstruction. In
our experience the following percentage ranges of the construction cost would typically be the
international norms for these fees.

Attendant Costs Percentage Range

Architecture 3.0 to 4.0 %
Civil and Structural 1.0 to 4.0 %
Electrical and Mechanical 2.5 to 3.5 %
Quantity Surveyor 1.0 %
Project Management 1.0 %
Total 8.5 to 11.5 %

3.1.14 On the basis of a construction cost valuation of the order of US$322 million we would expect planning
and design consultancy fees preconstruction to be a minimum of US$27 million, based on typical
international norms.

3.1.15 Some preliminary design was carried out by Takenaka prior to the EPC tender design so slight lower
planning and design consultancy fees could be expected. It is understood that PIATCO have paid US$19.3
million to the designers PCI, SOM, PACICON and JGC (architect of record) and this therefore appears a fair
and reasonable fee.

3.1.16. In addition there is also the cost of site supervision. In this case there was the independent QA role
undertaken by Japan Airport Consultants and construction supervision by PCI. It is noted that the Bid
Document suggested that up to 3% of the construction cost should be allowed for the independent QA role.
In our experience we would expect QA and construction supervision to cost between 3% and 5% of the
construction cost.

3.1.17 On the basis of a construction cost valuation of the order of US$322 million we would expect the cost
of construction supervision to be a minimum of US$9.5 million. It is understood that PIATCO have paid
US$7.9 million to the QA Inspectors (JAC) and US$4.2 million to PCI, SOM, PACICON and JGC and this
therefore appears not reasonable.

3.1.18 In summary, PIATCO have paid the following consultancy fees:ChanRoblesvirtualLawlibrary

Planning and design consultancy fees preconstruction US$19.3 million

QA Inspectors US$7.9 million
Construction supervision US$4.2 million
Total US$31.4 million

3.1.19 In our opinion these fees are in reasonable range.

Site Preparation Costs

3.1.20 We understand that PIATCO has incurred costs of US$10.3 million for relocation of PAF existing
facilities, removal of subterranean structures and site preparation which the Gleeds Base Case CCV has not
included.

Page 90 of 169
Legal Costs

3.1.21 We assume that in addition to the above fees PIATCO has incurred legal costs in planning and
constructing the development and this is quite normal on BOT concession contracts where contract
agreements and responsibilities have to be agreed between a number of different parties.

Overall Summary

3.1.21 PIATCO has incurred consultancy fees and site preparation costs of US$41.7 million
(US$31.4 plus US$10.3 million) not included by Gleeds in the Base Case CCV.284

In response, Tim Lunt asserted that its CCV of US$300,206,693.00 already includes the attendant costs of
US$36,279,033 under the heading General Requirements and Conditions. The sum of US$36,279,033
represents the General Requirements Section of the Takenaka Bill of Quantities. The General Requirements
and Conditions is composed of engineering and architectural services fees, quality assurance services fees,
construction supervision services fees, construction insurance, and site. Tim Lunt, however, admitted that
the General Requirements and Conditions exclude financing costs, and other associated costs. He likewise
stated that PIATCOs attendant costs have no evidentiary support.

On December 14, 2010, PIATCO attached to its Compliance documentary evidence of its claimed attendant
costs of US$70,197,802.00. These includephotocopies of summary of payments for architecture &
engineering, quality assurance, construction supervision, construction insurance, site development, other
costs and financing costs, official receipts, statements of account, sales invoices, endorsements, insurance
policies and other related documents, acknowledgement receipts, agreements, invoices, and bonds.

PIATCO claims that the following entities rendered services in the construction of the NAIA-IPT
III:ChanRoblesvirtualLawlibrary

Services Rendered Entities that Rendered the Services

Engineering and Pacific Consultants International Asia, Inc.
Architecture Pacicon Philippines, Inc.
Architect J. G. Cheng
RMJM Philippines, Inc.
Quality Assurance Japan Airport Consultants
I.A. Campbell & Associates
Construction Supervision Pacific Consultants International Asia, Inc.
Construction Insurance Gotuaco del Rosario
Site Development Bases Conversion Development Corporation
Skidmore, Owings & Merrill
Pacific Consultants International Asia, Inc.
Natural Resource Development Corporation
Serclan Enterprises
Geodesy Services, Inc.
Geotechnics Philippines, Inc.
Revalu Constructions & Supply
N.O. Mercado Construction, Inc.
Lopez Drilling Enterprises
Monark Constructions
Illustrious Security and Investigation Agency, Inc.

Page 91 of 169
 Core Watchmen, Security and Detective Agency
Corp.
Other Services Laguna Lake Development Authority
National Telecommunications Commission

Prudential Guarantee and Assurance, Inc.

Manila Electric Company, Inc.
Maynilad
Philippine Long Distance Telecommunications,
Inc.
Myrtle Intergen Exchange Corp.
Financing Services Dresdner / Kfw / Helaba Banks
Fraport AG/FAG
Deutsche Bank

Reyes Tacandong & Co. checked the mathematical accuracy of the attendant costs. PIATCO asserts that it
engaged the services of various consultants in the construction of the NAIA-IPT III and incurred the
following attendant costs:ChanRoblesvirtualLawlibrary

Attendant Costs Amount

Engineering and Architecture US$19,372,539
Quality Assurance US$6,923,720
Construction Supervision US$4,302,227
Construction Insurance US$4,329,272
Site Development US$8,358,169
Other Costs US$ 308,985
Financing Costs US$26,602,890
Total US$70,197,802

The BOC, the RTC, and the CA uniformly found that PIATCO failed to substantiate its attendant
costs.The CA observed that PIATCOs summarized computation of attendant costs was self-serving and
unsupported by relevant evidence.

Unlike the BOC and the RTC which pegged the attendant cost at 10% of the construction cost as an
accepted industry practice, the CA made a finding that the General Requirements and Conditions in the
Gleeds Appraisal Report constitutes the attendant costs. The CA stated that there is no need to further
recognize and award separate attendant costs because these were already included in the construction cost
valuation of US$300,206,693.00. The CA explained that the attendant cost becomes part of the total
construction cost once the construction is completed.285cralawrednad

4.a. PIATCOs attendant costs

Under the best evidence rule, when the subject of inquiry relates to the contents of a document, no
evidence shall be admissible other than the original document itself. In proving the terms of a written

Page 92 of 169
document, the original of the document must be produced in court.

The best evidence rule ensures that the exact contents of a document are brought before the court. In
deeds, wills, and contracts, a slight variation in words may mean a great difference in the rights and
obligations of the parties. A substantial hazard of inaccuracy exists in the human process of making a copy
by handwriting or typewriting. Moreover, with respect to oral testimony purporting to give the terms of a
document from memory, a special risk of error is present, greater than in the case of attempts at describing
other situations generally. 286cralawrednad

The best evidence rule likewise acts as an insurance against fraud. If a party is in the possession of the best
evidence and withholds it, and seeks to substitute inferior evidence in its place, the presumption naturally
arises that the better evidence is withheld for fraudulent purposes that its production would expose and
defeat. The rule likewise protects against misleading inferences resulting from the intentional or
unintentional introduction of selected portions of a larger set of writings. 287cralawrednad

As exceptions to the best evidence rule, Section 3, Rule 130 of the Rules of Court provides that non-
original documents may be produced in court in the following cases:ChanRoblesvirtualLawlibrary

(a)When the original has been lost or destroyed, or cannot be produced in

court, without bad faith on the part of the offeror;
(b)When the original is in the custody or under control of the party against
whom the evidence is offered, and the latter fails to produce it after
reasonable notice;
(c) When the original consists of numerous accounts or other documents
which cannot be examined in court without great loss of time and the fact
sought to be established from them is only the general result of the
whole; and
(d)When the original is a public record in the custody of a public officer or is
recorded in a public office. (Emphasis supplied)
Secondary evidence of the contents of writings is admitted on the theory that the original cannot be
produced by the party who offers the evidence within a reasonable time by the exercise of reasonable
diligence.288
cralawrednad

PIATCO argues that its non-submission of original documents before the trial court is justified under Section
3 (c), Rule 130 of the Rules of Court. It points out that a party need not submit the original when it consists
of numerous accounts or other documents which cannot be examined in court without great loss of time and
the fact sought to be established from them is only the general result of the whole. PIATCO insists that the
lower courts erred in not giving probative value to the report prepared by Reyes Tacandong & Co., an
auditing firm, validating PIATCOs computation of attendant costs. Significantly, Reyes Tacandong & Co.
failed to state that it examined the original documents in validating PIATCOs computation of
attendant costs.

We agree with PIATCO that it need not submit numerous and voluminous invoices, official receipts, and
other relevant documents before the trial court to prove the attendant costs that it incurred in the
construction of the NAIA-IPT III. The trial court may admit a summary of voluminous original
documents, in lieu of original documents, if the party has shown that the underlying writings are numerous
and that an in-court examination of these documents would be inconvenient. In other words, Section 3
(c), Rule 130 of the Rules of Court does away with the item-by-item court identification and
authentication of voluminous exhibits which would only be burdensome and tedious for the
parties and the court.

However, as a condition precedent to the admission of a summary of numerous documents, the

proponent must lay a proper foundation for the admission of the original documents on which
the summary is based. The proponent must prove that the source documents being summarized are also
admissible if presented in court.289
cralawrednad

Page 93 of 169
In concrete terms, the source documents must be shown to be original, and not secondary.
Furthermore, the source documents must likewise be accessible to the opposing party so that the
correctness of the summary of the voluminous records may be tested on cross-examination and/or may be
refuted in pleadings. In ordinary trial-type proceedings, a proper foundation for the introduction of a
summary may be established through the testimony of the person who is responsible for the summary's
preparation, or the person who supervised the preparation of the summary. 290 cralawrednad

The primary reason for these procedural foundations is that the summary of numerous documents is, in
strict terms, hearsay evidence. The trial court should not haphazardly allow a party to present a summary
of numerous documents and immediately admit and give probative value to such summary without
sufficiently laying these foundations. If the source documents of the summary are non-original, the trial
court would commit a grave error in admitting and/or giving probative value to the summary of non-original
documents; the evidence admitted would be double hearsay.291 cralawrednad

Furthermore, when a party invokes Section 3 (c), Rule 130 of the Rules of Court, he does not similarly
invoke Section 3 (a), (b), and/or (d), Rule 130 of the Rules of Court. He does not likewise claim that the
original documents have been lost or destroyed. The party merely asserts that the numerous documents
cannot be examined in court without great loss of time and that the fact sought to be established from these
documents is only the general result of the whole.

Whenever a party seeks an exemption under the best evidence rule pursuant to Section 3 (c), Rule 130 of
the Rules of Court, he asks permission from the trial court to produce a summary of numerous
documents, whose originals are available to the adverse party for inspection. He does not ask
permission from the trial court to present in evidence the numerous non-original documents.
Otherwise, the very purpose of Section 3 (c), Rule 130 of the Rules of Court would be defeated. In that
case, every exhibit of non-original documents would be identified, authenticated, and cross-examined,
leading to a tedious and protracted litigation.

Thus, if a party desires to present photocopies of the original documents, he must first establish
that the presentation of photocopies is justified under Section 3 (a), (b), and/or (d), Rule 130 of
the Rules of Court. He must establish the presence of all the elements under these provisions.

In the case of lost or destroyed documents, the offeror of non-original documents must first prove the
following elements before secondary evidence is admitted before the court: (a) the existence or due
execution of the original; (b) the loss and destruction of the original, or the reason for its non-production in
court; and (c) the absence of bad faith on the part of the offeror to which the unavailability of the original
can be attributed. To conclude otherwise is to allow the party to circumvent the best evidence rule and the
requirements under Section 3 (a), (b), and (d), Rule 130 of the Rules of Court by merely invoking Section 3
(c), Rule 130 of the Rules of Court.

In the present case, PIATCO attached to its Compliance dated December 14, 2010, the photocopies of
numerous documents, and the validation of PIATCOs computation of attendant costs prepared by Reyes
Tacandong & Co., among others. PIATCO justifies the non-presentment of original documents pursuant
to Section 3 (c), Rule 130 of the Rules of Court.

We affirm the lower courts uniform findings that PIATCO failed to establish its attendant
costs. PIATCO failed to establish that the photocopied documents fall under Section 3 (a), (b), and/or (d),
Rule 130 of the Rules of Court. These photocopied documents are hearsay evidence. They are mere scraps
of paper and have no weight as basis for the attendant costs of the NAIA-IPT III.

We likewise cannot give weight to the summary prepared by Reyes Tacandong & Co. for being
double hearsay. Reyes Tacandong & Co., whose letter was addressed to PIATCO and not to the trial court,
did not state in its report that it examined the original documents allegedly proving attendant costs.
Moreover, in a letter dated December 14, 2010, Reyes Tacandong & Co stated it does not express any
assurance on the attendant costs:

We have performed the procedures agreed with Philippine International Air Terminals, Co., (the Company)
with respect to the Companys attendant costs incurred in building NAIA Terminal 3 from 1997 to 2004. Our
engagement was undertaken in accordance with the Philippine Standard on Related Services applicable to
agreed-upon procedures engagements.

xxxx

Page 94 of 169
The sufficiency of the procedures is solely the responsibility of the specified users of the report.
Consequently, we make no representation regarding the sufficiency of the procedures either for the purpose
for which this report has been requested or for any other purpose.

Because the procedures do not constitute either an audit or a review of financial statements made in
accordance with Philippine Standards on Auditing, we do not express any assurance on the attendant
costs. (Emphasis supplied)

4.b. The BOC and the RTCs attendant cost

The CA correctly disregarded the BOC and the RTCs computation of attendant costs, which both pegged the
attendant cost at 10% of the construction cost. The BOC and the RTC relied on the mean percentage
range of attendant cost which appears in the Scott Wilson Report as follows: 292cralawrednad

Attendant Costs Percentage Range

Architecture 3.0 to 4.0 %
Civil and Structural 1.0 to 4.0 %
Electrical and Mechanical 2.5 to 3.5 %
Quantity Surveyor 1.0 %
Project Management 1.0 %
Total 8.5 to 11.5 %

The BOC and the RTC computed the mean percentage range by adding 8.5% and 11.5% and dividing the
result by 2, thus: ChanRoblesvirtualLawlibrary

(8.5 + 11.5)/2 = 10%

The mean percentage range is highly speculative and devoid of any factual basis. As a court of law, we
should only measure just compensation using relevant and actual evidence as basis in fixing the value of the
condemned property. Just compensation must be duly proven by preponderance of evidence or greater
weight of credible evidence.293 Bare allegations, unsubstantiated by evidence, are not equivalent to
proof.294
cralawrednad

In a case for damages, we allow the party to receive temperate damages in the absence of competent proof
on the amount of actual damages. Temperate or moderate damages, which are more than nominal but less
than compensatory damages, may be recovered when the court finds that some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, be proved with certainty. 295 cralawrednad

We cannot adopt the same liberal attitude in an eminent domain case and merely estimate the
attendant cost in the total absence of evidence of construction costs. The amount of just
compensation must be substantiated by a preponderance of evidence.

An eminent domain case is different from a complaint for damages. A complaint for damages is based on
tort and emanates from the transgression of a right. A complaint for damages seeks to vindicate a legal
wrong through damages, which may be actual, moral, nominal, temperate, liquidated, or exemplary. When
a right is exercised in a manner not conformable with Article 19 of the Civil Code and other provisions on
human relations in the Civil Code, and the exercise results in the damage of another, a legal wrong is
committed and the wrongdoer is held responsible. 296 cralawrednad

In contrast, an eminent domain case arises from the States exercise of its power to expropriate private
property for public use. The Constitution mandates that the property owner shall only receive just
compensation which, of course, should be based on preponderance of evidence. Moreover, the
determination of eminent domain being a judicial function, there is no constitutional or statutory provision

Page 95 of 169
giving the courts unfettered discretion to determine just compensation based on estimates and conjectures.

4.c. The Governments attendant cost

We affirm the CAs factual finding that the Governments computation of construction cost
valuation already includes the attendant costs. In the Gleeds Report dated December 22, 2010, Tim
Lunt sufficiently explained:
ChanRoblesvirtualLawlibrary

9. I consider that Engineering and Architecture, Quality Assurance, Construction Supervision, Construction
Insurance and Site Development are clearly costs which are included for in the CCV. The CCV includes costs
associated with the General Requirements (see Appendix D Summary). The costs of Site Development are
also included (see CCV Appendix D Part 2, page 5 of 38).

xxxx

25. Scott Wilson states at paragraph 2.2.14 that the constructions costs are exclusive of all other attendant
costs, such as the engineering and architectural services fees, quality assurance services fees, construction
supervision services fees, construction insurance, site development costs, financing costs and other
associated costs. This statement is incorrect. It is clear on the inspection of the General
Requirements sections of the Takenaka Bills of Quantities that some if not all of these items are
included in the assessment of the construction costs made by PIATCO with the exception of 1)
financing costs and 2) other associated costs, for which there is no definition. Scott Wilson makes
no reference to the Takenaka Bills of Quantities nor do they use them as documents which they have
reviewed in paragraph 1.4.1 of their report. I do not understand how Scott Wilson can ignore the items
which are included in the Bills of Quantities under the heading General Requirements and make the
suggestion that they are additional costs which should be considered.

xxxx

36. In respect of the Engineering Consultancy Fees set out by Scott Wilson, it is clear to me on
inspection of the General Requirements section of the On shore and Off shore Bills of Quantities
that an element of design fees included as Costs has also been included in the CCVs and should
not therefore be included as an addition. Scott Wilson has not provided any specific information on the
actual cost or extent of service provided in respect of engineering consultancy.

xxxx

39. The cost associated with the Independent QA role referred to by Scott Wilson is included in
the General Requirements section of the CCV. (Emphasis supplied)

The Governments CCV already includes attendant costs which are incorporated in the General
Requirements and Conditions. On the basis of the Bills of Quantities, Gleeds took into account indirect costs
in constructing the NAIA-IPT III, summarized below:ChanRoblesvirtualLawlibrary

Attendant Costs under General Requirements and Conditions

Design $6,439,680.00297
Staff and labour $10,491,139.54298
Insurance $925,210.78299
Professional Indemnity Insurance $2,200,000.00300
Consequential Loss Insurance $800,000.00301
Setting out $364,647.00302
Health and Safety $403,224.00303

Page 96 of 169
 Environmental management $176,490.00304
Design $2,631,100.00305
Staff and labour $2,590,774.19306
Insurance $71,109.77307
Total $27,093,375.28

5. Deductions from the replacement

cost of the NAIA-IPT III

5.a. Depreciation should be

deducted from the replacement
cost.

In eminent domain cases, it is acceptable that a deduction should be made to the extent to which the
improvement or fixture has depreciated. The cost of the buildings and fixtures, minus depreciation, is a
reasonable test of the amount by which they enhance the market value of the land even where the market
value of the land itself is not readily quantifiable.308 cralawrednad

In order for this Court to arrive at a valid indication of the market value of the NAIA-IPT III, we must
consider accrued depreciation, which is the loss in value of the terminal.

Contrary to the CAs position, depreciation is used in different contexts in valuation and financial
accounting. As earlier discussed, in appraisal, depreciation refers to the reduction or writing down of the
cost of a modern equivalent asset to reflect the obsolescence and relative disabilities affecting the actual
asset309 or loss in value from any cause.310 It is further defined as the reduction or writing down of the
cost of a modern equivalent asset to reflect the obsolescence and relative disabilities affecting the actual
asset.311
cralawrednad

In contrast, depreciation in accounting refers to a charge made against an entitys income to reflect the
consumption of an asset over a particular accounting period.312 It is the process of allocating to expense
the cost of a plant asset over its useful (service) life in a rational and systematic manner. 313 Accumulated
depreciation is reported as a deduction from plant assets and affects the income statement through
depreciation expenses. Thus, the cost allocation is designed to match expenses with revenues.

In financial accounting, depreciation is a process of cost allocation, not a process of asset valuation. No
attempt is made to measure the change in an assets market value during ownership because it is assumed
that plant assets are not held for resale. 314 Book depreciation refers to the amount of capital recapture
written off an owners books; it is not market derived. 315 Thus, the book value original cost less
accumulated depreciation of an asset may be different from the market value. Consequently, an asset can
have zero book value but still have a significant market value.316 cralawrednad

Simply put, book depreciation is measured against the book value or original cost of the property and is
the amount of capital recapture written off an owners books. 317Accrued depreciation is measured against
the current market value of the property. 318 cralawrednad

Under the depreciated replacement cost method, accrued depreciation is the difference between the
replacement cost of the improvements on the effective date of the appraisal and the market value of the
improvements on the same date.319 cralawrednad

In the Gleeds Report, Tim Lunt stated: ChanRoblesvirtualLawlibrary

Deterioration

3.2.7 The Arup Site Observation Report identifies a number of items which have deteriorated since
suspension of the construction of Terminal 3 in December 2002.

Page 97 of 169
3.2.8 A provisional value has been assessed against the items identified in the Arup report at $1,738,318.

The deterioration items have been costed with a base date of 2Q09. Calculation of this amount is contained
in Appendix E. Further examination and costing of each of the identified items are required and, therefore,
the costs of these items will require adjustment based on the actual date when the rectification works are
carried out.

Depreciation

3.2.0 An Assessment has been made of the depreciated value of the assets from December 2002 when
construction was suspended to December 2004 when Terminal 3 was expropriated by the Republic.

3.2.10 A depreciation value has been assessed at $USD35,076,294 in 3Q01 Manila prices. Calculation of this
amount showing the various asset lives assumed is included in Appendix J.

3.2.11 Based on the deductions for deterioration and depreciation between December 2002 and December
2004, the Base Value CCV at the time of expropriation is $USD263,392,081. 320 cralawrednad

In the Scott Wilson report, he stated: ChanRoblesvirtualLawlibrary

3.7.1 We consider the question of depreciation in this instance to be a financial and legal issue which has to
be dealt with in accordance with Philippine law.

3.7.2 We therefore do not feel qualified to comment on the legal issue except that we do not understand
how deterioration in section 3.6 and depreciation can both be applied as surely this means that Gleeds (sic)
have double counted the effect of any deterioration. (Emphasis supplied)321

In response, Tim Lunt argued: ChanRoblesvirtualLawlibrary

14. With respect to PIATCOs hypothetical inclusion of inflation, I do not consider that inflation should be
applied to the base value as the replacement cost method establishes the cost of construction when
completed in December 2002.

15. The base values included in the CCVs are the same for the December 2002 and December 2004. The
December 2004 base value is not adjusted to account for inflation because the items which make up the
construction of NAIA3, i.e., the labour, plant, materials, systems and equipment installed should not be paid
for at a higher rate (that takes into account inflation) than the rate which would have been paid when they
were purchased at the earlier date. Put simply, it makes no sense to apply December 2004 prices to items
bought and used in the construction of NAIA3 sometime between June 2000 and December 2002.

16. PIATCO do (sic) not consider depreciation. Having explained above why inflation should not be included,
it is the application of a similar logic which demonstrates why depreciation should be included. In the case of
NAIA3 the materials, systems and equipment installed are at least two years older as at December 2004
than at the time they were incorporated into the construction of NAIA3. Their value should therefore be less.
The method used for assessing this reduced value is that of depreciation. 322 cralawrednad

66. Scott Wilson provide a Summary of Conclusions on deductions at section 3.11 and my responses to
each of the items contained in their comment column are as follows: ChanRoblesvirtualLawlibrary

xxxx

Deterioration Major deduction for baggage system not justified The deterioration in the
baggage systems is clearly set out in the Arup (and Gensler) Site Observation Report dated August
2007, at section 9.2. The cost deduction is set out in Appendix to the previous CCV report which
Scott Wilson do (sic) not appear to have reviewed.

Depreciation Scott Wilson states This issue appears to be a legal issue and should be commented
on by legal expert and offers no technical or cost related comments relevant to the CCV.

Page 98 of 169
On the other hand, Gary Taylor commented: ChanRoblesvirtualLawlibrary

Gleeds have (sic) assessed a depreciation value of US$35,076,294 (11.68%) to conclude its 4Q04 value.
This concept of depreciation is contrary to the GRPs own statistics which shows a Consumer Price Index for
Manila (CPI) increase from 107.8 (Aug 01) to 125.1 (Nov. 04), a 16% increase over the period. The CPI is
a conglomerate of all consumer prices in the Manila region and includes property values and is published by
the GRP on a monthly basis. In assessing such a depreciation value, Gleeds have (sic) taken an arbitrary life
cycle of the building and assumed a write off of asset over that period, then assessed the two (2) year
depreciation over the period 3Q01 to 4Q04. Whilst we acknowledge that an airport terminal building is
something of a specialized asset and appreciation of value is not always in line with the areas general value
assessments, it is still a major structure and appreciation before depreciation (which should be limited to
equipment and fittings within the building) should not be discounted. The concept of long term value of an
asset on a similar concept is proven out by NAIA Terminal 1, which since its construction more than 30
years ago has maintained a value to this date.323

We uphold the Governments computed extent of deterioration and depreciation. In the Reply to
Tengson International Ltd. Report and Response from Takenaka and Asahikosan dated December 7, 2010,
Tim Lunt explained that [t]he asset lives are taken specifically from experience in preparing Asset
Revaluations for Airport properties which are used as an input for annual published accounts, which are in
turn audited by appointed Accountants.324 cralawrednad

Takenaka and Asahikosan should have provided for contrary assumptions with respect to the useful lives of
the subject assets if they did not agree with the Governments assumptions. Instead, Gary Taylor merely
referred to the valuation of the NAIA Terminal I without any factual basis to support his claim. Moreover,
Scott Wilson did not question the assumed useful life of the NAIA-IPT III, but agreed that the question of
whether depreciation should be deducted is a legal issue.

Since PIATCO, Takenaka, and Asahikosan failed to present contrary assumptions or estimates with respect
to the NAIA-IPT IIIs useful life, we adopt Tim Lunts computations with respect to deterioration and
depreciation.

5.b. Rectification for contract

compliance should not be deducted from
the replacement cost.

However, we hold that the cost for rectification for contract compliance should not be deducted
from the base value, as the contract, being void, cannot be ratified.325 cralawredcralawrednad

In the present case, the Court already nullified the PIATCO contracts for being contrary to public policy in
Agan. A substantial amendment to a contract awarded through public bidding, when such subsequent
amendment was made without a new public bidding, is null and void. The PIATCO contracts contain material
and substantial amendments that substantially departed from the bidded contract. If at all, the declaration
of nullity of a contract only operates to restore things to their state and condition before the contracts
execution.326
cralawrednad

Moreover, Takenaka and Asahikosan, as subcontractors in the NAIA-IPT III project, were not bound by the
nullified PIATCO contracts. Takenaka and Asahikosan were only bound to perform their contractual
obligations under the Onshore Construction Contract and Offshore Procurement Contract, respectively. They
were not bound by the nullified PIATCO contracts.

If there had indeed been variations from the Onshore Construction Contract and Offshore Procurement
Contract, the cause of action for breach of contract and damages lies with PIATCO. For purposes of
determining just compensation, the Government cannot rely on the specifications in the Bid Documents
precisely because the concession agreement between PIATCO and the Government had already been
nullified. The Government cannot complain of contract noncompliance in an eminent domain case, whose
cause of action is not based on a breach of contract, but on the peremptory power of the State to take
private property for public use.

Consequently, deductions from the base value of the cost of non-compliance with bid documents as well as
inferior quality items have no legal basis. Gleeds reliance on the NAIA-IPT III bid documents is misplaced.

Page 99 of 169
As Scott Wilson correctly pointed out, the decisive factor of the deductibility of items under noncompliance
with bid documents is whether they are functional. The Scott Wilson report shows that, except for the
nonprovision of moving walkway, the alleged noncompliant items are functional. 327 Also, the nonprovision of
a moving walkway should not be deducted from the base value. The only consequence of the failure to
provide a moving walkway is the need to construct one, which would only increase the construction
cost.328 The increase in the construction cost, however, should not be included as part of just compensation
as this Court is only tasked to determine the construction cost of the NAIA-IPT III as of December 21, 2004.

For these same reasons, we cannot allow the deduction in the amount of $75,570,510.00
additional areas to be built. These are areas where the minimum requirements stated in the Bid
Documents have not been met and are necessary for the operation of the NAIA-IPT III. These areas
include:
Departure hall 22,462 m2
Meeter/greeter hall 14,696 m2

Ramp operations 13,640 m2

Offices 4,370 m2

Hold rooms 3,729 m2

Public toilets 2,351 m2

Hardstand hold rooms 1,442 m2

Delayed flight restaurant 620 m2329

6. Adjustments to the Replacement Cost

6.a. The replacement cost should

be adjusted to December 2004 values.

Gleeds used the Principle Quantities approach in determining the gross replacement cost of the NAIA-IPT
III.330 Gleeds calculated the cost of construction based on the midpoint between June 2000 and December
2002 to arrive at the December 2002 CCV. According to Gleeds, the cost of construction based on its
midpoint or the third quarter of 2001 is a recognized standard practice in the construction industry. 331
cralawrednad

Gleeds did not adjust the base valuation of $300,206,693.00 as of December 2002 to reflect the
current gross replacement cost as of December 2004. It merely assumed that the gross replacement
cost as of December 2002 is the same as the gross replacement cost as of December 2004. It stated that it
did not consider inflation in determining the base valuation of the NAIA-IPT III as of December 2004: ChanRoblesvirtualLawlibrary

14. With respect to PIATCOs hypothetical inclusion of inflation, I do not consider that inflation
should be applied to the base value as the replacement cost method establishes the cost of
construction when completed in December 2002.

15. The base values included in the CCVs are the same for December 2002 and December 2004.
The December 2004 is not adjusted to account for inflation because the items which make up the
construction of NAIA3, i.e., the labour, plant, materials, systems and equipment installed should
not be paid for at a higher rate (that takes into account inflation) than the rate which would have
been paid when they were purchased at the earlier date. Put simply, it makes no sense to apply
December 2004 prices to items bought and used in the construction of NAIA3 sometime between
June 2000 and December 2002. 332 (Emphasis supplied)

Section 10 of RA 8974 IRR provides that the replacement cost shall be based on the current market prices
of construction and attendant costs. Under the depreciated replacement cost method, the replacement cost
shall be based on the current gross replacement cost of the asset.

In its pleadings, the Government itself explained that the cost of replacing an asset under both depreciated
replacement cost and new replacement cost methods should be measured at its current prices.

Page 100 of 169

In our jurisdiction, the word current should be equated with the date of the taking of the property or
the filing of the complaint, whichever came first. In the present case, the word current should
necessarily refer to December 21, 2004, the filing of the complaint for expropriation.

In National Power Corporation v. Co,333 the Court suppletorily applied Section 4, Rule 67 of the Rules of
Court in determining the value of the property sought to be expropriated for purposes of implementing
national infrastructure projects. Under the Rules of Court, just compensation shall be determined from
the date of the taking of the property or the filing of the complaint, whichever came first. Thus,
where the filing of an action precedes the taking of the property, just compensation shall be
computed as of the time of the filing of the complaint.334 cralawrednad

The relevant valuation date when we shall reckon the current gross replacement cost is December 21,
2004, or the date of filing of the complaint for expropriation.

The Governments base valuation of $300,206,693.00 is only a measurement of the current gross
replacement cost as of December 2002. We agree with PIATCO that the gross replacement cost of the
NAIA-IPT III as of December 2002 should be adjusted to its cost as of December 2004 for the plain reason
that the Governments computed gross replacement cost is not current, as required by the Rules of Court
and jurisprudence.

Equity dictates that we should adjust the replacement cost at December 2004 values using the
Consumer Price Index (CPI).335 This Court should not be confined and restricted by the use of the
depreciated replacement cost method, especially in this case where the calculated base valuation as of
December 2004 appears to be not truly reflective of the current gross replacement cost of the NAIA-IPT III
at the time of the filing of the complaint for expropriation.

In adjusting the gross replacement cost to December 2004 values, this Court takes cognizance of the fact
that the cost of goods and services in the Philippines increased from 2002 until 2004. This is shown by the
CPI which is used in calculating the inflation rate and the purchasing power of the peso. 336PIATCO correctly
arrived at the inflation rate of 1.0971 using the prevailing CPI from November 29, 2002, or the date of the
suspension of works in the NAIA-IPT III until December 21, 2004, or the date when the Government filed
the expropriation complaint.337 cralawrednad

7. Interests, Fruits and Income

7.a. Computation of Interests

To avoid confusion in computing interests, we first distinguish three interrelated concepts in just
compensation: (1) the valuation period of just compensation under Rule 67 of the Rules of Court; (2) the
reckoning period of interest in eminent domain cases pursuant to Section 9, Article 3 of the 1987
Constitution; and (3) the initial and final payments of just compensation under RA 8974.

Under Section 4, Rule 67 of the Rules of Court, the property sought to be expropriated shall be appraised as
of the date of taking of the property or the filing of the complaint for expropriation, whichever is
earlier, thus:ChanRoblesvirtualLawlibrary

Section 4. Order of expropriation. If the objections to and the defenses against the right of the plaintiff
to expropriate the property are overruled, or when no party appears to defend as required by this Rule, the
court may issue an order of expropriation declaring that the plaintiff has a lawful right to take the property
sought to be expropriated, 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 taking of the property or the filing of
the complaint, whichever came first.

A final order sustaining the right to expropriate the property may be appealed by any party aggrieved
thereby. Such appeal, however, shall not prevent the court from determining the just compensation to be
paid.

After the rendition of such an order, the plaintiff shall not be permitted to dismiss or discontinue the
proceeding except on such terms as the court deems just and equitable. (4a) (Emphasis supplied)

On the other hand, Section 9, Article 3 of the 1987 Constitution provides that [n]o private property shall

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be taken for public use without just compensation. The 1987 Constitution thus commands the
condemnor to pay the property owner the full and fair equivalent of the property from the date of taking.
This provision likewise presupposes that the condemnor incurs delay if it does not pay the property owner
the full amount of just compensation on the date of taking.338 cralawrednad

The reason is that just compensation would not be just if the State does not pay the property owner
interest on the just compensation from the date of the taking of the property. Without prompt payment,
the property owner suffers the immediate deprivation of both his land and its fruits or income.
The owners loss, of course, is not only his property but also its income-generating potential. 339 cralawrednad

Ideally, just compensation should be immediately made available to the property owner so that he may
derive income from this compensation, in the same manner that he would have derived income from his
expropriated property.

However, if full compensation is not paid for the property taken, then the State must pay for the shortfall
in the earning potential immediately lost due to the taking, and the absence of replacement property from
which income can be derived. Interest on the unpaid compensation becomes due as compliance with the
constitutional mandate on eminent domain and as a basic measure of fairness. 340 cralawrednad

Thus, interest in eminent domain cases runs as a matter of law and follows as a matter of course from the
right of the landowner to be placed in as good a position as money can accomplish, as of the date of
taking.341
cralawrednad

Lastly, RA 8974 requires the Government to pay just compensation twice: (1) immediately upon the
filing of the complaint, when the amount to be paid is 100% of the value of the property based on the
current relevant zonal valuation of the BIR, and the value of the improvements and/or structures sought to
be expropriated (initial payment); and (2) when the decision of the court in the determination of just
compensation becomes final and executory, in which case the implementing agency shall pay the
owner the difference between the amount already paid and the just compensation as determined by the
court (final payment).

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 initial payment shall be the proffered value of the
property. Section 4 of RA 8974 also states that the initial payment of just compensation is a prerequisite
for the trial courts issuance of a writ of possession, to wit: ChanRoblesvirtualLawlibrary

Section 4. Guidelines for Expropriation Proceedings. Whenever it is necessary to acquire real property for
the right-of-way or location for any national government infrastructure project through expropriation, the
appropriate implementing agency shall initiate the expropriation proceedings before the proper court under
the following guidelines:ChanRoblesvirtualLawlibrary

(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;

(b) In provinces, cities, municipalities and other areas where there is no zonal valuation, the BIR is hereby
mandated within the period of sixty (60) days from the date of the expropriation case, to come up with a
zonal valuation for said area; and

(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 compliance 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.

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In the event that the owner of the property contests the implementing agencys 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. (Emphasis supplied)

The Governments initial payment of just compensation does not excuse it from avoiding payment of interest
on the difference between the adjudged amount of just compensation and the initial payment.

The initial payment scheme as a prerequisite for the issuance of the writ of possession under RA 8974 only
provides the Government flexibility toimmediately take the property for public purpose or public
use pending the courts final determination of just compensation. Section 4 (a) of RA 8974 only addresses
the Governments need to immediately enter the privately owned property in order to avoid delay in the
implementation of national infrastructure projects.

Otherwise, Section 4 of RA 8974 would be repugnant to Section 9, Article 3 of the 1987 Constitution which
mandates that private property shall not be taken for public use without just compensation. To
reiterate, the Constitution commands the Government to pay the property owner no less than the full and
fair equivalent of the property from the date of taking.

In the present case, the Government avers that PIATCO is not entitled to recover interest. According to the
Government, PIATCO should not be allowed to profit from the void contracts. This contention, however,
stems from a mistaken understanding of interest in expropriation cases.

Contrary to the Governments opinion, the interest award is not anchored either on the law of
contracts or damages; it is based on the owners constitutional right to just compensation. The
difference in the amount between the final payment and the initial payment in the interim or before the
judgment on just compensation becomes final and executory is not unliquidated damages which do not
earn interest until the amount of damages is established with reasonable certainty. The difference between
final and initial payments forms part of the just compensation that the property owner is entitled from
the date of taking of the property.

Thus, when the taking of the property precedes the filing of the complaint for expropriation, the Court
orders the condemnor to pay the full amount of just compensation from the date of taking whose interest
shall likewise commence on the same date. The Court does not rule that the interest on just compensation
shall commence the date when the amount of just compensation becomes certain, e.g., from the
promulgation of the Courts decision or the finality of the eminent domain case.

With respect to the amount of interest on just compensation, we decisively ruled in Republic v. Court of
Appeals342 that the just compensation due to the property owner is effectively a forbearance of money, and
not indemnity for damages.343 Citing Eastern Shipping Lines, Inc. v. Court of Appeals,344 we awarded a legal
interest of 12% per annum on just compensation. The Court upheld the imposition of the 12% interest rate
in just compensation cases, as ruled in Republic, in Reyes v. National Housing Authority, 345Land Bank of the
Philippines v. Wycoco,346Republic v. Court of Appeals,347Land Bank of the Philippines v. Imperial, 348Philippine
Ports Authority v. Rosales-Bondoc,349 and Curata v. Philippine Ports Authority.350The Court reiterated the
Republic ruling in Apo Fruits Corporation and Hijo Plantation, Inc. v. Land Bank of the Philippines, 351Land
Bank of the Philippines v. Rivera, 352Department of Agrarian Reform v. Goduco,353 and Land Bank of the
Philippines v. Santiago, Jr.354
cralawrednad

On June 21, 2013, the BSP issued Circular No. 799,355 pursuant to MB Resolution No. 796 dated May 16,
2013, reducing the legal interest on loans and forbearance of money from 12% to 6% per annum. BSP
Circular No. 799 took effect on July 1, 2013.

In the present case, the Government filed a complaint for expropriation of the NAIA-IPT III on December 21,
2004. On the same day, the RTC issued a writ of possession in favor of the Government upon the deposit of
P3,002,125,000.00 with the Land Bank. In Gingoyon, the Court held in abeyance the implementation of the
writ of possession pending the direct payment of the proffered value of P3,002,125,000.00 to PIATCO.

On September 11, 2006, the RTC reinstated the writ of possession after the Government tendered PIATCO a
check in this amount.

Page 103 of 169

On April 11, 2012, the MIAA and the Land Bank entered into an escrow agreement in the amount of
$82,157,716.73. On the same date, the MIAA and the DBP likewise executed an escrow agreement in the
amount of $34,190,924.59.

Based on these factual circumstances, interest shall accrue as follows:

1. The principal amount of just compensation shall be appraised on the date of the filing of the
complaint for expropriation or on December 21, 2004. The just compensation shall not earn interest
from December 21, 2004, until September 10, 2006, since the Government did not take possession
of the NAIA-IPT III during this period.

2. The difference between the principal amount of just compensation and the proffered value of
P3,002,125,000.00 shall earn legal interest of 12% per annum from the date of taking or
September 11, 2006 until June 30, 2013.

3. The difference between the principal amount of just compensation and the proffered value of
P3,002,125,000.00 shall earn legal interest of 6% per annum from July 1, 2013, until the finality of
the Courts ruling.

4. The total amount of just compensation shall earn legal interest of 6% per annum from the finality of
the Courts ruling until full payment.

The execution of the escrow agreements shall not affect the accrual of interest in this case. In its
Manifestation and Motion dated July 8, 2011, the Government stated that the escrow accounts shall be
subject to the condition that [t]he claimant(s) shall have been held to be entitled to receive the sum
claimed from the Just Compensation (NAIA Terminal 3) Fund in accordance with Philippine law and
regulation, by a final, binding and executory order or award of the expropriation court.356 cralawrednad

Clearly, the Government does not intend to pay the just compensation due to either PIATCO or
Takenaka and Asahikosan during the pendency of the expropriation case or until the finality of
the Courts rulings in G.R. Nos. 209917, 209696 & 209731.

7.b. PIATCO is not entitled to

the fruits and income of the
NAIA-IPT III.

PIATCO insists that aside from the interest on just compensation, it is also entitled to all income generated
from the operations of the NAIA-IPT III, from the date of taking up to the present.

PIATCOs claim is unmeritorious. The State, by way of interest, makes up for the shortfall in the owners
earning potential and the absence of replacement property from which income can be derived. This is
because the interest awarded by the expropriation court is, in reality, the equivalent of the fruits or income
of the seized property.357 In fact, PIATCO itself admitted in its petition in G.R. No. 209731 that the interest
on just compensation already answers for the loss of income that the owner suffered as a result of the
States deprivation of the ordinary use of his property.358
cralawrednad

Thus, we cannot allow PIATCO to profit from the operation of the NAIA-IPT III whose funds are sourced from
the public coffers. Otherwise, PIATCO would be doubly compensated and unjustly enriched to the detriment
of the taxpayers.

8. The BOCs Expenses

8.a. Takenaka and Asahikosan should

not share in the BOCs expenses.

Takenaka and Asahikosan refuse to share in the expenses of the BOC. They argue that pursuant to Section
12, Rule 6 of the Rules of Court, the Government should solely shoulder the costs incurred in the
expropriation case.

The Government, on the other hand, asserts that Section 1, Rule 142 of the Rules of Court explicitly

Page 104 of 169

authorizes the expropriation court to order the parties to equally share the costs of an action. Hence, the
court can require third-party intervenors, i.e., Takenaka and Asahikosan, to share in the expenses of the
BOC. It points out that PIATCO already shared in the expenses of the BOC and tendered the sum of
P2,550,000.00 to the RTC.

We find no merit in the Governments assertion.

The relevant rule is found in Section 12, Rule 67 of the Rules of Court which provides: ChanRoblesvirtualLawlibrary

SEC. 12. Costs, by whom paid. The fees of the commissioners shall be taxed as a part of the costs of the
proceedings. All costs, except those of rival claimants litigating their claims, shall be paid by
the plaintiff, unless an appeal is taken by the owner of the property and the judgment is
affirmed, in which event the costs of the appeal shall be paid by the owner. [Emphasis supplied]

This provision specifically deals with the costs of eminent domain cases. Hence, we find that Section 1, Rule
142 of the Rules of Court, more specifically, the statement allowing the court to divide the costs of an action
to either party to the case, is inapplicable to the present case.

Based on the clear terms of Section 12, Rule 67, it is the plaintiff in this case, the Government not the
property owner or third-party intervenors, i.e.,Takenaka and Asahikosan, who shall shoulder the costs of the
expropriation before the court of origin. Since the expenses of the BOC form part of the costs of the suit
as these are expenses necessary in prosecuting or defending an action or a distinct proceeding within an
action the Government solely bears the expenses of the BOC. The property owner shall only bear
the costs of the appeal if he loses in his appeal.

PIATCO, in its pleading, has not questioned its share in the expenses of the BOC before the Court. PIATCOs
voluntary sharing in the expenses of the BOC and its non-objection to its payment amount to a waiver of its
right not to share in the expenses of the BOC.

In sum, just compensation shall be computed as shown below:ChanRoblesvirtualLawlibrary

Base Current Cost Valuation (Inclusive of Attendant $ 300,206,693.00

Cost)
ADD:
Excess Concession Space $ 1,081,272.00
Four-Level Retail Complex $ 12,809,485.00
Exclusions due to Structural Issues $ 20,713,901.00
LESS:
Depreciation $ 1,738,318.00
Deterioration $ 35,076,295.00
REPLACEMENT COST AS OF DECEMBER 2002 $ 297,996,738.00
MULTIPLY:
Inflation Rate of 1.0971
REPLACEMENT COST AS OF DECEMBER 21, 2004 $ 326,932,221.26
ADD:
Interests from September 11, 2006 to December 2014 $ 242,810,918.54

Page 105 of 169

LESS:
Proffered Value $ 59,438,604.00
JUST COMPENSATION AS OF DECEMBER 31, 2014 $ 510,304,535.80

Period Formula Numbe Intere Principal Straight

r st Amount Interest
of Rate
Days
Septemb principal*rate*(113/ 113 12% $267,493,617 $9,937,571.1
er 11, 365) days .26 0
2006 to

Decemb
er 31,
2006
January principal*rate 365 12% $267,493,617 $32,099,234.
1, 2007 days .26 07
to

Decemb
er 31,
2007
January principal*rate 365 12% $267,493,617 $32,099,234.
1, 2008 days .26 07
to

Decemb
er 31,
2008
January principal*rate 365 12% $267,493,617 $32,099,234.
1, 2009 days .26 07
to

Decemb
er 31,
2009
January principal*rate 365 12% $267,493,617 $32,099,234.
1, 2010 days .26 07
to

Page 106 of 169

Decemb
er 31,
2010
January principal*rate 365 12% $267,493,617 $32,099,234.
1, 2011 days .26 07
to
Decemb
er 31,
2011
January principal*rate 365 12% $267,493,617 $32,099,234.
1, 2012 days .26 07
to
Decemb
er 31,
2012
January principal * rate * 181 12% $267,493,617 $15,917,702.
1, 2013 (181/365) days .26 38
to
June
30, 2013
July 1, principal*rate* 189 6% $267,493,617 $8,310,623.6
2013 to (189/365) days .26 2

Decemb
er 31,
2013
January principal*rate 365 6% $267,493,617 $16,049,617.
1, 2014 days .26 04
to
Decemb
er 31,
2014
Total $242,810,918
.54

Formula Principal Total Interest Just Compensation as of

Amount from December 31, 2014
September 11,
2006
to December 31,

Page 107 of 169

 2014
Principal
Amount
$267,493,617.26 $ 242,810,918.54 $510,304,535.80
+
Interest

9. PIATCO as the Lawful Recipient of Just Compensation.

After determining the amount of just compensation, we next resolve the question of who shall receive the
full amount of just compensation.

Takenaka and Asahikosan contend that as actual builders of the NAIA-IPT III, they are lawfully entitled to
receive just compensation. They pray that just compensation of at least $85,700,000.00 be set aside
through an escrow account or other means, in their favor, to answer for their pending money claims against
PIATCO in G.R. No. 202166.

PIATCO, on the other hand, bases its claim for just compensation on its ownership of the NAIA-IPT III and
on the ruling in Agan and Gingoyon that PIATCO should be fully compensated as the builder and owner of
the NAIA-IPT III.

For its part, the Government refuses to make further payments to PIATCO. Instead, it created an escrow
account in favor of the entitled claimants of just compensation. The Government fears that the NAIA-IPT
III would still be burdened with liens and mortgages as a result of PIATCOs indebtedness to other entities
even after it pays PIATCO the full amount of just compensation.

9.a. Takenaka and Asahikosans

intervention in the case as unpaid
subcontractors is proper.

The defendants in an expropriation case are not limited to the owners of the property condemned. They
include all other persons owning, occupying, or claiming to own the property. Under Sections 8 and 14 of RA
8974 IRR, in relation with Section 9, Rule 67 of the Rules of Court, all persons who claim to have lawful
interest in the property to be condemned should be included as defendants in the complaint for
expropriation:ChanRoblesvirtualLawlibrary

Section 8 of RA 8974 IRR. Expropriation. If the owner of a private property needed by the government
implementing agency does not agree to convey his property to the government by any of the foregoing
modes of acquiring and/or transferring ownership of the property, then the government shall exercise its
right of eminent domain by filing a complaint with the proper Court for the expropriation for the private
property.

The verified complaint shall state with certainty the right and purpose of expropriation, describe the real or
personal property sought to be expropriated, and join as defendants all persons owning or claiming to own,
or occupying, any part thereof or interest therein, showing as far as practicable, the interest of each
defendant separately. If the title to any property sought to be condemned appears to be in the
name of the Republic of the Philippines, although occupied by private individuals, or if the title is
otherwise obscure or doubtful so that the plaintiff cannot with accuracy or certainty specify the
real owners, averment to that effect may be made in the complaint.

Section 14 of RA 8974 IRR. Trial Proceedings. Within sixty (60)-day period prescribed by the Act, all
matters regarding defences 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.

Section 9, Rule 67 of the Rules of Court. Uncertain ownership; conflicting claims. If the ownership of
the property taken is uncertain, or there are conflicting claims to any part thereof, the court may order

Page 108 of 169

any sum or sums awarded as compensation for the property to be paid to the court for the
benefit of the person adjudged in the same proceeding to be entitled thereto. But the judgment
shall require the payment of the sum or sums awarded to either the defendant or the court
before the plaintiff can enter upon the property, or retain it for the public use or purpose if entry
has already been made. (9a) (Emphasis supplied)

All persons who have lawful interest in the property sought to be expropriated should be impleaded in the
complaint for purposes of determining who shall be entitled to just compensation. If a known owner
is not joined as defendant, he may intervene in the proceeding. If the owner is joined but not served with
process and the proceeding is already closed before he came to know of the condemnation, he may maintain
an independent suit for damages.

Consequently, Takenaka and Asahikosan are correct in invoking Section 9, Rule 67 of the Rules of Court for
purposes of determining who shall be entitled to just compensation in this case. This rule is likewise their
proper basis of intervention in the RTCs March 12, 2007 order in Civil Case No. 04-0876.

Our ruling on this point does not contradict Section 4 (a) of RA 8974 which provides for a scheme of direct
and immediate initial payment to the property owner in cases involving national government
infrastructure projects.

Section 4 (a) of RA 8974 applies only to cases where the issue of ownership of the expropriated property is
not disputed. In cases where the ownership is contested; where conflicting claims or interests over the
expropriated property exist; or where there are other incidents affecting the complaint for expropriation, the
governing rule is Section 9, Rule 67 of the Rules of Court. By creating a separate provision applicable only to
the latter cases, Section 14 of RA 8974 IRR359 necessarily acknowledged that the scheme of immediate and
direct initial payment is not an absolute and all-encompassing rule applicable in all circumstances.

We are aware of our pronouncement in the December 19, 2005 Gingoyon decision directing the
Government to directly and immediately pay PIATCO the proffered value of P3 billion. We rendered the
December 19, 2005 Decision based on the fact that Takenaka and Asahikosan were not yet parties to
G.R. No. 166429 and Civil Case No. 04-0876 at that time. The Court denied Takenaka and
Asahikosans motions for leave to intervene in our February 1, 2006 Resolution in Gingoyon for palpable
violation of Section 2, Rule 19 of the Rules of Court which only allows intervention before the rendition of
judgment by the court. Moreover, Takenaka and Asahikosan had not yet instituted Civil Case No. 06-
171 (the enforcement case) when we promulgated our rulings in Gingoyon.

The RTCs issuance of the March 12, 2007 order, which is binding on the parties and which allows Takenaka
and Asahikosan to intervene in the case, changed the factual circumstances of this case. As an incident in
our determination of the just compensation, we necessarily should resolve the issue of NAIA-IPT IIIs
ownership and the question of who the recipient of the just compensation should be.

9.b. The property owner is entitled

to just compensation.

Citing Agan, Takenaka and Asahikosan argue that the Court intended that the real builders of the NAIA-IPT
III should be paid just compensation. Takenaka and Asahikosan assert that they are the entities who
actually built the NAIA-IPT III pursuant to the Onshore Construction and Offshore Procurement Contracts.
In Agan, the Court declared that PIATCO is the builder of the NAIA-IPT III. The Court stated: ChanRoblesvirtualLawlibrary

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 cannot unjustly enrich
itself at the expense of PIATCO and its investors.360

This finding is likewise affirmed in our February 1, 2006 Resolution in Gingoyon where we declared: ChanRoblesvirtualLawlibrary

The Court is not wont to reverse its previous rulings based on factual premises that are not yet conclusive or
judicially established. Certainly, whatever claims or purported liens Takenaka and Asahikosan against
PIATCO or over the NAIA 3 have not been judicially established. Neither Takenaka nor Asahikosan are
parties to the present action, and thus have not presented any claim which could be acted upon by this
Court. The earlier adjudications in Agan v. PIATCO made no mention of either Takenaka or Asahikosan, and

Page 109 of 169

certainly made no declaration as to their rights to any form of compensation. If 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.

It must be emphasized that the conclusive ruling in the Resolution dated 21 January 2004
in Agan v. PIATCO (Agan 2004) is that PIATCO, as builder of the facilities, must first be justly
compensated in accordance with law and equity for the Government to take over the facilities. It
is on that premise that the Court adjudicated this case in its 19 December 2005 Decision.

While the Government refers to a judgment rendered by a London court in favor of Takenaka and
Asahikosan against PIATCO in the amount of US$82 Million, it should be noted that this foreign
judgment is not yet binding on Philippine courts. It is entrenched in Section 48, Rule 39 of the
Rules of Civil Procedure that a foreign judgment on the mere strength of its promulgation is not
yet conclusive, as it can be annulled on the grounds of want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact. It is likewise recognized in Philippine
jurisprudence and international law that a foreign judgment may be barred from recognition if it
runs counter to public policy.

Assuming that PIATCO indeed has corresponding obligations to other parties relating to NAIA 3,
the Court does not see how such obligations, yet unproven, could serve to overturn the Decision
mandating that the Government first pay PIATCO the amount of 3.02 Million Pesos before it may
acquire physical possession over the facilities. This directive enjoining payment is in accordance
with Republic Act No. 8974, and under the mechanism established by the law the amount to be
initially paid is that which is provisionally determined as just compensation. The provisional
character of this payment means that it is not yet final, yet sufficient under the law to entitle the
Government to the writ of possession over the expropriated property.

There are other judicial avenues outside of this Motion for Reconsideration wherein all other
claims relating to the airport facilities may be ventilated, proved and determined. Since such
claims involve factual issues, they must first be established by the appropriate trier of facts
before they can be accorded any respect by or binding force on this Court.361 [Emphasis supplied]

Contrary to Takenaka and Asahikosans position, in the Philippine jurisdiction, the person who is solely
entitled to just compensation is the owner of the property at the time of the taking.362As shown below,
the test of who shall receive just compensation is not who built the terminal, but rather who its true owner
is.

From the express provision of Section 4 of RA 8974, just compensation shall only be paid to the property
owner. We implead persons with lawful interests in the property in order to determine the person who shall
receive just compensation. Note that the last paragraph, Section 4 of RA 8974 states: When thedecision
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. This provision
thus envisions a situation where the court determines with finality, for purposes of payment of just
compensation, the conflicting claims of the defendants and intervenors.

The cases cited by Takenaka and Asahikosan are inapplicable to justify their right to receive just
compensation. The Court did not award just compensation to a non-owner in De Knecht v. Court of
Appeals.363 The Court held in that case that a person who had no legal interest in the property at the time of
the filing of a complaint for expropriation had no right to intervene in the case. The Court ruled that only
persons who have lawful interests in the property may be impleaded as defendants or may intervene in the
expropriation case under Section 1, Rule 67 of the Rules of Court. This case thus, at most, support their
right to intervene.

In Calvo v. Zandueta,364 the Court stayed the execution of the trial courts judgment ordering the provincial
treasurer of Pangasinan to pay Aquilino Calvo just compensation due to the pendency of the interpleader
that Juana Ordoez brought based on her own claim of ownership of the expropriated land. Ordoez
asserted that she acquired all rights and interests on the subject land when she purchased it during the
execution sale while the expropriation proceedings were still pending.

Philippine Veterans Bank v. Bases Conversion Development Authority365 further affirms the rule that just
compensation shall only be paid to the owner of the expropriated property at the time of taking. In that
case, the Court held that the trial court may order the payment of just compensation to itself pending the

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adjudication of the issue of ownership in other proceedings pursuant to Section 9, Rule 67 of the Rules of
Court.

The Court likewise did not award just compensation to a non-owner in Republic v. Mangotara.366 The Court
held that the filing of a supplemental complaint for expropriation impleading private parties does not
necessarily amount to an admission that the parcels of land sought to be expropriated are privately owned.
The Republic merely acknowledged that there are private persons also claiming ownership of the parcels of
land. The Republic can still consistently assert, in both actions for expropriation and reversion, that the
subject parcels of land are part of the public domain.

The record of the present case show that PIATCO has been the original contracting party commissioned by
the Government to construct the NAIA-IPT III based on a build-operate-transfer arrangement and who, in
this capacity, contracted out the actual construction to Takenaka and Asahikosan. Thus, when the NAIA-IPT
III was built, it was in PIATCOs name and account, although it subsequently owed sums to subcontractors,
incurred in the course of the construction. From this perspective, PIATCO has been the owner recognized as
such by the Government although the basis of its contractual relationship with the Government was later on
nullified. Takenaka and Asahikosan, on the other hand, had always been subcontractors with whom the
Government did not have any formal link. These facts indubitably show that PIATCO has been the owner of
the NAIA-IPT III entitled to receive the just compensation due. Takenaka and Asahikosan for their part,
have not shown that they possess legal title or colorable title to the NAIA-IPT III that would defeat PIATCOs
ownership.

To recap and expound on the matter: ChanRoblesvirtualLawlibrary

First, Takenaka and Asahikosan were mere subcontractors in the nullified NAIA-IPT III project. That
Takenaka and Asahikosan actually built the NAIA-IPT III does not make them the owner of the terminal
building.

We carefully point out that our finding in this case that Takenaka and Asahikosan are the actual builders of
the NAIA-IPT III does not contravene our rulings in Agan and Gingoyon that PIATCO is the builder of the
NAIA-IPT III. The word builder is broad enough to include the contractor, PIATCO, and the
subcontractors, Takenaka and Asahikosan, in the nullified NAIA-IPT III project. Republic Act No.
4566367 defines a builder as follows:
ChanRoblesvirtualLawlibrary

Section 9 (b) of RA 4566. Contractor is deemed synonymous with the term builder and, hence, any
person who undertakes or offers to undertake or purports to have the capacity to undertake or submits a bid
to, or does himself or by or through others, construct, alter, repair, add to, subtract from, improve, move,
wreck or demolish any building, highway, road, railroad, excavation or other structure, project, development
or improvement, or to do any part thereof, including the erection of scaffolding or other structures or works
in connection therewith. The term contractor includes subcontractor and specialty contractor.

In Gingoyon, the Court loosely used the word builder and owner interchangeably. We clarify, however,
that a builder is different from the owner of the property. As we stated above, a builder includes the
contractor and the subcontractor. On the other hand, the owner who is constitutionally entitled to just
compensation is the person who has legal title to the property. Logically, a builder is not necessarily the
owner of the property and vice-versa.

Second, we cannot recognize Takenaka and Asahikosans claimed liens over the NAIA-IPT III in this just
compensation case. Since G.R. No. 202166 is still pending before the Court, we cannot conclusively rule that
Takenaka and Asahikosan are unpaid creditors of PIATCO without pre-empting the Courts ruling in the
enforcement case.

Even assuming that Takenaka and Asahikosan as unpaid contractors in the botched NAIA-IPT III
construction contract indeed have liens over the NAIA-IPT III, PIATCO is still the property owner who, as
such, should directly receive just compensation from the Government.

We clarify that the expropriation courts determination of the lawful property owner is merely provisional.
By filing an action for expropriation, the condemnor merely serves notice that it is taking title to and
possession of the property, and that the defendant is asserting title to or interest in the property, not to
prove a right to possession, but to prove a right to compensation for the taking. The Courts
disposition with respect to the ownership of the property is not conclusive, and it remains open to
challenge through proper actions. The courts resolution of the title to the land at the time of taking has no

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legal consequences beyond the eminent domain proceedings. The courts decision cannot be pleaded as a
defense of res judicata or collateral estoppel in any action to determine title to the property.

As we explained in Republic of the Philippines v. Samson-Tatad:368 cralawrednad

However, the authority to resolve ownership should be taken in the proper context. The
discussion in Republic was anchored on the question of who among the respondents claiming
ownership of the property must be indemnified by the Government:

Now, to determine the person who is to be indemnified for the expropriation of Lot 6, Block 6, Psd-2017, the
court taking cognizance of the expropriation must necessarily determine if the sale to the Punzalan spouses
by Antonio Feliciano is valid or not. For if valid, said spouses must be the ones to be paid by the condemnor;
but if invalid, the money will be paid to someone else. x x x

Thus, such findings of ownership in an expropriation proceeding should not be construed as final
and binding on the parties. By filing an action for expropriation, the condemnor (petitioner),
merely serves notice that it is taking title to and possession of the property, and that the
defendant is asserting title to or interest in the property, not to prove a right to possession, but
to prove a right to compensation for the taking.

If at all, this situation is akin to ejectment cases in which a court is temporarily authorized to
determine ownership, if only to determine who is entitled to possession. This is not conclusive,
and it remains open to challenge through proper actions. The consequences of Sec. 9, Rule 67
cannot be avoided, as they are due to the intimate relationship of the issue of ownership with the
claim for the expropriation payment. (Emphasis supplied)

9.c. A final disposition in the eminent

domain case with respect to the order of
payment to a particular person shall be
final and executory.

To avoid future litigation, we emphasize that a final disposition in the eminent domain case with
respect to the order to pay a particular person shall be final and executory upon the lapse of
relevant periods under Rule 39 of the Rules of Court. The recourse of the person claiming ownership
over the expropriated property in any subsequent case is against the adjudged property owner in the
expropriation case.

The principle of res judicata applies in this particular matter because the issues on the amount of just
compensation and the person to be paid just compensation are the central issues in the second
phase of expropriation. Based on this principle, a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on points and
matters determined in the former suit.369 cralawrednad

There would be no end to litigation in an eminent domain case if we rule otherwise; we would only foment
mockery of the judicial proceedings as the order of payment in the eminent domain case would never be
truly final and executory. Furthermore, to the detriment of the public, interest would continue to accrue on
just compensation if we rule that the order of payment to a particular recipient can be reversed in the
subsequent judicial proceedings and is, indeed, reversed in the subsequent case. This would be unfair to the
State (and the public) that merely exercised its immutable right to exercise the power of eminent domain.

Contrary to Takenaka and Asahikosans claim, in Calvo v. Zandueta,370 the Court did not stay the
execution of a final and executory ruling in the eminent domain case during the pendency of the
interpleader case.

A close reading of Calvo shows that the order of payment of just compensation in that case was
not yet final and executory.

In November 1924, the municipality of San Quintin, Pangasinan filed an action for expropriation of a parcel
of land owned by Aquilino Calvo and with a Certificate of Title No. 25100.

On November 25, 1925, the Court of First Instance (CFI) approved the commissioners valuation of the
subject land in the sum of P6,943.25. The municipality of San Quintin appealed the case but subsequently

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withdrew the appeal on June 23, 1926. The CFI approved the withdrawal of appeal on July 20, 1926.

In the meantime, Juana Ordoez levied on the subject land after she obtained a favorable judgment against
Calvo. The levy was recorded on the certificate of title on December 23, 1925. Thereafter, the sheriff sold
the subject land to Ordoez in an execution sale. On January 23, 1926, the sale was duly entered by
memorandum on the certificate of title. On the same date, Ordoez filed a motion for substitution as a
defendant in the expropriation case on the ground that she acquired all the rights and interests of Calvo on
the subject land.

On June 29, 1926, the CFI declared the November 25, 1925 decision final and ordered the provincial
treasurer of Pangasinan to pay Calvo a part of just compensation. The following day, Ordoez filed a
motion praying for the revocation of the June 29, 1926 order and for the provincial treasurer of Pangasinan
to retain the award of just compensation.

On July 20, 1926, the CFI revoked the June 29, 1926 order and ordered the provincial treasurer of
Pangasinan to retain the money until further orders of the court. After the CFI denied Calvo et al.s motion
for reconsideration, they filed a petition for certiorari before the Court.

The Court denied the petition. The Court ruled that assuming that the judgment of November 25, 1925,
constituted a final determination of the petitioners right to receive the award, Ordoez was not a party to
the expropriation case and, therefore, could not be bound by the judgment. Ordoez claim that she stands
subrogated to Calvos right to just compensation has the appearance of validity. The judicial determination
of her claim may be adjudicated in an action for interpleader which was then pending when the motion for
substitution was filed. Consequently, the trial court correctly stayed the execution of the judgment in the
expropriation case. Whenever necessary to promote the ends of justice, courts have the power to
temporarily stay executions of judgments rendered by them.

Clearly, the November 25, 1925 decision in Calvo was not yet final and executory when the Court suspended
the execution of that ruling. The July 29, 1926 order revoked the June 29, 1926 order which in turn
declared the finality of the November 25, 1925 decision of the CFI. Ordoez filed a motion for the reversal of
the June 29, 1926 order prior to the CFIs withdrawal of appeal on July 20, 1926. Significantly, the CFI
approved the withdrawal of appeal on the same date that the CFI revoked the June 29, 1926 order and
ordered the provincial treasurer of Pangasinan to withhold the just compensation. There is thus no basis
to Takenaka and Asahikosans claim that the execution of a final and executory judgment on just
compensation may be suspended if there is still a subsisting case regarding the disputed
ownership of the expropriated property.

9.d. The determination of whether the

NAIA-IPT III shall be burdened by liens and
mortgages even after the full payment of just
compensation is still premature.

The determination of whether the NAIA-IPT III shall be burdened by liens and mortgages even after the full
payment of just compensation is still premature. The enforceability of Claim Nos. HT-04-248 and HT-05-269
in this jurisdiction has yet to be decided by the Court in G.R. No. 202166. Furthermore, the application of
Article 2242 of the Civil Code371 presupposes that PIATCO declared insolvency or has been declared
insolvent. This, of course, should be litigated in insolvency proceedings, not in the present eminent domain
case.

The Court cannot pass upon the validity and enforceability of civil claims against PIATCO by creditor/s in an
expropriation case or the existence of liens on the NAIA-IPT III. Section 114 of Republic Act No.
10142372 provides: ChanRoblesvirtualLawlibrary

Section 114. Rights of Secured Creditors. The Liquidation Order shall not affect the right of a secured
creditor to enforce his lien in accordance with the applicable contract or law. A secured creditor may: ChanRoblesvirtualLawlibrary

(a) waive his right under the security or lien, prove his claim in the liquidation proceedings and share in the
distribution of the assets of the debtor; or

(b) maintain his rights under the security or lien: ChanRoblesvirtualLawlibrary

If the secured creditor maintains his rights under the security or lien: cralawlawlibrary

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(1) the value of the property may be fixed in a manner agreed upon by the creditor and the liquidator. When
the value of the property is less than the claim it secures, the liquidator may convey the property to the
secured creditor and the latter will be admitted in the liquidation proceedings as a creditor for the balance. If
its value exceeds the claim secured, the liquidator may convey the property to the creditor and waive the
debtor's right of redemption upon receiving the excess from the creditor;

(2) the liquidator may sell the property and satisfy the secured creditor's entire claim from the proceeds of
the sale; or

(3) the secure creditor may enforce the lien or foreclose on the property pursuant to applicable laws.
10. The exercise of eminent domain from the perspective of taking.

10.a. The Government may take the property

for public purpose or public use upon the
issuance and effectivity of the writ of possession.

To clarify and to avoid confusion in the implementation of our judgment, the full payment of just
compensation is not a prerequisite for the Governments effective taking of the property. As
discussed above, RA 8974 allows the Government to enter the property and implement national
infrastructure projects upon the issuance of the writ of possession. When the taking of the property
precedes the payment of just compensation, the Government shall indemnify the property owner by way of
interest.

Taking under the power of eminent domain means entering upon private property for more than a
momentary period, and under the warrant or color of legal authority, devoting it to public use, or otherwise
informally appropriating or injuriously affecting it in such a way as substantially to oust the owner and
deprive him of all beneficial enjoyment thereof.373 cralawrednad

Taking of property takes place when: (1) the owner is actually deprived or dispossessed of his property;
(2) there is a practical destruction or a material impairment of the value of his property; (3) the owner is
deprived of the ordinary use of the property, or (4) when he is deprived of the jurisdiction, supervision and
control of his property.374
cralawrednad

The taking of property is different from the transfer of the property title from the private owner
to the Government. Under Rule 67 of the Rules of Court, there are two phases of expropriation: (a) the
condemnation of the property after it is determined that its acquisition will be for a public purpose or public
use; and (b) the determination of just compensation to be paid for the taking of private property to be made
by the court with the assistance of not more than three commissioners.

The first phase is concerned with the determination of the Governments authority to exercise the power of
eminent domain and the propriety of its exercise in the context of the facts involved in the suit. The court
declares that the Government has a lawful right to take the property sought to be condemned, for the public
use or purpose described in the complaint.375 cralawrednad

The second phase relates to the just amount that the Government shall compensate the property
owner. 376cralawrednad

Whenever the court affirms the condemnation of private property in the first phase of the proceedings, it
merely confirms the Governments lawful right to take the private property for public purpose or
public use. The court does not necessarily rule that the title to the private property likewise vests on the
Government.

The transfer of property title from the property owner to the Government is not a condition
precedent to the taking of property. The State may take private property prior to the eventual transfer
of title of the expropriated property to the State.

In fact, there are instances when the State takes the property prior to the filing of the complaint for
expropriation or without involving the transfer of title.377 In People v. Fajardo,378 the Court ruled that the
municipal mayors refusal to give the property owner the permission to build a house on his own land on the
ground that the structure would destroy the beauty of the public plaza amounts to the taking of the property
requiring just compensation.

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In National Power Corporation (NPC) v. Spouses Malit,379 the NPCs transmission lines had to pass the
Spouses Malits property. The Court ruled that the NPCs easement of right-of-way on the land was
equivalent to the taking of property. The limitation imposed by the NPC against the use of the land for an
indefinite period deprived the Spouses Malit of the lots ordinary use. Consequently, the NPC shall give the
Spouses Malit just compensation.

The reckoning period, however, of the valuation of just compensation is the date of taking or the filing of the
complaint for expropriation, whichever is earlier. In either case, it is only after the finality of the second
stage and after the payment of just compensation that the title shall pass to the Government. As we have
ruled in Gingoyon, the title to the property does not pass to the condemnor until just compensation
is paid.

Under Section 4 of RA 8974, the Government is only entitled to a writ of possession upon initial payment of
just compensation to the defendant, and upon presentment to the court of a certificate of availability of
funds.

A writ of possession does not transfer title to the Government; it is a writ of execution employed to enforce
a judgment to recover the possession of land. It commands the sheriff to enter the land and give its
possession to the person entitled under the judgment.380 Section 4 of RA 8974 further states that the writ
of possession is an order to take possession of the property and to start the implementation of the
project, to wit:ChanRoblesvirtualLawlibrary

Section 4. Guidelines for Expropriation Proceedings. Whenever it is necessary to acquire real property for
the right-of-way or location for any national government infrastructure project through expropriation, the
appropriate implementing agency shall initiate the expropriation proceedings before the proper court under
the following guidelines:ChanRoblesvirtualLawlibrary

(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;
(b)In provinces, cities, municipalities and other areas where there is no
zonal valuation, the BIR is hereby mandated within the period of sixty
(60) days from the date of the expropriation case, to come up with a
zonal valuation for said area; and
(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 compliance 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.

In the event that the owner of the property contests the implementing agencys 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. (Emphasis supplied)

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The Government is provisionally authorized to take the property for public purpose or public use whenever
the court issues a writ of possession in favor of the Government. It may take possession of the property or
effectively deprive the property owner of the ordinary use of the property. If the court, however, later on
determines that the State has no right of expropriation, then the State shall immediately restore the
defendant of the possession of the property and pay the property owner damages that he sustained. Section
11, Rule 67 of the Rules of Court: ChanRoblesvirtualLawlibrary

Section 11. Entry not delayed by appeal; effect of reversal. The right of the plaintiff to enter upon the
property of the defendant and appropriate the same for public use or purpose shall not be delayed by an
appeal from the judgment. But if the appellate court determines that plaintiff has no right of expropriation,
judgment shall be rendered ordering the Regional Trial Court to forthwith enforce the restoration to the
defendant of the possession of the property, and to determine the damages which the defendant sustained
and may recover by reason of the possession taken by the plaintiff. (11a)

The States taking of the property is not based on trust or contract, but is founded on its inherent power to
appropriate private property for public use. It is also for this reason to compensate the property owner for
the deprivation of his right to enjoy the ordinary use of his property until the naked title to the property
passed to the State that the State pays interest from the time of the taking of the property until full
payment of just compensation.

This conclusion is consistent with the dispositive portion of our ruling in Gingoyon where we authorized the
Government to perform acts that are essential to the operation of the NAIA-IPT III as an international
airport terminal upon the effectivity of the writ of possession. The authority granted to the Government
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.

The present case involves the second stage of expropriation or the determination of replacement cost of the
NAIA-IPT III. The first stage has become final after the promulgation of the December 19, 2005 decision and
the February 1, 2006 resolution in Gingoyon where we affirmed the Governments power to expropriate the
NAIA-IPT III and where we ordered the issuance of a writ of possession upon the Governments direct
payment of the proffered value of P3 billion to PIATCO. Thus, the reinstatement of the writ of
possession on September 11, 2006, empowered the Government to take the property for public
use, and to effectively deprive PIATCO of the ordinary use of the NAIA-IPT III.

B. G.R. No. 181892

The issue on the appointment of

an independent appraiser is already moot
and academic.

In G.R. No. 181892, the RTC, in its order dated May 5, 2006, ordered the appointment of an independent
appraiser to conduct the valuation of the NAIA-IPT III upon the BOCs request. Thereafter, the Government
and PIATCO submitted their lists of nominees to this position. On May 3, 2007, the RTC engaged the
services of DG Jones and Partners as an independent appraiser. On May 18, 2007, the RTC directed the
Government to submit a Certificate of Availability of Funds to cover DG Jones and Partners $1.9 Million
appraisal fee.

The Government disputed the May 3 and 18, 2007 orders and argued that the RTC had no power to appoint
an independent appraiser. The Government insisted that the RTC should exclusively choose among its
nominees pursuant to Section 7 of RA 8974 as well as Sections 10 and 11 of RA 8974 IRR.

The RTC sustained the appointment of DG Jones and Partners in an order dated January 7, 2008. The RTC
ruled that its power to appoint the members of the BOC under Section 5, Rule 67 of the Rules of Court was
broad enough as to include the appointment of an independent appraiser.

On February 6, 2008, the Government filed a petition for certiorari with prayer for the issuance of a
temporary restraining order and/or a writ of preliminary injunction before the Court assailing the May 3,
2007; May 18, 2007; and January 7, 2008 orders (G.R. No. 181892).

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On January 9, 2008, the Court issued a temporary restraining order against the implementation
of the May 3, May 18, and January 7, 2008 orders.

On August 5, 2010, the RTC ordered the parties to submit their appraisal reports of the NAIA-IPT III. The
Government, PIATCO, Takenaka and Asahikosan separately hired their own appraisers who came up with
their different valuations of the NAIA-IPT III.

On March 31, 2011, the BOC submitted its Final Report recommending the payment of just compensation in
the amount of $376,149,742.56. On May 23, 2011, the RTC rendered a decision ordering the Government to
pay PIATCO just compensation in the amount of $116,348,641.10. The CA modified the RTC ruling and held
that the just compensation as of July 31, 2013, amounts to $371,426,742.24.

These developments render the appointment of DG Jones and Partners as an independent

appraiser of the NAIA-IPT III ineffective. An appraiser is a person selected or appointed by competent
authority to ascertain and state the true value of goods or real estate. 381 The purpose of appointing DG
Jones and Partners as an independent appraiser was to assist the BOC in appraising the NAIA-IPT III. In
fact, the BOC requested the RTC to engage the services of an independent appraiser because the BOC had
no technical expertise to conduct the valuation of the NAIA-IPT III. In turn, the BOC was to recommend to
the RTC the replacement cost of the NAIA-IPT III. Under Section 8, Rule 67 of the Rules of Court, the RTC
may accept or reject, whether in whole or in part, the BOCs report which is merely advisory and
recommendatory in character.

We find, under the given circumstances, that the propriety of the appointment of DG Jones and
Partners and the corollary issue of who should shoulder the independent appraisers fees moot
and academic.

An actual case or controversy exists when there is a conflict of legal rights or an assertion of opposite legal
claims between the parties that is susceptible or ripe for judicial resolution. 382 A justiciable controversy must
not be moot and academic or have no practical use or value. In other words, there must be a definite and
concrete dispute touching on the legal relations of the parties who have adverse legal interests. Otherwise,
the Court would simply render an advisory opinion on what the law would be on a hypothetical state of
facts. The disposition of the case would not have any practical use or value as there is no actual substantial
relief to which the applicant would be entitled to and which would be negated by the dismissal or denial of
the petition.383cralawrednad

After the BOC submitted its Final Report on the replacement cost of the NAIA-IPT III based on the appraisal
reports and other evidence submitted by the parties, the appointment of DG Jones and Partners ceased to
serve any purpose. Any subsequent findings of DG Jones and Partners regarding the appraisal of the NAIA-
IPT III would cease to have any practical materiality since the RTC proceedings on the amount of just
compensation had already been terminated.

As with the BOC, the independent appraisers valuation of the NAIA-IPT III was advisory and
recommendatory in character. DG Jones and Partners valuation was only preliminary and was not by any
means meant to be final and conclusive on the parties. In the exercise of its judicial functions, it is the
expropriation court who has the final say on the amount of just compensation. Since the RTC has already
made a factual finding on the valuation of the NAIA-IPT III, there is no point in appointing DG Jones and
Partners as an independent appraiser. To reiterate, valuation involves a factual question that is within the
province of the expropriation court, and not the BOC or the independent appraiser. DG Jones and Partners
rule has simply been overtaken by events.

As a final note, while we stated in Gingoyon that the RTC may validly appoint commissioners in the appraisal
of the NAIA-IPT III, the trial court should have appointed commission members who possessed technical
expertise in the appraisal of a complex terminal building. Under Section 5, Rule 67 of the Rules of Court, the
BOCs main functions are to ascertain and report to the court the just compensation for the property sought
to be taken. The appointment of technical experts as commissioners would have avoided the DG Jones
aspect of the controversy as there would have been no need for the trial court to hire an independent
appraiser. This would have avoided the duplication of tasks and delay in the proceedings.

To summarize, we rule that:ChanRoblesvirtualLawlibrary

(1)The May 23, 2011 decision of the RTC in Civil Case No. 04-0876 is valid.

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 The parties were afforded procedural due process since their respective
positions, counter-positions, and evidence were considered by the trial
court in rendering the decision.
(2)Replacement cost is a different standard of valuation from fair market
value. Fair market value is the price at which a property may be sold by a
seller who is not compelled to sell and bought by a buyer who is not
compelled to buy. In contrast, replacement cost is the amount necessary
to replace the improvements/structures, based on the current market
prices for materials, equipment, labor, contractors profit and overhead,
and all other attendant costs associated with the acquisition and
installation in place of the affected improvements/structures.
(3)In computing just compensation, the Court shall use the replacement cost
method and the standards laid down in Section 5 of RA 8974 as well as
Section 10 of RA 8974. The Court shall likewise consider equity in the
determination of the just compensation due for NAIA-IPT III.
(4)The use of depreciated replacement cost method is consistent with the
principle that the property owner shall be compensated for his actual loss.
It is consistent as well with Section 10 of RA 8974 IRR which provides
that the courts shall consider the kinds and quantities of
materials/equipment used and the configuration and other physical
features of the property, among other things, in the valuation of the
NAIA-IPT III. The Government should not compensate PIATCO based on
the value of a modern equivalent asset that has the full functional utility
of a brand new asset.
(5)The amount of just compensation as of the filing of the complaint for
expropriation on December 21, 2004, is $326,932,221.26. From this sum
shall be deducted the proffered value of $59,438,604.00. The resulting
difference of $267,493,617.26 shall earn a straight interest of 12% per
annum from September 11, 2006 until June 30, 2013, and a straight
interest of 6% per annum from July 1, 2013, until full payment.
(6)PIATCO, as the owner of the NAIA-IPT III, shall solely receive the just
compensation. Based on the last paragraph, Section 4 of RA 8974 and
the prevailing jurisprudence, it is the owner of the expropriated property
who is constitutionally entitled to just compensation. Other claimants
should be impleaded or may intervene in the eminent domain case if the
ownership of the property is uncertain or there are conflicting claims on
the property pursuant to Section 9, Rule 67 of the Rules of Court.
(7)The Government may deprive PIATCO of the ordinary use of the NAIA-IPT
III upon the issuance and effectivity of the writ of possession on
September 11, 2006. However, the Government shall only have
ownership of the NAIA-IPT III after it fully pays PIATCO the just
compensation due.
(8)The expenses of the BOC, which are part of the costs, shall be shouldered
by the Government as the condemnor of the property pursuant to Section

Page 118 of 169

 12, Rule 67 of the Rules of Court. Consequently, Takenaka and
Asahikosan shall not share in the expenses of the BOC. PIATCO is
deemed to have waived its right not to share in the expenses of the BOC
since it voluntarily shared in the expenses of the BOC.
(9)The issues of the propriety of the appointment of DG Jones and Partners
as an independent appraiser in the valuation of the NAIA-IPT III and who
should shoulder DG Jones and Partners appraisal fee are already moot
and academic. The purpose of appointing DG Jones and Partners as an
independent appraiser was to assist the BOC in the appraisal of NAIA-IPT
III. As with the BOC, the independent appraisers recommendation to the
RTC was merely recommendatory and advisory in character. Since the
RTC has already ruled on the just compensation in Civil Case No. 04-
0876, the appointment of an independent appraiser no longer serves any
practical purpose.
WHEREFORE, premises considered, we PARTIALLY REVERSE the August 22, 2013 amended Decision
and the October 19, 2013 Resolution of the Court of Appeals.

1)The principal amount of just compensation is fixed at $326,932,221.26 as

of December 21, 2004. Thereafter, the amount of $267,493,617.26, which
is the difference between $326,932,221.26 and the proffered value of
$59,438,604.00, shall earn a straight interest of 12% per annum from
September 11, 2006 until June 30, 2013, and a straight interest of 6% per
annum from July 1, 2013 until full payment;
2)The Government is hereby ordered to make direct payment of the just
compensation due to PIATCO; and
3)The Government is hereby ordered to defray the expenses of the BOC in
the sum of P3,500,000.00.
We DECLARE the issue of the appointment of DG Jones and Partners as an independent appraiser of the
Ninoy Aquino International Airport Passenger Terminal III MOOT AND ACADEMIC. The temporary
restraining order issued on January 9, 2008, against the implementation of the May 3, 2007; May 18, 2007;
and January 7, 2008 orders of the Regional Trial Court of Pasay City, Branch 117 is hereby
made PERMANENT.

SO ORDERED. chanrobles virtuallawlibrary

Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Villarama, Jr., Perez, Mendoza, and Perlas-Bernabe,
JJ., concur.ChanRoblesVirtualawlibrary

Sereno, C.J., Carpio, Del Castillo, and Jardeleza, JJ., no part.

Reyes, J., on Leave.
Leonen, J., in the result see separate concurring opinion.

Endnotes:

1
In G.R. No. 209917, the Government filed a petition for review on certiorari seeking to partially reverse
the CAs August 22, 2013 Amended Decision and October 29, 2013 Resolution in CA-G.R. CV No. 98029.
In G.R. No. 209696, Takenaka and Asahikosan filed a petition for review on certiorari seeking to partially
reverse the same CA rulings. In G.R. No. 209731, PIATCO filed a petition for review on certiorari filed
seeking to reverse the same CA rulings.

Page 119 of 169

In G.R. No. 181892, the Government filed a petition for certiorari with prayer for the issuance of a
temporary restraining order assailing the January 7, 2008 order of the Regional Trial Court of Pasay City,
Branch 117 in Civil Case No. 04-0876.

2
Rollo, pp. 10-40; penned by Associate Justice Apolinario D. Bruselas, Jr., and concurred in by Associate
Justices Rebecca De Guia-Salvador and Samuel J. Gaerlan.

3
Republic Act No. 6957, as amended by Republic Act No. 7718.

Agan v. PIATCO, 450 Phil. 789 (2003).

4

5
Id. at 792-793.

6
Id. at 794.

7
Id. at 794-795.

8
Id. at 795-796.

9
Id. at 795.

10
This agreement was further supplemented by the following contracts: ChanRoblesvirtualLawlibrary

(a) First Supplement to the Agreement Re: the Ninoy Aquino International Airport Passenger Terminal III
On-Shore Construction Contract dated January 26, 2001;
(b) Second Supplement Agreement Relating to the On-Shore Construction Contract Re: the Ninoy Aquino
International Airport Passenger Terminal III On-Shore Construction Contract dated February 21, 2001;
(c) Agreement between Takenaka and Asahikosan and Fraport AG Frankfurt Airport Services Worldwide
Relating to the Deeds of Guaranteed Re: Ninoy Aquino International Airport Passenger Terminal III dated
February 21, 2001;
(d) Third Supplemental Agreement relating to the Onshore Construction Contract dated April 11, 2002; and
(e) Fourth Supplemental Agreement relating to the Onshore Construction Contract dated September 11,
2002.

See CA rollo, Volume XXXII-Q, pp. 10-155, 183-201 and 381-398.

11
The Offshore Procurement Contract was supplemented by the following agreements: ChanRoblesvirtualLawlibrary

(a) First Supplement to the Agreement Re: the Ninoy Aquino International Airport Passenger Terminal III
Off-Shore Procurement Contract dated January 26, 2001;
(b) Second Supplement Agreement relating to the Offshore Procurement Contract Re: Ninoy Aquino
International Airport Passenger Terminal III dated February 21, 2001; and
(c) Agreement between Takenaka and Asahikosan and Fraport AG Frankfurt Airport Services Worldwide
Relating to the Deeds of Guaranteed Re: Ninoy Aquino International Airport Passenger Terminal III dated
February 21, 2001;
(d) Third Supplement Agreement Relating to the Off-shore Procurement Contract Re: Ninoy Aquino
International Airport Passenger Terminal III dated April 11, 2002.
(e) Fourth Supplement Agreement relating to the Offshore Procurement Contract dated September 11,
2002.

See CA rollo, Volume XXXII-Q, pp. 183-201 and 238-398.

12
Plant, as defined in Part II (ii) of the Offshore Procurement Contract dated March 31, 2001, means
machinery, apparatus, materials, articles, intellectual property and things of all kinds to be provided under
the Concession Agreement and as specified in the Employers Requirements and including, but not limited
to, those necessary to achieve the Tender Design but excluding any Contractors Equipment (as defined in
the Construction Contract). See CA rollo, Volume XXXII-Q, p. 258.

13
CA rollo, Volume XXXII-Q, pp. 214-237.

14
Id. at 381-398.

Page 120 of 169

15
Rollo in G.R. No. 209696, Volume II, p. 415.

16
Supra note 4, at 797.

17
The Court ruled in Agan that the maximum amount that Security Bank could validly invest in the Paircargo
Consortium is only P528,525,656.55, representing 15% of its entire net worth. We concluded that the total
net worth of the Paircargo Consortium after considering the maximum amounts that may be validly
invested by each of its members is P558,384,871.55 or only 6.08% of the project cost. This amount is
substantially less than the prescribed minimum equity investment required for the project in the amount of
P2,755,095,000.00 or 30% of the project cost.

18
Supra note 4, at 744-841.

19
Agan v. PIATCO, 465 Phil. 545-586 (2004).

20
Id. at 582.

21
The case is entitled Republic of the Philippines represented by Executive Secretary Eduardo R. Ermita, the
Department of Transportation and Communications, and the Manila International Airport
Authority, Plaintiffs, -versus- Philippine Air Terminals Co., Inc., Defendant. See G.R. No. 209731, Volume I,
pp. 363-383.

Republic v. Gingoyon, 514 Phil. 678 (2005). See also RTC rollo, Volume II, pp. 1050-1066 and rollo in G.R.
22

No. 209731, Volume I, pp. 363-374.

23
411 Phil. 754-765 (2001).

24
Supra note 22, at 678-679. See also RTC rollo, Volume II, p. 1072 and rollo in G.R. No. 209731, Volume
I, pp. 384-385.

25
The MIAA held guaranty deposits in the sum of $62,343,175.77 with Land Bank for purposes of
cralawred

expropriating the NAIA-IPT III. See rollo in G.R. No. 209731, Volume I, pp. 380-382.

Supra note 22, at 679680. See also RTC rollo, Volume II, pp. 818-821 and rollo in G.R. No. 209731,
26

Volume I, pp. 390-396.

27
Supra note 22, at 680681. See also RTC rollo, Volume II, pp. 823-829.

28
The RTC appointed Dr. Fiorello R. Estuar, Atty. Sofronio B. Ursal, and Capt. Angelo I. Panganiban. Dr.
Estuar and Atty. Ursal were succeeded by Engr. Adam Abinales and Atty. Alfonso V. Tan, Jr., respectively.

Supra note 22, at 680681. See also RTC rollo, Volume II, pp.942-943 and rollo in G.R. No. 181892, pp.
29

306-307.

30
Rollo in G.R. No. 209731, Volume I, pp. 397-398; RTC rollo, Volume II, pp. 944-950.

31
On January 20, 2006, Judge Jesus M. Mupas of RTC-Pasay, Branch 119 was designated by the Supreme
Court to replace Judge Henrick Gingoyon in the expropriation case. See RTC rollo, Volume XXVI-A, unpaged.

32
Supra note 22, at 681. See also RTC rollo, Volume II, pp. 958-965 and rollo in G.R. No. 209731, Volume
I, pp. 399-406.

33
Rollo in G.R. No. 209696, Volume I, pp. 266-286; RTC rollo, Volume IV, pp. 4244-4247.

34
Id. at 229-231; id. at 4224-4226.

35
RTC rollo, Volume IV, pp. 4248-4264.

36
Rollo in G.R. No. 209696, Volume I, pp. 229-231; id. at 4224-4226.

37
The First Claimant refers to Takenaka Corporation.

Page 121 of 169

38
The Second Claimant refers to Asahikosan Corporation.

39
Rollo in G.R. No. 209696, Volume I, p. 245; RTC rollo, Volume IV, p. 4239.

40
Id. at 227; id. at 4241.

41
Rollo in G.R. No. 209696, Volume I, pp. 242-243 and 284.

42
Id. at 332-333.

In a decision dated September 6, 2010, the RTC recognized the validity of the London awards in Claim
Nos. HT-04-248 and HT-05-269 and declared these awards as enforceable in the Philippine jurisdiction. The
RTC thus ordered PIATCO to pay Takenaka and Asahikosan the sum of $ 85.7 million.

PIATCO appealed the case to the CA42 which affirmed the RTC rulings in a decision dated March 13,
2012.42 The CA likewise denied PIATCOs motion for reconsideration in a resolution dated May 31, 2012.

43
RTC rollo, Volume X, pp. 7548-7573.

44
Rollo in G.R. No. 209731, Volume II, p. 1788.

45
Rollo in G.R. No. 209696, Volume I, pp. 332-333.

46
Supra note 22, at 681.

47
For simplicity and ease of reading, the Court shall use it, instead of they.

48
RTC rollo, Volume II, pp. 971-1036.

49
Section 2 of Rule 67 of the Rules of Court provides: ChanRoblesvirtualLawlibrary

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 states: ChanRoblesvirtualLawlibrary

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: ChanRoblesvirtualLawlibrary

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;

xxxx

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

Page 122 of 169

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.

50
RA 8974 IRR, Section 7.

51
Supra note 22, at 657-719.

52
Id. at 718-719.

53
Republic v. Gingoyon, 517 Phil. 7-8 (2006). See also RTC rollo, Volume V, pp. 4446-4487.

54
Id. at 7-8; id. at 4547-4579 and 4665-4732.

55
363 Phil. 225-338 (1999).

56
Another related case is Asias Emerging Dragon Corp. v. DOTC, docketed as G.R. Nos. 169914 &
174166. In G.R. No. 169914, AEDC filed a petition for mandamus and prohibition before the Court: (a)
seeking to compel the Government to execute in its favor an approved Draft Concession Agreement for the
operation of the NAIA-IPT III; and (b) seeking to prohibit the DOTC and the MIAA from awarding the NAIA-
IPT III project to or negotiating into any concession contract with third parties. The case, entitled AEDC v.
DOTC, was docketed as G.R. No. 169914

AEDC contended that it had the exclusive, clear, and vested statutory right to the award of the NAIA-IPT III
project on the ground that it remained the unchallenged original proponent of the NAIA-IPT III project as a
result of the Courts nullification of PIATCO contracts.

The Court denied the petition.

We noted that AEDC belatedly filed the petition twenty months after the Courts promulgation of Agan in
violation of Section 4, Rule 65 of the Rules of Court. Furthermore, the petition was barred by res judicata.
The RTC already dismissed Civil Case No. 66213 upon the execution of a compromise agreement by AEDC,
on one hand, and the DOTC Secretary and the PBAC, on the other hand.

Under Section 10.6 of the RA 6957 IRR, the Governments acceptance of the unsolicited proposal is limited
to its commitment to pursue the project and to the recognition of the proponent as the original proponent.
Thus, the Governments commitment is limited to the pursuit of the project; it does not award the
project to the original proponent. The acceptance of the unsolicited proposal only prevents the Government
from entertaining other similar proposals until the solicitation of comparative proposals.

Upon the submission of comparative proposals, the original proponent has the right to match the lowest or
most advantageous proposal within thirty working days from notice thereof. If the original proponent is able
to match the lowest or most advantageous proposal submitted, then the original proponent has the right to
the award of the project. The right to be awarded the project, however, is contingent upon the original
proponents actual exercise of his right to match the lowest or most advantageous proposal. In other words,
if the original proposal failed to match the most advantageous comparative proposal, then the original
proponent has no right to be awarded the project.

AEDC failed to match PIATCOs more advantageous proposal. Consequently, AEDC had no enforceable right
to be awarded the NAIA-IPT III project. Moreover, the nullification of the award to PIATCO neither revived
the proposal nor re-opened the bidding.

The Court also stated that AEDCs original proposal was to undertake the building, operation, and transfer to
the Government of the NAIA-IPT III. This proposal was no longer feasible since the NAIA-IPT III was already
substantially built. Furthermore, AEDC was not financially qualified to undertake the NAIA-IPT III project
since it then had a paid-in capital of only P150,000,000.00 at the time of the submission of the bids.

In G.R. No. 174166, Congressman Baterina, et al., filed a petition for certiorari opposing the expropriation
proceedings on the ground that the NAIA-IPT III is a public property. They posited that PIATCO should not
be paid just compensation and was only entitled to recovery onquantum meruit as the builder of the NAIA-
IPT III.

Page 123 of 169

The Court denied the petition. We held that PIATCO was entitled to just and equitable consideration for its
construction of the NAIA-IPT III. Furthermore, the propriety of the expropriation proceedings was already
recognized and upheld by the Court in Agan and Gingoyon.

In a resolution dated April 7, 2009, the Court denied AEDC et al.s motion for reconsideration. The Court
stated that the project would be awarded to the original proponent if there was no other competitive bid
submitted for the BOT project. However, if other proponents submitted competitive bids, then the original
proponent must be able to match the most advantageous or lowest bid to enjoy his preferential right to the
award of the project.

57
Rollo in G.R. No. 181892, pp. 68-69.

58
Id. at 74-80.

59
Id. at 68-69.

60
Id. at 16 and 61.

61
Id. at 16.

62
Id. at 150; RTC rollo, Volume VIII, p. 5591.

63
Rollo in G.R. No 209696, Volume I, p. 331.

64
Rollo in G.R. No. 181892, p. 174. After the conduct of a Pre-Final Evaluation of Prequalification of
Consultant, the BOC shortlisted DG Jones and Partners as well as Sallmans Far East Ltd. HK. (Sallmans) as
independent appraisers.

65
Prior to the appointment, Judge Mupas interviewed the representatives of DG Jones and Partners, and
Sallmans. The RTC concluded that DG Jones and Partners was more qualified than Sallmans as independent
appraiser since the former submitted a lower appraisal fee of US$1,900,000.00 ($1.9 Million). Moreover, DG
Jones and Partners has a wide experience and track record in the appraisal of airport facilities. See Prior to
the appointment, Judge Mupas interviewed the representatives of DG Jones and Partners, and Sallmans. The
RTC concluded that DG Jones and Partners was more qualified than Sallmans as independent appraiser since
the former submitted a lower appraisal fee of US$1,900,000.00 ($1.9 Million). Moreover, DG Jones and
Partners has a wide experience and track record in the appraisal of airport facilities.

See rollo in G.R. No. 181892, pp. 64-66.

66
The appraisal fee is itemized as follows:ChanRoblesvirtualLawlibrary

Description Amount in US
Dollars
1. Fixed lump sum fee for valuation of work-in-place 1,400,000.00
200,000.00
2. Fixed lump sum fee for valuation of remaining 300,000.00
works to complete

3. Provisional sum for joint survey/inventory

Total 1,900,000.00

See rollo in G.R. No. 181892, pp. 60 and 358.

67
The Government further argued that there were no laws or rules that empowered the RTC and the BOC to
appoint an independent appraiser. The Government opined that the RTC should exclusively choose among
its nominees pursuant to Section 7 of RA 8974 as well as Sections 10 and 11 of RA 8974 IRR. Furthermore,

Page 124 of 169

the appointment of an independent appraiser would only result in the duplication of tasks since the BOC and
the independent appraiser essentially perform the same function. The BOC would serve no purpose since the
appraisal of the NAIA-IPT III would be derived from the findings of DG Jones and Partners.

It opined that the DG Jones and Partners appraisal fee was unjust and exorbitant. The Government also
pointed out that PIATCO manifested its willingness to share one-half of the expenses in the valuation of the
NAIA IPT-III during the valuation hearings. The Government further raised doubts on DG Jones and
Partners qualifications since the RTC allegedly appointed the firm without disclosing DG Jones and Partners
qualifications and proposals. See rollo in G.R. No. 181892, pp. 170-182.

68
PIATCO contended that the Government was estopped from assailing the appointment of DG Jones and
Partners. The Government participated in the appointment process by nominating other firms as an
independent appraiser. Furthermore, it would be iniquitous for the Government to solely appraise the
replacement cost of the NAIA-IPT III. PIATCO asserted that the Government should solely bear the cost of
the appraisal. The Government should have anticipated the appointment of an independent appraiser when
it filed a complaint for expropriation. See rollo in G.R. No. 181892, pp. 183-190.

69
The RTC stated that it would be grossly unfair to choose exclusively among the Governments nominees;
otherwise, the independence of the appraiser would be questionable. The Government pointed out that the
government tax assessors valuation of expropriated property was not even conclusive on trial courts. In
fact, the BOC itself requested the appointment of an independent appraiser since it had no technical
expertise to ascertain the just compensation due to PIATCO.

The RTC also held that the Government was estopped from objecting to the appointment of an independent
appraiser since it did not previously object to the engagement of the services of an appraiser. The
Government even nominated several firms for the purpose of appointing an independent appraiser,
particularly, Gleeds International, Ove Arup, and Gensler.

The RTC likewise imposed on the Government the sole responsibility of paying the appraisal fee of DG Jones
and Partners. Under Section 12, Rule 67 of the Rules of Court, the commissioners fees shall be taxed as
part of the costs of the proceedings. The plaintiff shall pay all costs, except those of rival claimants litigating
their claims. If the property owner appeals from the expropriation courts judgment, he shall pay for the
costs of the appeal. According to the RTC, PIATCO should not shoulder the appraisal fee since it is
constitutionally entitled to just compensation.

The RTC also affirmed DG Jones and Partners independence. The RTC impartially chose this firm upon a
thorough review of its qualifications and upon the BOCs recommendation. The Government would likewise
not directly communicate with and pay the appraisal fee to DG Jones and Partners. The Government shall
deposit the appraisal fee with the RTC who shall in turn pay DG Jones and Partners.

The dispositive portion of the RTC order provides: cralawlawlibrary

WHEREFORE, premises considered, the Orders dated May 3, 2007 and May 18, 2007 are Affirmed without
modification. Consequently, Plaintiffs Omnibus Motion dated June 15, 2007 is denied. This expropriation
having been initiated in December 2004, the certificate of availability of funds from Plaintiffs for the
necessary full compensation to PIATCO, the costs and the expenses entailed in this expropriation is clearly
justified and should be submitted to this Court within 15 days from plaintiffs receipt of this order.

SO ORDERED.
See rollo in G.R. No. 181892, pp. 60-63.

70
Rollo in G.R. No. 181892, pp. 2-54.

71
Id. at 231-232.

72
Id. at 144.

73
Id. at 145.

74
Id. at 146; RTC rollo, Volume XVII, pp. 11175-11181.

75
Rollo in G.R. No. 209696, Volume II, p. 576.

Page 125 of 169

76
Id., Volume I, pp. 80-81.

77
Id., Volume I, p. 81.

78
Id.

79
Id.

80
Id., Volume II, p. 576.

81
Id.

82
Id. at 577.

83
Rollo in G.R. No. 209917, Volume II, pp. 1861-1899.

84
Gleeds Report dated November 15, 2010, p. 8.

85
Outstanding Project Works and Tests on Completion Status:ChanRoblesvirtualLawlibrary

OUTSTANDING ITEMS AS OF 16TH DECEMBER RESPONSIBLE

2002 PARTY

Note: This summary list is not exhaustive

1. Dedicated PLDT telephone lines for external Hot PIATCO with MIAA
Lines assistance
2. Building Management Systems (BMS) software PIATCO
applications and interfaces
3. Security Systems CCTV snagging PIATCO
- ACMS. Door fitting to enable secure door devices to
work
- ACMS. Software applications
- CCTV/ACMS interfaces
- CCTV/ACMS/Fire alarm interfaces
- CTX machines
- Security barriers
- Acceptable Security Plan
- Scanning machines to additional areas
4. Fire Alarm System completion of all interfaces PIATCO
and testing thereof, e.g. to BIIS and Security System
5. Emergency lighting incomplete, all areas (and non PIATCO
compliant with lux levels)

Page 126 of 169

6. FIDS installation at Ramp Control PIATCO
7. Ground to pilot communication system PIATCO with ATO
assistance
8. Generator sets fuel tanks and pump installations PIATCO
9. Lighting Lux levels to the following areas: PIATCO
a) Check-in Hall
b) Departure road
c) Car Park (external at grade), areas generally,
exists and entry
d) Service areas
e) Taxi car park
10. Seating throughout terminal (gates) PIATCO
11. Seating (concrete benches Departure Hall) PIATCO
( omission is a requested Deviation, as yet
unapproved)
12. Seating (concrete benches Baggage Overlook) PIATCO
(omission is a requested Deviation, as yet
unapproved)
13. Signage as follows: PIATCO
- Check-in island signs
- Room signs and numbering identification
14. Airfield lighting Balagbag connection MIAA
- Control Tower connection PIATCO with MIAA
assistance
15. T2-T3 Access Road MIAA to obtain Nayong
Pilipino
- Right of way - MIAA
- Construction - PIATCO
16. GSE Parking Areas (omission is a requested PIATCO
Deviation, as yet unapproved)
17. Permanent electric power connection up to the PIATCO
oversize baggage screening equipment
18. Public telephones PIATCO
19. ATM machines PIATCO/Their
Concessionaires

Page 127 of 169

20. STP generator set-operation PIATCO
21. Concession Areas, all areas - Fit out PIATCO and their
Concessionaires
- Hoarding off
22. Permanent MERALCO final connections MIAA assistance
23. Surface Water Drainage Detention Pond works MIAA/PIATCO to
resolve
- Outfalls MIAA/PIATCO to
resolve
24. Second West parallel taxiway MIAA to obtain Nayong
Pilipino
- Right of way - MIAA
- Construction - MIAA/PIATCO to resolve
25. Turntiles to Terminal Fee Kiosks (omission is a PIATCO
requested Deviation, as yet unapproved)
26. Doors to fixed links (omission is a requested PIATCO
Deviation, as yet unapproved)
27. Socket and davit maintenance system PIATCO
(omission is a requested Deviation, as yet
unapproved)
28. Air-conditioning system - problems with chiller 3 PIATCO
&4
- emergency power to 33% chiller power, (omission
is a requested Deviation, as yet unapproved)
29. IT interfaces incomplete (omission is a requested PIATCO
Deviation, as yet unapproved)
30. Tests on Completion (refer separate schedule) PIATCO
31. Rectification of Non-Compliances (refer separate
schedule)
32. Building Works snagging Works (refer Taking- PIATCO
Over inspection Defect Lists and outstanding QOR
lists)
33. Mechanical and Electrical snagging works refer: PIATCO
- Taking Over inspection Defect Lists
- Outstanding QOR issues
- TOC schedule

Page 128 of 169

- Non-Compliance schedule
34. Civil Work snagging refer: PIATCO
- Taking Over inspection Defect Lists
- Outstanding QOR issues
- Re-inspection lists / QAI Daily Reports
- Non-Compliance schedule
35. All Service Counters Concessionaires
36. Airline offices Airlines
37. Government office areas GRP
38. Airline Lounges Airlines
39. Airline data installation to all IT systems (CUTE Airlines
etc.)
40. Helipad (omission is a requested Deviation, as PIATCO
yet unapproved)
41. Fuel Hydrant System Testing at operational PIATCO
velocity and/or camera inspection
42. Access Road Improvements GRP/MIAA

See CA rollo, Volume 32-D, pp. 117-118.

86
Rollo in G.R. No. 209696, pp. 585-586.

87
Gleeds Report dated November 15, 2010.

88
Rollo in G.R. No. 209731, Volume I, pp. 531-532.

89
Id. at 532-533.

90
Id. at 533, citing par. 3.1.13 of Scott Wilson Report Dated December 1, 2010.

91
Id. at 534.

92
Id. at 531-532.

93
Id. at 535.

94
Id. at 532.

95
G.R. No. L-71412, August 15, 1986, 143 SCRA 466.

96
Rollo in G.R. No. 209731, Volume I, p. 536.

97
Rollo in G.R. No. 209696, Annex 4, p. 586.

98
This is the sum of $6,602,971.00 and $8,224,236.00 under the First Judgment of the London Court.

Page 129 of 169

99
This is the sum of $21,688,012.18 and $30,319,284.36 under the Second Judgment of the London Court.

100
Rollo in G.R. No. 209696, pp. 569-599.

101
Id., Volume II, pp. 600-610.

Rollo in G.R. No. 209731, Volume I, 1089-1097. Takenaka and Asahikosan filed a Notice of Appeal on
102

June 1, 2011 while PIATCO filed a Notice of Appeal on May 26, 2011. See CA rollo, Volume I, pp. 66-75.

103
Takenaka and Asahikosan were furnished copies of the BOC Final Report on June 21, 2011. On the other
hand, the RTC only gave PIATCO access to the BOC Final Report and ordered PIATCO to reproduce the
report at its own expense. See Takenaka and Asahikosans Brief dated October 3, 2012, rollo in G.R. No.
209917, Volume II, p. 1917; and PIATCOs Brief dated September 7, 2012, rollo in G.R. No. 209917,
Volume II, p. 1742.

104
Rollo in G.R. No. 209917, Volume II, pp. 1749-1754 and 1927-1930.

105
Rollo in G.R. No. 209731, Volume II, p. 1617.

106
Id., Volume I, pp. 1170-1177.

107
Id. at 1172-1173.

108
Id. at 1173-1174. On April 19, 2012, the Government manifested that it opened an escrow account with
the Land Bank and the Development Bank of the Philippines, as evidenced by the following documents:
1. Escrow Agreement between MIAA and LBP dated April 11, 2012 in the amount of
$82,157,716.73108
2. Escrow Agreement between MIAA and DBP dated April 11, 2012 in the amount of
$34,190,924.59108

3. Statement of Outstanding Balance of Investment as of April 13, 2012 issued by DPB,

showing the principal amount of $34,190,924.59 deposited on April 11, 2012; 108 and

4. Certification issued by the LBP Trust Banking Group dated April 12, 2012 attesting that
MIAA opened an escrow account on April 11, 2012 in the principal amount of
$82,157,716.73108

See rollo in G.R. No. 209731, Volume II, pp. 1388-1402; rollo in G.R. No. 209731, Volume I, pp. 10-38.

109
Rollo in G.R. No. 209731, Volume II, p. 1281.

On May 26, 2011, PIATCO filed a Notice of Appeal of the May 23, 2011 decision. On June 6, 2011,
110

Takenaka and Asahikosan likewise filed their Notice of Appeal. See rollo in G.R. No. 209917, Volume II, p.
1917.

111
Rollo in G.R. No. 209731, Volume II, pp. 1280-1290.

112
Id. at 1289-1290.

113
Id. at 1337-1342, Order of December 5, 2011, and CA rollo, Volume I, pp. 90-95.

114
Rollo in G.R. No. 209731, Volume II, pp. 1343-1386.

115
Id. at 10-38.

116
Id., Volume I, p. 26.

This amount is a mathematical error since the computed total amount of attendant costs is
117

$27,093,375.28.

118
Rollo in G.R. No. 209731, Volume I, p. 38.

Page 130 of 169

119
Id. at 41-70.

120
Id. at 69.

121
Id. at 72-77.

122
Decision, pp. 20-21.

123
Takenaka and Asahikosans complaint, docketed as Civil Case No. 06-171, was initially raffled to the RTC
of Makati, Branch 58. Civil Case No. 06-171 was subsequently re-raffled to RTC of Makati, Branch 143.
See rollo in G.R. No. 209917, Volume III, pp. 2466-2473.

124
Rollo in G.R. No. 209696, Volume II, pp. 405-427.

125
cralawred The case was docketed in the CA as CA-G.R. CV No. 96502.

126
Rollo in G.R. No. 209696, Volume II, pp. 612-643; and CA rollo, Volume I, pp. 102-134.

127
Rollo in G.R. No. 209696, Volume II, p. 644.

128
Rollo in G.R. No. 209917, pp. 12-81.

129
Id. at 149-179.

130
Id. at 180-186.

131
Rollo in G.R. No. 209696, pp. 18-61.

132
Rollo in G.R. No. 209731, pp. 87-148.

133
Rollo in G.R. No. 181892, pp. 2-59.

134
Id. at 60-63.

135
Rollo in G.R. No. 202166, pp. 48-106.

136
Rollo in G.R. No 206696, pp. 612-643.

137
Id. at 644.

138
Rollo in G.R. No. 209917, Volume I, pp. 54-55.

139
Id.

140
Id. at 58.

141
Id. at 62.

142
Id. at 48.

143
Id. at 48-49.

144
Id. at 50.

145
Id.

146
Id. at 49-50.

147
558 Phil. 683-715 (2007).

148
507 Phil. 174-193 (2005).

Page 131 of 169

149
RTC rollo, Volume VIII, pp. 5800-5822.

150
G.R. No. 97412, July 12, 1994, 234 SCRA 78-97.

151
Rollo in G.R. No. 209917, Volume I, p. 30; rollo in G.R. No. 209917, Volume I, pp. 12-89.

152
49 Phil. 605-609 (1926).

153
Rollo in G.R. No. 209696, Volume III, p. 1003.

154
Id. at 1003-1004.

155
Id. at 969-1024.

156
Id. at 969-1024

157
Rollo in G.R. No. 181892, pp. 2-59.

158
Rollo in G.R. No. 209731, Volume I, pp 87148.

159
Rollo in G.R. No. 209696, Volume III, pp. 894-941.

160
Id., Volume II, pp. 835-850.

161
Rollo in G.R. No. 181892, pp. 261-305.

G.R. Nos. 170375, 170505, 173355-56, 173401, 173563-64, 178779 & 178894, July 7, 2010, 624 SCRA
162

360.

163
352 Phil. 833, 852 (1998).

164
G.R. No. 173085, January 19, 2011, 640 SCRA 105.

165
49 Phil. 605 (1926).

166
Rollo in G.R. No. 209696, Volume I, pp. 18-61; and rollo in G.R. No. 209731, Volume IV, pp. 2962-2974.

167
Rollo in G.R. No. 209696,Volume II, p. 872.

168
Id., Volume I, p. 37.

169
Id., Volume II, pp. 867-892.

170
RULES OF COURT, Rule 67, Section 7.

171
Id., Section 8.

172
Arroyo v. Rosal Homeowners Association, Inc., G.R. No. 175155, October 22, 2012, 684 SCRA 297, 303.

173
National Power Corporation v. Spouses Dela Cruz, 543 Phil. 64-67 (2007).

174
Heirs of Suguitan v. City of Mandaluyong, 384 Phil. 677-678, 687-689 (2000); and 26 Am Jur 23, 2.

175
Id.

176
26 Am Jur 23, 4.

177
Id. at 5.

178
Supra note 175.

179
198

Page 132 of 169

7 CONSTITUTION, Article 3, Section 9.

180
Id. at Section 1.

181
National Power Corporation v. Zabala, G.R. No. 173520, January 30, 2013, 689 SCRA 554, 562.

182
29A C.J.S. 96.

183
26 Am Jur 23, 295.

Republic v. Ker & Company Limited, 433 Phil. 70, 76-77 (2002), and Republic v. Court of Appeals, 238
184

Phil. 475, 486 (1987).

185
National Power Corporation v. Manubay Agro-Industrial Development Corp., 480 Phil. 471, 480 (2004),
citing Republic v. Ker and Company Limited, July 2, 2002, 383 SCRA 584; Republic v. Court of Appeals,
September 30, 1987, 154 SCRA 428.

186
Republic v. Asia Pacific Integrated Steel Corp., G.R. No. 192100, March 12, 2014.

187
B.H. Berkenkotter & Co. v. Court of Appeals, 216 Phil 584, 586 (1992).

188
29 A C.J.S. 136 (3).

189
Id. Specialized properties are also defined as Properties that are rarely if ever sold on the (open)
market, except by way of a sale of the business or entity of which they are a part, due to their uniqueness,
which arises from the specialized nature and design of the buildings, their configuration, size, location, or
otherwise. Consequently reliable sales comparables cannot generally be identified for specialized properties.
See International Valuation Standards, Sixth Edition, 3.2. Retrieved http://www.romacor.ro/legislatie/22-
gn8.pdf.

190
Royal Institution of Chartered Surveyors. The Depreciated Replacement Cost Method of Valuation for
Financial Report Valuation Information Paper 10, page 3,
http://aces.org.uk/uploads/Depreciated_replacement_cost_method_of_valuation_for_financial_reporting_20
07.pdf (last accessed on February 27, 2015).

191
29 A C.J.S. 136 (3).

192
http://www.merriam-webster.com/dictionary/airport (last accessed February 27, 2015).

193
Rollo in G.R. No. 209731, Volume IV, p. 3050.

194
Id. at 3013.

195
6 Am Jur 23 302.

196
IMPLEMENTING RULES AND REGULATIONS OF REPUBLIC ACT NO. 8974, Section 10.

197
Supra note 19, at 582.

198
Supra note 22, at 695-696.

199
26 Am Jur 2d 224.

200
International Association of Assessing Officers. Standard on Mass Appraisal of Real Property, page 17,
http://katastar.rgz.gov.rs/masovna-
procena/Files/2.Standard_of_Mass_Appraisal_of_Real_Property_2013.pdf (last accessed February 25, 2015;
and Beckhart, Leslie K. No Intrinsic Value: The Failure of Traditional Real Estate Appraisal Methods to Value
Income-Producing Property. Southern California Law Review, page 8, 66 S. Cal. L. Rev. 2251 (July 1993).
See also American Society of Farm Managers & Rural Appraisers. COST APPROACH, page 385,
http://www2.econ.iastate.edu/classes/econ364/duffy/documents/costapproachfromntbk.pdf (last accessed
February 27, 2015).

Page 133 of 169

201
Babcock, Keith M. Condemnation 101: Fundamentals of Condemnation Law and Land Valuation, page 2
(January 2008).

202
Babcock, Keith M. Condemnation 101: Fundamentals of Condemnation Law and Land Valuation, page 11
(January 2008).

Highest and best use is defined as the reasonably probable and legal use of vacant land or an improved
property, which is physically possible, appropriately supported, financially feasible, and that results in the
highest value. See Beckhart, Leslie K. No Intrinsic Value: The Failure of Traditional Real Estate Appraisal
Methods to Value Income-Producing Property. Southern California Law Review, pp. 9-10, 66 S. Cal. L. Rev.
2251 (July 1993). See also American Society of Farm Managers & Rural Appraisers. COST APPROACH, page
385, http://www2.econ.iastate.edu/classes/econ364/duffy/documents/costapproachfromntbk.pdf (last
accessed February 27, 2015).

203
Babcock, Keith M. Condemnation 101: Fundamentals of Condemnation Law and Land Valuation, page 11
(January 2008). See also Kabat Thomas & Shultz Valeo. HOTEL VALUATION AND CONSIDERATIONS IN
EMINENT DOMAIN, page 6 (January 2002).

204
Beckhart, Leslie K. No Intrinsic Value: The Failure of Traditional Real Estate Appraisal Methods to Value
Income-Producing Property. Southern California Law Review, page 10, 66 S. Cal. L. Rev. 2251 (July 1993).

205
American Society of Farm Managers & Rural Appraisers. COST APPROACH, page 406,
http://www2.econ.iastate.edu/classes/econ364/duffy/documents/costapproachfromntbk.pdf (last accessed
February 27, 2015).

206
Polish Real Estate Scientific Society. Selected Aspects of the Cost Approach in Property Valuation, page
19, http://www.tnn.org.pl/tnn/publik/19/Monografia_XIX_2011.pdf (last accessed February 27, 2015).

207
26 Am Jur 2d 251.

208
Jahr, Alfred D. Law of Eminent Domain Valuation and Procedure, page 279 (1953).

209
Beckhart, Leslie K. No Intrinsic Value: The Failure of Traditional Real Estate Appraisal Methods to Value
Income-Producing Property. Southern California Law Review, page 10, 66 S. Cal. L. Rev. 2251 (July 1993).

210
American Institute of Certified Public Accountants, et al. INTERNATIONAL GLOSSARY OF BUSINESS
VALUATION TERMS, pp. 48-49,
http://www.aicpa.org/InterestAreas/ForensicAndValuation/Membership/DownloadableDocuments/Intl
%20Glossary%20of%20BV%20Terms.pdf (last access February 25, 2015).

Appraisal and Valuation, page 406, http://www.dre.ca.gov/files/pdf/refbook/ref15.pdf (last accessed

211

February 25, 2015).

212
Beckhart, Leslie K. No Intrinsic Value: The Failure of Traditional Real Estate Appraisal Methods to Value
Income-Producing Property. Southern California Law Review, page 10, 66 S. Cal. L. Rev. 2251 (July 1993).
International Association of Assessing Officers. Standards on Mass Appraisal of Real Property, page 21,
http://katastar.rgz.gov.rs/masovna-
procena/Files/2.Standard_of_Mass_Appraisal_of_Real_Property_2013.pdf (last accessed February 25,
2015).

213
The Royal Institution of Chartered Surveyors. THE DEPRECIATED REPLACEMENT OF VALUATION FOR
FINANCIAL REPORTING: VALUATION INFORMATION PAPER 10, page 2,
http://aces.org.uk/uploads/Depreciated_replacement_cost_method_of_valuation_for_financial_reporting_20
07.pdf (last accessed February 25, 2015). INTERNATIONAL VALUATION GUIDANCE NOTE 8. International
Valuation Standards, Sixth Edition, page 309, http://www.romacor.ro/legislatie/22-gn8.pdf (last accessed
February 25, 2015).

214
Plimmer, Frances & Sayce, Sarah. Depreciated Replacement Cost Consistent Methodology, page 1,
https://www.fig.net/pub/fig2006/papers/ts86/ts86_01_plimmer_sayce_0268.pdf (last accessed February
25, 2015).

Page 134 of 169

215
Plimmer, Frances & Sayce, Sarah. Depreciated Replacement Cost Consistent Methodology, page 5,
https://www.fig.net/pub/fig2006/papers/ts86/ts86_01_plimmer_sayce_0268.pdf (last accessed February
25, 2015). International Association of Assessing Officers. Standards on Mass Appraisal of Real Property,
page 17, http://katastar.rgz.gov.rs/masovna-
procena/Files/2.Standard_of_Mass_Appraisal_of_Real_Property_2013.pdf (last accessed February 25,
2015).

The International Valuation Standards further explains the computation: ChanRoblesvirtualLawlibrary

5.5. In applying DRC methodology, the Valuer shall:

5.5.1.1. Assess the land at its Market Value for Existing Use
5.5.1.2 Assess the current gross replacement cost of improvements less allowances to reflect:
Physical deterioration
Functional, or technical, obsolescence

Economic, or external, obsolescence

5.5.1.3 Assess physical deterioration in the improvements, resulting from wear and tear over
time and the lack of necessary maintenance. Different valuation methods may be used for estimating
the amount required to rectify the physical condition of the improvements.

5.5.1.3.1 Some methods rely on estimates of specific elements of depreciation and contractor charges;

5.5.1.3.2 Other methods rely on direct unit value comparisons between properties in similar condition.

5.5.1.4 Assess functional/technical obsolescence caused by advances in technology that create

new assets capable of more efficient delivery of goods and services.

5.5.1.4.1 Modern production methods may render previously existing assets fully or partially obsolete in
terms of current cost equivalency.

5.5.1.4.2 Functional/technical obsolescence is usually allowed for by adopting the costs of a modern
equivalent asset.

5.5.1.5 Assess economic/external obsolescence resulting from external influences that affect the
value of the subject property.

5.5.1.5.1 External factors may include changes in the economy, which affect the demand for goods and
services, and, consequently, the profitability of business entities.

5.5.1.6 Estimate all relevant forms of remediable deterioration and obsolescence, including the
costs of optimization required to rectify the property so as to optimize its productivity.

5.5.1.7 Calculate the sum of the Market Value for Existing Use of the land and the Depreciated
Replacement cost of the improvements (current gross replacement cost of the improvements less
allowances for physical deterioration and all relevant forms of obsolescence) as the DRC
estimate.

5.5.1.8 In the case of plant and machinery, the DRC method of calculation is the same but
excludes the land element.

INTERNATIONAL VALUATION GUIDANCE NOTE 8. International Valuation Standards, Sixth Edition, pp. 313-
314, http://www.romacor.ro/legislatie/22-gn8.pdf (last accessed February 25, 2015).

216
The Royal Institution of Chartered Surveyors. THE DEPRECIATED REPLACEMENT OF VALUATION FOR
FINANCIAL REPORTING: VALUATION INFORMATION PAPER 10, page 10,
http://aces.org.uk/uploads/Depreciated_replacement_cost_method_of_valuation_for_financial_reporting_20
07.pdf (last accessed February 25, 2015).

217
Dedeaux, Warren H. TREADING ON WATER: PUBLIC UTILITIES, EMINENT DOMAIN, AND JUST

Page 135 of 169

COMPENSATION - VALUING THE PLANT. Mississippi Law Journal, page 6, 82 Miss. L.J. 1375 (2013).

218
The Royal Institution of Chartered Surveyors. THE DEPRECIATED REPLACEMENT OF VALUATION FOR
FINANCIAL REPORTING: VALUATION INFORMATION PAPER 10, page 7,
http://aces.org.uk/uploads/Depreciated_replacement_cost_method_of_valuation_for_financial_reporting_20
07.pdf (last accessed February 25, 2015).

219
Plimmer, Frances & Sayce. DEPRECIATED REPLACEMENT COST CONSISTENT METHODOLOGY, page 11,
https://www.fig.net/pub/fig2006/papers/ts86/ts86_01_plimmer_sayce_0268.pdf (last accessed February
27, 2015). Amdur, James. TELECOMMUNICATIONS PROPERTY TAXATION. Federal Communications Law
Journal, 46 Fed. Comm. L.J. 219 (March, 1994).

220
Plimmer, Frances & Sayce. DEPRECIATED REPLACEMENT COST CONSISTENT METHODOLOGY, page 9,
https://www.fig.net/pub/fig2006/papers/ts86/ts86_01_plimmer_sayce_0268.pdf (last accessed February
27, 2015). See also MARKET VALUE ASSESSMENT IN SASKATCHEWAN HANDBOOK: DEPRECIATION
ANALYSIS GUIDE, pp. 5-8, http://www.sama.sk.ca/mvahandbook/6Depreciation.pdf (last accessed February
25, 2015).

221
Plimmer, Frances & Sayce. DEPRECIATED REPLACEMENT COST CONSISTENT METHODOLOGY, page 9,
https://www.fig.net/pub/fig2006/papers/ts86/ts86_01_plimmer_sayce_0268.pdf (last accessed February
27, 2015). See also MARKET VALUE ASSESSMENT IN SASKATCHEWAN HANDBOOK: DEPRECIATION
ANALYSIS GUIDE, pp. 5-8, http://www.sama.sk.ca/mvahandbook/6Depreciation.pdf (last accessed February
25, 2015).

222
Plimmer, Frances & Sayce. DEPRECIATED REPLACEMENT COST CONSISTENT METHODOLOGY, page 10,
https://www.fig.net/pub/fig2006/papers/ts86/ts86_01_plimmer_sayce_0268.pdf (last accessed February
27, 2015). See also MARKET VALUE ASSESSMENT IN SASKATCHEWAN HANDBOOK: DEPRECIATION
ANALYSIS GUIDE, pp. 5-8, http://www.sama.sk.ca/mvahandbook/6Depreciation.pdf (last accessed February
25, 2015).

223
Reilly, Robert F. PERSONAL PROPERTY APPRAISAL REPORT GUIDELINES, American Bankruptcy Institute
Journal, 23-6 ABIJ 46, (July 2004). See also Saskatchewan Assessment Management Agency. MARKET
VALUE ASSESSMENT IN SASKATCHEWAN HANDBOOK: DEPRECIATION ANALYSIS GUIDE, pp. 5-8,
http://www.sama.sk.ca/mvahandbook/6Depreciation.pdf (last accessed February 25, 2015). Fong, Cory.
PROPERTY TAX VALUATION CONCEPTS RESIDENTIAL AND COMMERCIAL PROPERTY,

http://www.nd.gov/tax/property/pubs/guide/conceptsresidentialcommercialproperty.pdf?20150305015052
(last accessed February 25, 2015). See also THE COST APPROACH,
https://professional.sauder.ubc.ca/re_creditprogram/course_resources/courses/content/444/materials/R1B4
4409_chapter05.pdf (last accessed February 27, 2015).

224
Plimmer, Frances & Sayce. DEPRECIATED REPLACEMENT COST CONSISTENT METHODOLOGY, page 10,
https://www.fig.net/pub/fig2006/papers/ts86/ts86_01_plimmer_sayce_0268.pdf (last accessed February
27, 2015). Amdur, James. TELECOMMUNICATIONS PROPERTY TAXATION. Federal Communications Law
Journal, 46 Fed. Comm. L.J. 219 (March, 1994).

225
The Royal Institution of Chartered Surveyors. THE DEPRECIATED REPLACEMENT OF VALUATION FOR
cralawred

FINANCIAL REPORTING: VALUATION INFORMATION PAPER 10, page 22,

http://aces.org.uk/uploads/Depreciated_replacement_cost_method_of_valuation_for_financial_reporting_20
07.pdf (last accessed February 25, 2015).

226
Reilly, Robert F. PERSONAL PROPERTY APPRAISAL REPORT GUIDELINES, American Bankruptcy Institute
Journal, 23-6 ABIJ 46, (July 2004).

227
Reilly, Robert F. PERSONAL PROPERTY APPRAISAL REPORT GUIDELINES, American Bankruptcy Institute
Journal, 23-6 ABIJ 46, (July 2004). See also Fong, Cory. PROPERTY TAX VALUATION CONCEPTS
RESIDENTIAL AND COMMERCIAL PROPERTY,

http://www.nd.gov/tax/property/pubs/guide/conceptsresidentialcommercialproperty.pdf?20150305015052
(last accessed February 25, 2015). See also THE COST APPROACH,
https://professional.sauder.ubc.ca/re_creditprogram/course_resources/courses/content/444/materials/R1B4
4409_chapter05.pdf (last accessed February 27, 2015).

Page 136 of 169

228
Plimmer, Frances & Sayce. DEPRECIATED REPLACEMENT COST CONSISTENT METHODOLOGY, page 10,
https://www.fig.net/pub/fig2006/papers/ts86/ts86_01_plimmer_sayce_0268.pdf.page 11 (last accessed
February 27, 2015). See also Fong, Cory. PROPERTY TAX VALUATION CONCEPTS RESIDENTIAL AND
COMMERCIAL PROPERTY,

http://www.nd.gov/tax/property/pubs/guide/conceptsresidentialcommercialproperty.pdf?20150305015052
(last accessed February 25, 2015). See also THE COST APPROACH,
https://professional.sauder.ubc.ca/re_creditprogram/course_resources/courses/content/444/materials/R1B4
4409_chapter05.pdf (last accessed February 27, 2015).

The Polish Real Estate Scientific Society, Selected aspects of the Cost Approach in Property Valuation, pp.
229

19-20, http://www.tnn.org.pl/tnn/publik/19/Monografia_XIX_2011.pdf (last accessed February 27, 2015.)

Masterman, James D., Eminent Domain and Land Valuation Litigation: THE THREE APPROACHES TO
230

VALUE, p. 9 (January 2002).

231
The Republic of the Philippines v. CA, 494 Phil. 495-496, 510 (2005).

232
B.H. Berkenkotter & Co. v. Court of Appeals, 216 Phil 584, 586 (1992).

Spouses Cabahug v. National Power Corporation, G.R. No. 186069, January 30, 2013, 689 SCRA 667-668,
233

675-676; and National Power Corporation v. Spouses Zabala, G.R. No. 173520, January 30, 2013, 689
SCRA 554, 562-563.

234
Jahr, Alfred D., Law of Eminent Domain Valuation and Procedure, pp. 93-94 (1953).

235
Rollo in G.R. No. 209917, Volume I, p. 631.

Dedeaux, Warren H., Mississippi Law Journal. TREADING ON WATER: PUBLIC UTILITIES, EMINENT
236

DOMAIN, AND JUST COMPENSATION -- VALUING THE PLANT, p. 5 (2013).

237
Rollo in G.R. No. 209917, Volume I, p. 588.

238
Id. at 589.

239
Id. at 590.

240
Id. at 592.

241
Id.

242
Id. at 593.

243
Id. at 598.

244
Id. at 603.

245
Id. at 604.

246
Id. at 605.

247
Id. at 1392-1394.

248
Id. at 1516.

249
RULES OF COURT, Rule 129, Sections 1 and 2.

250
RULES OF COURT, Rule 39, Section 48.

251
Tengson Report dated December 2010, p. 9.

Page 137 of 169

252
Rollo in G.R. No. 209696, Volume II, pp. 585-586.

253
Scott Wilson Report, 3.3.2.

254
Report and Response from Takenaka & Asahikosan, Contractors for the NAIA 3 Facility and Intervenors in
the Expropriation Case between the GRP and PIATCO December 2010, RTC rollo, Volume 32-R, pp. 10-24.

255
Id. at 10.

256
Rollo in G.R. No. 209917, Volume II, p. 1783.

257
Id. at 1810, Scott Wilson Report, 3.3.28.

258
Daisuke Fukamachi, Takenakas Corporate Representative and Project Director of the NAIA-IPT III
project, summarized Takenakas position in his letter dated January 28, 2008, addressed to Mr. Alfonso
Cusi, the General Manager of MIAA: ChanRoblesvirtualLawlibrary

Re: NAIA INTERNATIONAL PASSENGER TERMINAL 3 STRUCTURAL ISSUES

We write to you in this instance to summarize the position on the above noted issue, following various
recent meetings and presentations by both ourselves and our design consultant, Meinhardt. Firstly, we need
to summarize the history of this issue to ensure that our position is reiterated and maintained.

After the appointment by you of your consultant TCGI, we received on 2 March 2007, a 91 page document
detailing suggestions by TCGI. This document was issued despite the fact that we had (nor have since)
accepted the allegation of defective design and despite the fact that no supporting documents were issued
by TCGI to support both their allegations and/or their remediation suggestions.

Alleged Structural Design Deficiencies

With the exception of non-supported calculations in respect of 26 beams and part of the PT Slab, TCGI
have always failed to produce structural calculations in respect of their allegation of design deficiencies,
even when requested to do so in order that these may be checked by our design consultants and our
structural design office in Tokyo. Despite this failure, TCGI continue to maintain its position on these alleged
design deficiencies. In our opinion, if allegations are made, proof must be forthcoming; otherwise any
allegations should be regarded as erroneous and should be ignored.

We have responded in every way and at every juncture, and provided all details and opinions to support our
position, yet you, on the advice of TCGI have not accepted our position despite unequivocal proof that our
design is safe and in accordance with the relevant codes and standards. We therefore conclude that TCGIs
submission and their position cannot be based on technical grounds.

We have identified and pointed out to you (and TCGI) inaccuracies in TCGI calculations and documents and
as yet TCGI have not been able to refute these facts. They have instead tried to redirect the focus of
attention onto discussions regarding the ETABS modeling, which, it is important to note, primarily for the
structural model analysis of the shear walls within the superstructure (for the Building Frame System
adapted for the Head House and Concourse buildings), for which TCGI have again failed to provide any
alleged design deficiency calculations.

Our position remains the same, and we and our design consultants cannot accept TCGIs approach on these
structural issues, whereby they continue to make unsubstantiated and unproven allegations. We now
reiterate that any further discussions on these matters must be subject to TCGI stating in detail what the
alleged design deficiencies are, with full and complete supporting calculations for our and Meinhardts
response.

Ductility (Code Interpretation)

We have repeatedly stated and clarified in detail our interpretation of the relevant Sections of NSCP 1992
related to ductility. We have also provided supporting opinions from two members of the American Concrete
Institute (ACI), Dr.s Ghosh and Mast, which state that our interpretation is correct. However, TCGI have
refused to accept any interpretation other than their own. Neither have TCGI produced letters from any ACI
members, or members from any other recognized institute, supporting their interpretation of the code. It is

Page 138 of 169

worthwhile noting here that the NSCP 1992 code is based on the ACI 318 1989 code and therefore such
opinions from these ACI members, as obtained by us, should be taken seriously.

We therefore maintain that our designs conform to NSCP 1992, (which is the relevant version of the code for
this design) and as such the design is safe and sound.

Regardless of our position, we have, as a gesture of goodwill, and in an attempt to solve the structural
issue, proposed beam enhancement to strengthen the structure, even though we maintain that this is not
necessary. Even with this proposal submitted, TCGI continue to question our design professionalism and we
understand their advice, you have not as yet accepted this proposal, even though the enhancement would
strengthen the building structure. The final version of this proposal is still open to acceptance by you.

PT Slabs

Again, TCGI has made allegations of design deficiencies in this design, without providing substantiation
and/or proof of the same, and with the provision of only half the required design calculations. However, we
have provided our design calculations for level 2 sector 3, (from our D&C contractor, BBR) which prove there
is no design deficiency. BBR has also provided further calculations to show the impact of overstressing the
PT Slab, and these calculations again prove the adequacy of the design. Yet TCGI continue to make these
allegations.

Furthermore, our proposal to carry out load tests on specific slabs, which as TCGI has pointed out have
some visible cracking, has been presented on the basis of testing the worst affected slabs, thus proving
that if these worst slabs pass the load test, all others by definition would pass the same test. Therefore we
see no need to carry out 14 tests as suggested by TCGI, and still consider 2 tests more than adequate, even
though we will add another 9 tests (Maximum) as a gesture of goodwill.

General

Finally, we would make some general points and state a few additional facts and observations: ChanRoblesvirtualLawlibrary

Both Meinhardt and ourselves have given you adequate design guarantees which you may call upon in the
event of any proven design deficiencies. These guarantees are comprehensive and long standing and both
parties shoulder a heavy responsibility by issuing these documents especially Takenaka who have a single
point responsibility to MIAA and the DOTC.

In Arups letter to you ref: 131269/RVM/08-0023, dated 15 January 2008, they have described the
procedure which is outlined n NSCP 1992, in respect of the required calculations for ductility and structural
deformation compatibility. What they fail to state is whether TCGIs interpretation of NSCP 1992 is correct or
not, or whether our interpretation is correct or not. They have also made reference to ACI 318 1995, which
is not a national code, neither is it one representing the basis of the design. They have failed to conclude
this issue even with their own opinion, and we therefore concluded that they cannot state unequivocally that
our interpretation of NSCP 1992 is incorrect, a point we have made on numerous occasions in the past.

Both ourselves and Meinhardt have presented all design details and an ETABS modeling presentation to you
and TCGI. We have requested on numerous occasions that TCGI present their version of the same
calculations and ETABS modeling, without success, with TCGI unable or unwilling to present the same, even
though you, as the Employer, have instructed them to do so several times. We now have a request
(demand) from TCGI to make yet another design and modeling presentation and have had the audacity to
present us with their RULES for this presentation, even requiring that we allow filming and photography of
the proceedings. This is totally unacceptable. We have therefore concluded that there will be no further
presentation to TCGI whilst their attitude remains unchanged, and unless they provide us with full
supporting calculations to substantiate their allegations, and even in that event neither Takenaka nor
Meinhardt will accept or be subjected to any rules for any future presentation, which have been presented
recently by TCGI.

We again refer you to the Clause 4.5 of the General Framework Agreement, (GFA) (dated 6 September
2005) which confirms that we have no obligation to approve or confirm your consultants findings and we
have no obligation to be bound by the same. Despite this no obligation and despite our position regarding
the correctness and safety of the design, we have over the past 9 months discussed various possibilities and
scenarios, have submitted numerous presentations and compromise documents and other calculations, and
spent large amounts of money to try and convince you and your consultant that our position is correct,

Page 139 of 169

where in fact we had no need to do so. If TCGI continue with their present unsubstantiated position we may
find our position untenable and would need to discuss our future position on this project with our Senior
Management in Tokyo. We also remind you that any design and/or works done by any third party on the
Terminal 3 structure would invalidate any single point responsibility and any guarantees we or Meinhardt
have given you.

See RTC rollo, Volume 32-R, pp. 26-28. For exhaustive discussion of Takenaka and Asahikosans position
with supporting documents, See RTCrollo, Volume 32-R and RTC rollo, Volume 33-B.

259
See RTC rollo, Volume XXXIII-B.

260
Rollo in G.R. No. 209696, Volume II, pp. 645-659.

261
Id. at 660-664.

262
Id. at 671-677.

263
RULES OF COURT, Rule 37, Section 1(b).

264
Rollo in G.R. No. 209696, Volume I, pp. 334-335.

265
RULES OF COURT, Rule 131, Section 3(a).

266
Id., Section 3(d).

267
Id., Section 3(p).

268
Id., Section 3(q).

Ogawa v. Menigishi, G.R. No. 193089, July 9, 2012, 676 SCRA 15, 22, citing Amoroso v. Alegre, G.R. No.
269

142766, June 15, 2007, 524 SCRA 641-652.

270
RULES OF COURT, Rule 133, Section 1.

De Leon v. Bank of the Philippines, G.R. No. 184565, November 20, 2013,710 SCRA 453-454, citing Jison
271

v. Court of Appeals, 350 Phil. 138, 173 (1998).

272
Municipality of Candijay v. Court of Appeals, 321 Phil. 922, 926 (1995).

273
Rivera v. Court of Appeals, 348 Phil. 735, 743 (1998).

274
Supra note 273.

275
Supra note 274.

276
Rollo in G.R. No. 209731, Volume II, p. 1753.

277
On April 25, 2006, Judge Mupas and the BOC conducted a physical inspection of the NAIA-IPT III.
Representatives from PIATCO and the Government formed part of the inspection team. See RTC rollo,
Volume XXVI-A, unpaged; and RTC rollo, Volume VI, p. 5356.

278
See 3.3.28 & 3.3.32 of the Scott Wilson Report.

279
http://www.dotc.gov.ph/images/SectoralAA_Procurement/miaa/2012/ITB-212M.pdf

280
http://www.gov.ph/2012/08/14/dotc-reminds-bidders-for-p212-m-naia-t3-retrofit-project-to-submit-
bids-by-august-23/

281
Rollo in G.R. No. 209917, Volume I, p. 606.

282
Republic of the Philippines v. Asia Pacific Integrated Steel Corp., G.R. No. 192100, March 12, 2014.

Page 140 of 169

283
Rollo in G.R. No. 209917, Volume I, p. 1412.

284
Id. at 1396-1398.

285
Court of Appeals Amended Decision, p. 22.

286
Heirs of Prodon v. Heirs of Alvarez, G.R. No. 170604, September 2, 2013, 704 SCRA 465-466, 477-479.

287
Id.

288
Republic of the Philippines v. Sandiganbayan, G.R. No. 188881, April 21, 2014.

289
29A Am Jur 2d Evidence 1072, 1073, & 1079.

290
Id. at 1077.

291
Id. at 1079.

292
Rollo in G.R. No. 209917, Volume II, p. 1863.

293
Eulogio v. Spouses Apeles, G.R. No. 167884, January 20, 2009, 596 SCRA 615, 626.

Real v. Belo, 542 Phil. 111, 122 (2007), citing Domingo v. Robles, G.R. No. 153743, March 18, 2005, 453
294

SCRA 812, 818; and Ongpauco v. CA, G.R. No. 134039, December 21, 2004, 447 SCRA 395, 400.

295
CIVIL CODE, Article 2224.

296
National Power Corporation v. Heirs of Sangkay, 671 Phil. 570-571, 591-592 (2011).

297
NAIA-IPT III Bills of Quantities, Volume I, p. 1.2.1.

298
Id.

299
Id. at 1.2.2.

300
Id.

301
Id.

302
Id. at 1.1.5.

303
Id. at 1.1.6.

304
Id.

305
Id. at 1.2.1.

306
Id.

307
Id. at 1.2.2.

308
26 Am Jur 2d Eminent Domain 263.

309
Royal Institution of Chartered Surveyors. The Depreciated Replacement Cost Method of Valuation for
Financial Report Valuation Information Paper, page 1,
http://aces.org.uk/uploads/Depreciated_replacement_cost_method_of_valuation_for_financial_reporting_20
07.pdf (last accessed February 25, 2015).

APPRAISAL AND VALUATION, page 408, http://www.dre.ca.gov/files/pdf/refbook/ref15.pdf (last accessed

310

February 25, 2015).

311
Royal Institution of Chartered Surveyors. The Depreciated Replacement Cost Method of Valuation for

Page 141 of 169

Financial Report Valuation Information Paper, page 1,
http://aces.org.uk/uploads/Depreciated_replacement_cost_method_of_valuation_for_financial_reporting_20
07.pdf (last accessed February 25, 2015).

312
Royal Institution of Chartered Surveyors. The Depreciated Replacement Cost Method of Valuation for
Financial Report Valuation Information Paper, page 1,
http://aces.org.uk/uploads/Depreciated_replacement_cost_method_of_valuation_for_financial_reporting_20
07.pdf (last accessed February 25, 2015).

313
Kimmel, P., Weygandt, J., Kieso, D. & Wiley, J. Financial Accounting Tools for Business Decision Making,
p. 422 (2004).

314
Id.

315
The Polish Real Estate Scientific Society, Selected aspects of the Cost Approach in Property Valuation, p.
37, http://www.tnn.org.pl/tnn/publik/19/Monografia_XIX_2011.pdf (last accessed February 27, 2015.)

316
Kimmel, P., Weygandt, J., Kieso, D. & Wiley, J. Financial Accounting Tools for Business Decision Making,
p. 422 (2004).

The Polish Real Estate Scientific Society, Selected aspects of the Cost Approach in Property Valuation,
317

page 37, http://www.tnn.org.pl/tnn/publik/19/Monografia_XIX_2011.pdf. See also DEPRECIATION UNDER

GAAP (FOR BOOK PURPOSES), http://www.aipb.org/pdf/DEPRECIA.pdf (last accessed March 2, 2015).

318
The Polish Real Estate Scientific Society, Selected aspects of the Cost Approach in Property Valuation,
page 37, http://www.tnn.org.pl/tnn/publik/19/Monografia_XIX_2011.pdf (last accessed February 27, 2015.)
See also THE COST APPROACH,
https://professional.sauder.ubc.ca/re_creditprogram/course_resources/courses/content/444/materials/R1B4
4409_chapter05.pdf (last accessed February 27, 2015).

The Polish Real Estate Scientific Society, Selected aspects of the Cost Approach in Property Valuation,
319

page 38, http://www.tnn.org.pl/tnn/publik/19/Monografia_XIX_2011.pdf (last accessed February 27, 2015.)

320
Rollo in G.R. No. 209917, Volume I, p. 608.

321
Id. at 1414.

322
Id. at 1514.

323
Gary Taylor Report, p. 4.

324
Rollo in G.R. No. 209731, Volume VII, p. 3097.

325
cralawred CIVIL CODE, Article 1409.

Filinvest Land, Inc. v. Ngilay, G.R. No. 174715, October 11, 2012, 684 SCRA 128, citing Development
326

Bank of the Philippines v. CA, et al., 319 Phil. 447, 454-455 (1995).

327
Rollo in G.R. No. 209917, Volume I, pp. 1414-1417.

328
Id. at 1415.

329
Id. at 610.

330
Id. at 592.

331
Id. at 599.

332
Id. at 1514.

333
G.R. No. 166973, February 10, 2009, 578 SCRA 234.

Page 142 of 169

334
RULES OF COURT, Rule 67, Section 4.

335
According to Bangko Sentral ng Pilipinas, consumer price index is an indicator of the change in the
average retail prices of a fixed basket of goods and services commonly purchased by households relative to
a base year. The CPI is used in calculating the inflation rate and purchasing power of the peso. The inflation
rate is defined as the annual rate of change or the year-on-year change in the CPI. It is the rate of change
in the average price level between two periods. The purchasing power of the peso shows how much the peso
in the base period is worth in the current period. It is computed as the reciprocal of the CPI for the period
under review multiplied by 100.

See Consumer Price Index, Inflation and Purchasing Power of the Peso,
http://www.bsp.gov.ph/statistics/Metadata/CPI_metadata.pdf (last accessed February 27, 2015).

336
Consumer Price Index, Inflation and Purchasing Power of the Peso,
http://www.bsp.gov.ph/statistics/Metadata/CPI_metadata.pdf (last accessed February 27, 2015).

337
Rollo in G.R. No. 209731, Volume II, p. 1690.

338
RA 8974 is silent on the reckoning period of interests in the expropriation of property for national
infrastructure projects. Pursuant to Section 14 of RA 8974, the Rules of Court suppletorily applies. In this
respect, Section 10, Rule 67 of the Rules of Court provides: cralawlawlibrary

Section 10. Rights of plaintiff after judgment and payment. Upon payment by the plaintiff to the
defendant of the compensation fixed by the judgment, with legal interest thereon from the taking of
the possession of the property, or after tender to him of the amount so fixed and payment of the costs,
the plaintiff shall have the right to enter upon the property expropriated and to appropriate it for the public
use or purpose defined in the judgment, or to retain it should he have taken immediate possession thereof
under the provisions of section 2 hereof. If the defendant and his counsel absent themselves from the court,
or decline to receive the amount tendered, the same shall be ordered to be deposited in court and such
deposit shall have the same effect as actual payment thereof to the defendant or the person ultimately
adjudged entitled thereto. (10a)
However, even without this provision, interest on just compensation will still accrue on the date of taking
since the Section 9, Article 3 of the 1987 Constitution provides that just compensation must be paid on the
date of taking.

339
Apo Fruits Corporation v. Land Bank of the Philippines, 647 Phil. 276 (2010).

340
Id.

341
Id.

342
G.R. No. 146587, July 2, 2002, 383 SCRA 623.

343
Citing Eastern Shipping Lines, Inc. v. Court of Appeals, [G.R. No. 97412, July 12, 1994, 234 SCRA 78,
95], we awarded a legal interest of 12% per annum on just compensation. The Court upheld the imposition
of the 12% interest rate in just compensation cases, as ruled in Republic, in Reyes v. National Housing
Authority [443 Phil. 603 (2003)], Land Bank of the Philippines v. Wycoco [464 Phil. 83 (2004)],Republic v.
Court of Appeals [494 Phil. 494 (2005)].

344
G.R. No. 97412, July 12, 1994, 234 SCRA 78, 95.

345
443 Phil. 603 (2003).

346
464 Phil. 83 (2004).

347
494 Phil. 494 (2005).

348
544 Phil. 378 (2007).

349
557 Phil. 737 (2007).

350
608 Phil. 9 (2009).

Page 143 of 169

351
Supra note 340, at 257-258, 274-277.

352
G.R. No. 182431, November 17, 2010, 635 SCRA 285 .

353
G.R. No. 174007, June 27, 2012, 675 SCRA 187.

354
G.R. No. 182209, October 3, 2012, 682 SCRA 264.

355
BSP Circular No. 799 reads in part: cralawlawlibrary

Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate
allowed in judgments, in the absence of express contract as to such rate of interest, shall be six per cent
(6%) per annum. [emphasis supplied]
356
Rollo in G.R. No. 209731, Volume I, p. 1172.

357
Supra note 340.

358
Rollo in G.R. No. 209731, Volume I, p. 132.

359
Section 14 of RA 8974 IRR provides: ChanRoblesvirtualLawlibrary

Section 14. Trial Proceedings. Within the sixty (60)-day period prescribed by the Act, 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 provision on expropriation of Rule 67 of the Rules of Court.

360
Supra note 19.

361
Republic v. Gingoyon, 517 Phil. 9-10 (2006).

362
26 Am Jur 2d Eminent Domain 182.

363
352 Phil. 833-854 (1998).

364
49 Phil. 605-609 (1926).

365
655 Phil. 104-109 (2011).

G.R. Nos. 170375, 170505, 173355-56, 173401, 173563-64, 178779 & 178894, July 7, 2010, 624 SCRA
366

360-492.

An Act Creating the Philippine Licensing Board for Contractors, Prescribing Its Powers, Duties and
367

Functions, Providing Funds Therefor, and For Other Purposes.

368
G.R. No. 187677, April 17, 2013, 696 SCRA 819.

369
Mallon v. Alcantara, 536 Phil. 1049, 1054 (2006).

370
Supra note 365.

371
Article 2242 of the Civil Code provides: ChanRoblesvirtualLawlibrary

Article 2242. With reference to specific immovable property and real rights of the debtor, the following
claims, mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable or
real right: ChanRoblesvirtualLawlibrary

(1) Taxes due upon the land or building;

(2) For the unpaid price of real property sold, upon the immovable sold;
(3) Claims of laborers, masons, mechanics and other workmen, as well as of architects, engineers and
contractors, engaged in the construction, reconstruction or repair of buildings, canals or other works, upon
said buildings, canals or other works;
(4) Claims of furnishers of materials used in the construction, reconstruction, or repair of buildings, canals or
other works, upon said buildings, canals or other works;

Page 144 of 169

(5) Mortgage credits recorded in the Registry of Property, upon the real estate mortgaged;
(6) Expenses for the preservation or improvement of real property when the law authorizes reimbursement,
upon the immovable preserved or improved;
(7) Credits annotated in the Registry of Property, in virtue of a judicial order, by attachments or executions,
upon the property affected, and only as to later credits;
(8) Claims of co-heirs for warranty in the partition of an immovable among them, upon the real property
thus divided;
(9) Claims of donors or real property for pecuniary charges or other conditions imposed upon the donee,
upon the immovable donated; and
(10) Credits of insurers, upon the property insured, for the insurance premium for two years. (1923a)

372
An Act Providing for the Rehabilitation or Liquidation of Financially Distressed Enterprises and Individuals.

373
Republic v. Castelvi, 157 Phil. 344 (1974).

Sy v. Local Government of Quezon City, G.R. No. 202690, June 5, 2013, 297 SCRA 622-623, 634;
374

and Republic of the Philippines v. Sarabia, 505 Phil. 254, 262 (2005).

375
Republic of the Philippines v. Legaspi, Sr., G.R. No. 177611, April 18, 2012, 670 SCRA 120-121,
citing Municipality of Bian v. Judge Garcia, 259 Phil. 1058, 1068-1069 (1989).

376
Id.

Bernas, J., THE 1987 CONSTITUTION OF THE REPUBLIC OF THE PHILIPPINES: A COMMENTARY, pp. 421-
377

422 (2003 Ed.)

378
104 Phil. 443 (1958).

379
271 Phil. 1-8 (1991).

380
BLACKS LAW DICTIONARY, p. 1444 (5th ed. 1979).

381
BLACKS LAW DICTIONARY, 5th Ed., p. 92.

382
Arevalo v. Planters Development Bank, G.R. No. 193415, April 18, 2012, 670 SCRA 262-263.

Sarmiento v. Magsino, G.R. No. 193000, October 16, 2013, 707 SCRA 532-533, 543; Korea Exchange
383

Bank v. Judge Gonzales, 520 Phil. 691, 701 (2006); Desaville, Jr. v. Court of Appeals, 480 Phil. 22, 26-27
(2004); Royal Cargo Corporation v. Civil Aeronautics Board, 465 Phil. 719-720, 725 (2004).

CONCURRING OPINION

LEONEN, J.:

I concur in the result.

I entertain serious doubts about the propriety of the remedy pursued by the government to comply with the
Decision of this court in Agan, Jr. v. Philippine International Air Terminals Co., Inc.1 The improvements built
by Philippine International Air Terminals Co., Inc. through its subcontractors may have been private, but it
was the product of a procurement contract that would later be declared as illegal and void ab initio.

Thus, in my view, it is not the kind of private property protected under Article III, Section 9 2 of the
Constitution. It is not the kind of property that should be the subject of expropriation. Otherwise, the
essence of the illegality of the contract will be nullified.

Page 145 of 169

If any, the subsequent payment by government should only be to adhere to a civil law policy against unjust
enrichment. Even then, the full application of this concept should also be qualified. The contractor does not
stand in the same footing as an ordinary property owner. The improvements had been introduced by virtue
of a contract that was subsequently declared illegal.

Nonetheless, the rules on valuation will be different should government be made to pay the owner so that
there is no unjust enrichment. Instead of the fair market value of the property at the time of the taking, the
government would have had to pay the value of the property based on its utility at present.

However, these issues were not raised, and the government chose the remedy of expropriation. Thus, this
court could not adequately address these issues in these cases.

Finally, I reiterate the view that while just compensation must be the value of the property at the time of
the taking, the actual amount to be paid should take into consideration the present value of the property. I
had occasion to point this out in my Separate Opinions in Secretary of the Department of Public Works and
Highways v. Spouses Tecson3 and Heirs of Spouses Tria v. Land Bank of the Philippines.4

Endnotes:

1
465 Phil. 545 (2004) [Per J. Puno, En Banc]; See Agan, Jr. v. Philippine International Air Terminals Co.,
Inc., 450 Phil. 744 (2003) [Per J. Puno, En Banc].

2
Section 9. Private property shall not be taken for public use without just compensation.

3
J. Leonen, Dissenting Opinion in G.R. No. 179334, July 1, 2013, 700 SCRA 243, 274279 [Per J. Peralta,
Third Division] and J. Leonen, Dissenting Opinion on the Resolution, G.R. No. 179334, April 21, 2015 [Per
J. Peralta, Third Division].

4
G.R. No. 170245, July 1, 2013, 700 SCRA 188, 200209 [Per J. Peralta, Third Division].

Page 146 of 169

 THIRD DIVISION

G.R. No. 207662, April 13, 2016

PEOPLE OF THE PHILIPPINES, Plaintiff and Appellee, v. FABIAN URZAIS Y LANURIAS, ALEX
BAUTISTA, AND RICKY BAUTISTA, Accused.

FABIAN URZAIS Y LANURIAS, Accused-Appellant.

DECISION

PEREZ, J.:

Before us for review is the Decision1 of the Court of Appeals (CA) in C.A. G.R. CR.-H.C. No. 04812 dated 19
November 2012 which dismissed the appeal of accused-appellant Fabian Urzais y Lanurias and affirmed with
modification the Judgment2 of the Regional Trial Court (RTC) of Cabanatuan City, Branch 27, in Criminal
Case No. 13155 finding accused-appellant guilty beyond reasonable doubt of the crime of carnapping with
homicide through the use of unlicensed firearm.

Accused-appellant, together with co-accused Alex Bautista and Ricky Bautista, was charged with Violation of
Republic Act (R.A.) No. 6539, otherwise known as the Anti-Carnapping Act of 1972, as amended by R.A. No.
7659, with homicide through the use of an unlicensed firearm. The accusatory portion of the Information
reads as follows:
chanRoblesvirtualLawlibrary

That on or about the 13th day of November, 2002, or prior thereto, in the City of Cabanatuan, Republic of
the Philippines and within the jurisdiction of this Honorable Court, the above-named accused, conspiring,
confederating with and abetting one another, with intent to gain and by means of force, violence and
intimidation, did then and there, wilfully, unlawfully and feloniously take, steal and carry away, a Isuzu
Highlander car, colored Forest Green, with Plate No. UUT-838 of one MARIO MAGDATO, valued at FIVE
HUNDRED THOUSAND PESOS (P500,000.00) Philippine Currency, owned by and belonging to said MARIO
MAGDATO, against his will and consent and to his damage and prejudice in the aforestated amount of
P500,000.00, and on the occasion of the carnapping, did assault and use personal violence upon the person
of one MARIO MAGDATO, that is, by shooting the latter with an unlicensed firearm, a Norinco cal. 9mm
Pistol with Serial No. 508432, thereby inflicting upon him gunshot wound on the head which caused his
death.3 ChanRoblesVirtualawlibrary

At his arraignment, accused-appellant pleaded not guilty. The trial proceeded against him. His two co-
accused remain at large.

The prosecution presented as witnesses Shirley Magdato (Shirley), Senior Police Officer 2 Fernando Figueroa
(SPO2 Figueroa) and Dr. Jun Concepcion (Dr. Concepcion).

Shirley, the widow of the victim, testified mainly regarding her husband's disappearance and discovery of his
death. She narrated that her husband used to drive for hire their Isuzu Highlander with plate number UUT-
838 from Pulilan, Bulacan to the LRT Terminal in Metro Manila. On 12 November 2002, around four o'clock in
the morning, her husband left their house in Pulilan and headed for the terminal at the Pulilan Public Market
to ply his usual route. When her husband did not return home that day, Shirley inquired of his whereabouts
from his friends to no avail. Shirley went to the terminal the following day and the barker there told her that
a person had hired their vehicle to go to Manila. Shirley then asked her neighbors to call her husband's
mobile phone but no one answered. At around 10 o'clock in the morning of 13 November 2002, her
husband's co-members in the drivers' association arrived at their house and thereafter accompanied Shirley
to her husband's supposed location. At the Sta.Rosa police station in Nueva Ecija, Shirley was informed that
her husband had passed away. She then took her husband's body home.4 Shirley retrieved their vehicle on
21 November 2002 from the Cabanatuan City Police Station. She then had it cleaned as it had blood stains

Page 147 of 169

and reeked of a foul odor.5

SPO2 Figueroa of the Philippine National Police (PNP), Cabanatuan City, testified concerning the
circumstances surrounding accused-appellant's arrest. He stated that in November 2002, their office
received a "flash alarm" from the Bulacan PNP about an alleged carnapped Isuzu Highlander in forest green
color. Thereafter, their office was informed that the subject vehicle had been seen in the AGL Subdivision,
Cabanatuan City. Thus, a team conducted surveillance there and a checkpoint had been set up outside its
gate. Around three o'clock in the afternoon of 20 November 2002, a vehicle that fit the description of the
carnapped vehicle appeared. The officers apprehended the vehicle and asked the driver, accused-appellant,
who had been alone, to alight therefrom. When the officers noticed the accused-appellant's waist to be
bulging of something, he was ordered to raise his shirt and a gun was discovered tucked there. The officers
confiscated the unlicensed 9mm Norinco, with magazine and twelve (12) live ammunitions. The officers
confirmed that the engine of the vehicle matched that of the victim's. Found inside the vehicle were two (2)
plates with the marking "UUT-838" and a passport. Said vehicle contained traces of blood on the car seats at
the back and on its flooring. The officers detained accused-appellant and filed a case for illegal possession of
firearm against him. The subject firearm was identified in open court. 6

Dr. Concepcion testified about the wounds the victim sustained and the cause of his death. He stated that
the victim sustained one (1) gunshot wound in the head, the entrance of which is at the right temporal area
exiting at the opposite side. The victim also had several abrasions on the right upper eyelid, the tip of the
nose and around the right eye. He also had blisters on his cheek area which could have been caused by a
lighted cigarette.7

Accused-appellant testified in his defense and interposed the defense of denial.

Accused-appellant testified that he had ordered in October 2002 from brothers Alex and Ricky Bautista, an
owner-type jeepney worth P60,000.00for use in his business. The brothers, however, allegedly delivered
instead a green Isuzu Highlander around half past three o'clock in the afternoon of 13 November 2002. The
brothers told accused-appellant that his P60,000.00 would serve as initial payment with the remaining
undetermined amount to be paid a week after. Accused-appellant agreed to this, amazed that he had been
given a new vehicle at such low price. Accused-appellant then borrowed money from someone to pay the
balance but the brothers never replied to his text messages. On 16 November 2002, his friend Oscar
Angeles advised him to surrender the vehicle as it could be a "hot car." Accused-appellant was initially
hesitant to this idea as he wanted to recover the amount he had paid but he eventually decided to sell the
vehicle. He removed its plate number and placed a "for sale" sign at the back. On 18 November 2002, he
allegedly decided to surrender the vehicle upon advice by a certain Angie. But when he arrived home in the
afternoon of that day, he alleged that he was arrested by Alex Villareal, a member of the Criminal
Investigation and Detection Group (CIDG) of Sta. Rosa, Nueva Ecija. 8 Accused-appellant also testified that
he found out in jail the owner of the vehicle and his unfortunate demise. 9 On cross-examination, accused-
appellant admitted that his real name is "Michael Tapayan y Baguio" and that he used the name Fabian
Urzais to secure a second passport in 2001 to be able to return to Taiwan. 10

The other defense witness, Oscar Angeles (Angeles), testified that he had known the accused-appellant as
Michael Tapayan when they became neighbors in the AGL subdivision. Accused-appellant also served as his
computer technician. Angeles testified that accused-appellant previously did not own any vehicle until the
latter purchased the Isuzu Highlander for P30,000.00 from the latter's friends in Bulacan. Angeles advised
accused-appellant that the vehicle might have been carnapped due to its very low selling price. Angeles
corroborated accused-appellant's testimony that he did not want to surrender the car at first as he wanted
to recover his payment for it.11

On 18 October 2010, the RTC rendered judgment finding accused-appellant guilty of the crime charged. The
RTC anchored its ruling on the disputable presumption that a person found in possession of a thing taken in
the doing of a recent wrongful act is the taker and the doer of the whole act. 12 It held that the elements of
carnapping were proven by the prosecution beyond reasonable doubt through the recovery of the
purportedly carnapped vehicle from the accused-appellant's possession and by his continued possession
thereof even after the lapse of one week from the commission of the crime. 13 The dispositive portion of the
RTC Decision reads:
chanRoblesvirtualLawlibrary

WHEREFORE, in view of all the foregoing, the Court finds accused Fabian Urzais alias Michael Tapayan y
Lanurias GUILTY beyond reasonable doubt of the crime of carnapping as defined and penalized by Republic
Act 6539 (Anti-Carnapping Act of 1972) as amended by R.A. 7659 with homicide thru the use of unlicensed
firearm. Accordingly, he is hereby sentenced to suffer imprisonment of forty (40) years of reclusion
perpetua.

Page 148 of 169

In the service of the sentence, accused shall be credited with the full time of his preventive detention if he
agreed voluntarily and in writing to abide by the disciplinary rules imposed upon convicted prisoners
pursuant to Article 29 of the Revised Penal Code.

Accused is further sentenced to indemnify the heirs of Mario Magdato the sum of Php50,000.00 as death
indemnity, Php50,000.00 as moral damages, and Php672,000.00 as loss of earning capacity. 14 ChanRoblesVirtualawlibrary

Accused-appellant filed a Notice of Appeal on 22 December 2010. 15

On 19 November 2012, the CA rendered the assailed judgment affirming with modification the trial court's
decision. The CA noted the absence of eyewitnesses to the crime yet ruled that sufficient circumstantial
evidence was presented to prove accused-appellant's guilt, solely, accused-appellant's possession of the
allegedly carnapped vehicle.

Accused-appellant appealed his conviction before this Court. In a Resolution 16 dated 12 August 2013,
accused-appellant and the Office of the Solicitor General (OSG) were asked to file their respective
supplemental briefs if they so desired. Accused-appellant filed a Supplemental Brief 17 while the OSG
manifested18 that it adopts its Brief19 filed before the CA for the purpose of the instant appeal.

Before the Court, accused-appellant vehemently maintains that there is no direct evidence that he robbed
and murdered the victim; and that the lower courts erred in convicting him based on circumstantial evidence
consisting only of the fact of his possession of the allegedly carnapped vehicle. Accused-appellant decries
the appellate court's error in relying on the disputable presumption created by law under Section 3 (j), Rule
131 of the Rules of Court to conclude that by virtue of his possession of the vehicle, he is considered the
author of both the carnapping of the vehicle and the killing of its owner. Accused-appellant asserts that such
presumption does not hold in the case at bar.

The Court agrees.

Every criminal conviction requires the prosecution to prove two (2) things: 1. The fact of the crime, i.e.the
presence of all the elements of the crime for which the accused stands charged; and (2) the fact that the
accused is the perpetrator of the crime. The Court finds the prosecution unable to prove both aspects, thus,
it is left with no option but to acquit on reasonable doubt.

R.A. No. 6539, or the Anti-Carnapping Act of 1972, as amended, defines carnapping as the taking, with
intent to gain, of a motor vehicle belonging to another without the latter's consent, or by means of violence
against or intimidation against persons, or by using force upon things. 20 By the amendment in Section 20 of
R.A. No. 7659, Section 14 of the Anti-Carnapping Act now reads:
chanRoblesvirtualLawlibrary

SEC. 14. Penally for Carnapping. Any person who is found guilty of carnapping, as this term is defined in
Section two of this Act, shall, irrespective of the value of the motor vehicle taken, be punished by
imprisonment for not less than fourteen years and eight months and not more than seventeen years and
four months, when the carnapping is committed without violence or intimidation of persons, or force upon
things, and by imprisonment for not less than seventeen years and four months and not more than thirty
years, when the carnapping is committed by means of violence or intimidation of any person, or force upon
things; and the penalty of reclusion perpetua to death shall be imposed when the owner, driver or occupant
of the carnapped motor vehicle is killed or raped in the course of the commission of the carnapping or on
the occasion thereof. (Emphasis supplied)
Three amendments have been made to the original Section 14 of the Anti-Carnapping Act: (1) the penalty of
life imprisonment was changed to reclusion perpetua, (2) the inclusion of rape, and (3) the change of the
phrase "in the commission of the carnapping" to "in the course of the commission of the carnapping or on
the occasion thereof." This third amendment clarifies the law's intent to make the offense a special complex
crime, by way of analogy vis-a-vis paragraphs 1 to 4 of the Revised Penal Code on robbery with violence
against or intimidation of persons. Thus, under the last clause of Section 14 of the Anti-Carnapping Act, the
prosecution has to prove the essential requisites of carnapping and of the homicide or murder of the victim,
and more importantly, it must show that the original criminal design of the culprit was carnapping and that
the killing was perpetrated "in the course of the commission of the carnapping or on the occasion thereof."
Consequently, where the elements of carnapping are not proved, the provisions of the Anti-Carnapping Act
would cease to be applicable and the homicide or murder (if proven) would be punishable under the Revised
Penal Code.21

In the instant case, the Court finds the charge of carnapping unsubstantiated for failure of the prosecution
to prove all its elements. For one, the trial court's decision itself makes no mention of any direct evidence

Page 149 of 169

indicating the guilt of accused-appellant. Indeed, the CA confirmed the lack of such direct evidence. 22 Both
lower courts solely based accused-appellant's conviction of the special complex crime on one circumstantial
evidence and that is, the fact of his possession of the allegedly carnapped vehicle.

The Court notes that the prosecution's evidence only consists of the fact of the victim's disappearance, the
discovery of his death and the details surrounding accused-appellant's arrest on rumors that the vehicle he
possessed had been carnapped. Theres is absolutely no evidence supporting the prosecution's theory that
the victim's vehicle had been carnapped, much less that the accused-appellant is the author of the same.

Certainly, it is not only by direct evidence that an accused may be convicted, but for circumstantial evidence
to sustain a conviction, following are the guidelines: (1) there is more than one circumstance; (2) the facts
from which the inferences are derived are proven; and (3) the combination of all the circumstances is as
such as to produce a conviction beyond reasonable doubt.23 Decided cases expound that the circumstantial
evidence presented and proved must constitute an unbroken chain which leads to one fair and reasonable
conclusion pointing to the accused, to the exclusion of all others, as the guilty person. All the circumstances
must be consistent with each other, consistent with the hypothesis that the accused is guilty and at the
same time inconsistent with the hypothesis that he is innocent, and with every other rationale except that of
guilt.24

In the case at bar, notably there is only one circumstantial evidence. And this sole circumstantial evidence of
possession of the vehicle does not lead to an inference exclusively consistent with guilt. Fundamentally,
prosecution did not offer any iota of evidence detailing the seizure of the vehicle, much less with accused-
appellant's participation. In fact, there is even a variance concerning how accused-appellant was discovered
to be in possession of the vehicle. The prosecution's uncorroborated evidence says accused-appellant was
apprehended while driving the vehicle at a checkpoint, although the vehicle did not bear any license plates,
while the latter testified he was arrested at home. The following testimony of prosecution witness SPO2
Figueroa on cross-examination raises even more questions:
chanRoblesvirtualLawlibrary

Q: You mentioned the car napping incident, when was that, Mr. witness?

ATTY. GONZALES:

Your Honor, I noticed that every time the witness gave his
answer, he is looking at a piece of paper and he is not testifying
on his personal knowledge.

xx
xx

COURT:

The witness is looking at the record for about 5 min. now. Fiscal,
here is another witness who has lapses on the mind.

FISCAL MACARAIG:

Page 150 of 169

 I am speechless, Your Honor.

WITNESS:

It was not stated in my affidavit, sir the time of the carnapping incident.

ATTY. GONZALES:

Your Honor, if he can no longer remember even the simple

matter when this car napping incident happened then he is an
incompetent witness and we are deprive (sic) of the right to
cross examine him. I move that his testimony would be stricken
off from the record.

xx
xx

Q: Mr. Witness, what is the date when you arrested the accused Fabian
Urzais?
A: It was November 20, 2002 at around 3 o'clock in the afternoon, sir.

Q: You said earlier that on November 3, 2002 that you met the accused is
that correct, Mr. Witness?
A: Yes, sir.

Q: Why did you see the accused on November 3, 2002, Mr. Witness?
A: During that time, we conducted a check point at AGL were (sic) the
Highlander was often seen, sir.

Q: So, since on November 3, 2002, you were conducting this check point at
AGL, it is safe to assume that the carnapping incident happened earlier

Page 151 of 169

 than November 3, 2002?
A: Yes, sir.

Q: Were you present when this vehicle was car napped, Mr. Witness?
A: No, sir.

Q: Since you were not present, you have no personal knowledge about this
car napping incident, right, Mr. Witness?
A: Yes, sir.

Q: No further question, Your Honor.25

Considering the dearth of evidence, the subject vehicle is at best classified as "missing" since the non-return
of the victim and his vehicle on 12 November 2002. Why the check-point had begun before then, as early 3
November 2002, as stated by the prosecution witness raises doubts about the prosecution's version of the
case. Perhaps, the check-point had been set up for another vehicle which had gone missing earlier. In any
event, accused-appellant's crime, if at all, was being in possession of a missing vehicle whose owner had
been found dead. There is perhaps guilt in the acquisition of the vehicle priced so suspiciously below
standard. But how this alone should lead to a conviction for the special complex crime of carnapping with
homicide/murder, affirmed by the appellate court is downright disturbing.

The application of disputable presumption found in Section 3 (j), Rule 131 of the Rules of Court, that a
person found in possession of a thing taken in the doing of a recent wrongful act is the taker and doer of the
whole act, in this case the alleged carnapping and the homicide/murder of its owner, is limited to cases
where such possession is either unexplained or that the proffered explanation is rendered implausible in
view of independent evidence inconsistent thereto.26 In the instant case, accused-appellant set-up a defense
of denial of the charges and adhered to his unrebutted version of the story that the vehicle had been sold to
him by the brothers Alex and Ricky Bautista. Though the explanation is not seamless, once the explanation
is made for the possession, the presumption arising from the unexplained possession may not anymore be
invoked and the burden shifts once more to the prosecution to produce evidence that would render the
defense of the accused improbable. And this burden, the prosecution was unable to discharge. In contrast to
prosecution witness SPO2 Figueroa's confused, apprehensive and uncorroborated testimony accused-
appellant unflinchingly testified as follows:
chanRoblesvirtualLawlibrary

Q: Will you please tell us how you came into possession of this Isuzu
Highlander with plate number UTT 838?
A: That vehicle was brought by Ricky Bautista and Alex Bautista, sir.

xx
xx

Q: Do you know why Alex and Ricky Bautista gave you that Isuzu
Highlander?

Page 152 of 169

A: Actually that was not the vehicle I ordered form (sic) them, I ordered an
owner type jeep worth Php60,000 but on November 13, 2002 they
brought that Isuzu Highlander, sir.

Q: Why did you order an owner type jeep from them?

A: Because I planned to install a trolley, cause I have a videoke for rent
business, sir.

xx
xx

Q: What happened upon the arrival of this Alex and Ricky Bautista on that
date and time?
A: I was a little bit surprise (sic) because Alex alighted from an Isuzu
Highlander colored green, sir.

Q: What happened after that?

A: I told them that it was not I ordered from you and my money is only
Php60,000, sir.

Q: What did he told (sic) you?

A: He told me to give them the Php60,000 and they will leave the vehicle
and when I have the money next week I will send text message to
them, sir.

Q: What was your reaction?

A: I was amazed because the vehicle is brand new and the price is low, sir.

xx
xx

Q: Did you find out anything about the Isuzu highlander that they left to
you?

Page 153 of 169

A: When I could not contact them I went to my friend Oscar Angeles and
told him about the vehicle then he told me that you better surrender the
vehicle because maybe it is a hot car, sir. "Nung hindi ko na po sila
makontak ay nagpunta ako sa kaibigan kong si Oscar Angeles at sinabi
ko po yung problema tungkol sa sasakyan at sinabi nya sa akin na
isurrender na lang at baka hot car yan"27

xx
xx

Q: Mr. Witness, granting for the sake that what you are saying is true,
immediately on the 16th, according to your testimony, and upon
confirming it to your friend, you then decided to surrender the vehicle,
why did you not do it on the 16th, why did you still have to wait until you
get arrested?
A: Because I was thinking of my Sixty Thousand Pesos (Php60,000.00) at
that time, and on how I can take it back, sir. ("Kasi nanghinayang po
ako sa Sixty Thousand (Php60,000.00) ko nung oras na un ... pano ko
po yun mabawi sabi ko".)

xx
xx

Q: So Mr. Witness, let us simplify this, you have purchased a carnapped

vehicle, your intention is to surrender it but you never did that until you
get caught in possession of the same, so in other words, that is all that
have actually xxx vehicle was found dead, the body was dumped
somewhere within the vicinity of Sta. Rosa, those are the facts in this
case?
A: I only came to know that there was a dead person when I was already
in jail, sir.

Q: What about the other facts that I have mentioned, are they correct or
not?
A: When I gave the downpayment, I do not know yet that it was a hot car
and I came to know it only on the 16th, sir.28

Page 154 of 169

Significantly, accused-appellant's testimony was corroborated by defense witness Angeles who had known
accused-appellant by his real name "Michael Tapayan y Baguio," to wit:
chanRoblesvirtualLawlibrary

Q: Do you know if this Michael Tapayan owns any vehicle sometime in

2002?
A: At first none, sir, he has no vehicle.

Q: What do you mean when you say at first he has no vehicle?

A: Later, sir, I saw him riding in a vehicle.

xxx
x

Q: Did Michael Tapayan tell you how much he bought that vehicle?
A: I remember he told me that he bought that vehicle for Thirty Thousand
(Php30,000.00) Pesos, sir.

Q: What was your reaction when you were told that the vehicle was
purchased for only Thirty Thousand Pesos (Php30,000.00)?
A: I told him that it's very cheap and also told him that it might be a
carnap (sic) vehicle.

Q: What was the reaction of Michael Tapayan when you told him that?
A: He thought about it and he is of the belief that the person who sold the
vehicle to him will come back and will get the additional payment, sir.

Q: Aside from this conversation about that vehicle, did you have any other
conversation with Michael Tapayan concerning that vehicle?
A: After a few days, sir, I told him to surrender the said vehicle to the
authorities because the persons who sold it to him did not come back
for additional payment.

Q: What was the reaction of Michael Tapayan to this suggestion?

Page 155 of 169

A: He told me that he will think about it because he was thinking about
the money that he already gave to them.29
Evidently, the disputable presumption cannot prevail over accused-appellant's explanation for his possession
of the missing vehicle. The possession having been explained, the legal presumption is disputed and thus,
cannot find application in the instant case. To hold otherwise would be a miscarriage of justice as criminal
convictions necessarily require proof of guilt of the crime charged beyond reasonable doubt and in the
absence of such proof, should not be solely based on legal disputable presumptions.

The carnapping not being duly proved, the killing of the victim may not be treated as an incident of
carnapping. Nonetheless, even under the provisions of homicide and murder under the Revised Penal Code,
the Court finds the guilt of accused-appellant was not established beyond reasonable doubt.

There were no eyewitnesses to the killing of the victim, Mario Magdato. Again, both courts relied only on the
circumstantial evidence of accused-appellant's possession of the missing vehicle for the latter's conviction.
Shirley, the widow, testified that her husband and their vehicle went missing on 12 November 2002. Dr.
Concepcion gave testimony on the cause of death of Mario Magdato and the injuries he had sustained. Most
glaringly, no connection had been established between the victim's gunshot wound which caused his death
and the firearm found in the person of accused-appellant. Only SPO2 Figueroa's testimony gave light on how
allegedly accused-appellant was found to have been in possession of the missing vehicle of the victim. But
even if this uncorroborated testimony was true, it does not link accused-appellant to the carnapping, much
less, the murder or homicide of the victim. And it does not preclude the probability of accused-appellant's
story that he had merely bought the vehicle from the Bautista brothers who have themselves since gone
missing.

The equipoise rule states that where the inculpatory facts and circumstances are capable of two or more
explanations, one of which is consistent with the innocence of the accused and the other consistent with his
guilt, then the evidence does not fulfil the test of moral certainty and is not sufficient to support a
conviction. The equipoise rule provides that where the evidence in a criminal case is evenly balanced, the
constitutional, presumption of innocence tilts the scales in favor of the accused.30

The basis of the acquittal is reasonable doubt, which simply means that the evidence of the prosecution was
not sufficient to sustain the guilt of accused-appellant beyond the point of moral certainty. Proof beyond
reasonable doubt, however, is a burden particular to the prosecution and does not apply to exculpatory facts
as may be raised by the defense; the accused is not required to establish matters in mitigation or defense
beyond a reasonable doubt, nor is he required to establish the truth of such matters by a preponderance of
the evidence, or even to a reasonable probability. 31

It is the primordial duty of the prosecution to present its side with clarity and persuasion, so that conviction
becomes the only logical and inevitable conclusion. What is required of it is to justify the conviction of the
accused with moral certainty. Upon the prosecution's failure to meet this test, acquittal becomes the
constitutional duty of the Court, lest its mind be tortured with the thought that it has imprisoned an innocent
man for the rest of his life.32 The constitutional right to be presumed innocent until proven guilty can be
overthrown only by proof beyond reasonable doubt.33

In the final analysis, the circumstances narrated by the prosecution engender doubt rather than moral
certainty on the guilt of accused-appellant. chanrobleslaw

WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals dated 19 November 2012 in
C.A. G.R. CR.-H.C. No. 04812 is REVERSED and SET ASIDE. FABIAN URZAIS Y LANURIAS alias Michael
Tapayan y Baguio is ACQUITTED on reasonable doubt of the crime of carnapping with homicide, without
prejudice to investigation for the crime of fencing penalized under Presidential Decree 1612. His immediate
release from confinement is hereby ordered, unless he is being held for some other lawful cause.

SO ORDERED. cralawlawlibrary

Velasco, Jr., (Chairperson), Bersamin,** and Reyes, JJ., concur.

Peralta, J., on official leave. chanroblesvirtuallawlibrary

Endnotes:

Page 156 of 169

**
Additional Member per Raffle dated 24 February 2016.

1
Rollo, pp. 2-16; Penned by Associate Justice Jose C. Reyes, Jr. with Associate Justices Mario V. Lopez and
Socorro B. Inting concurring.

2
Records, pp. 216-226; Presided by Presiding Judge Angelo C. Perez.

3
Id. at 1.

4
TSN, 20 January 2004, pp. 3-6, 13; Testimony of Shirley.

5
Id. at 6-9.

6
TSN, 13 August 2004, pp. 3-8; TSN, 12 September 2006, p. 7; Testimony of SPO2 Figueroa.

7
TSN, 18 April 2006, pp. 5-7; Testimony of Dr. Concepcion.

8
TSN, 9 December 2008, pp. 4-9; Testimony of Accused-Appellant.

9
TSN, 8 January 2009, pp. 8 and 13.

10
TSN, 9 December 2008, pp. 10-12.

11
TSN, 10 August 2010, pp. 3-5; Testimony of Angeles.

12
Section 3 (j), Rule 131 of the Revised Rules of Court.

13
Records, p. 221.

14
Id. at 226.

15
Id. at 229-231.

16
Rollo, pp. 23-24.

17
Id. at 38-51.

18
Id. at 25-27.

19
CA rollo, pp.

20
Section 2, R.A. No. 6539.

21
People v. Santos, 388 Phil. 993, 1005-1006 (2000).

22
Rollo, p. 10.

23
Section 4, Rule 133, Revised Rules of Court.

People v. Geron, 346 Phil. 14, 24 (1997); People v. Quitorio, 349 Phil. 114, 129 (1998);People v. Reyes,
24

349 Phil. 39, 58 (1998) citing People v. Binamira, G.R. No. 110397, 14 August 1997, 277 SCRA 232, 249-
250 citing People v. Adofina, G.R. No. 109778, 8 December 1994, 239 SCRA 67, 76-77. See also People v.
Payawal, 317 Phil. 507, 515 (1995). cralawred

25
TSN, 4 October 2006, pp. 3-5.

26
People v. Geron, supra note 23 at 25. cralawred

27
TSN 09 December 2008, pp. 4-8.

28
TSN dated 8 January 2009, pp. 11-13.

Page 157 of 169

29
TSN dated 10 August 2010, pp. 4-5.

30
People v. Erguiza, 592 Phil. 363, 388 (2008).

31
People v. Geron, supra note 23 at 29 citing 23 C.J.S. 195-196.

32
People v. Cabalse, G.R. No. 146274, 17 August 2004, 436 SCRA 629, 640.

33
People v. Asis, 439 Phil. 707, 728 (2002).

ORDER OF RELEASE

TO: The Director

FIRST DIVISION

G.R. No. 213229, December 09, 2015

FILINVEST ALABANG, INC., Petitioner, v. CENTURY IRON WORKS, INC., Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated December 27, 2013 and the
Resolution3 dated June 25, 2014 of the Court of Appeals (CA) in CA-G.R. CV No. 97025, which affirmed with
modification the Decision4 dated August 3, 2010 of the Regional Trial Court of Pasig City (assigned in the
City of San Juan), Branch 264 (RTC) in Civil Case No. 68850 and, accordingly, ordered petitioner Filinvest
Alabang, Inc. (petitioner) to pay respondent Century Iron Works, Inc. (respondent) the aggregate amount of
P1,392,088.68, plus legal interest at the rate of twelve percent (12%) per annum from the time of default
until full payment thereof.

The Facts

Sometime in 1997 and 1998, petitioner awarded various contracts to respondent, including a contract for
the completion of the metal works requirement of Filinvest Festival Supermall amounting to P29,000,000.00,
as evidenced by the Agreement for Construction5 executed by both parties (subject contract), as well as the
General Conditions of Contract6 (General Conditions) which supplements the subject contract. After the
completion of said project, respondent tried to fully settle its credit with petitioner, but the latter, despite
demands, allegedly withheld without any reasonable ground the payment of the aggregate amount of
P1,392,088.68, broken down as follows: (a) balance of the retention fee amounting to P40,880.00; (b)
additional deduction of P227,500.00 from the latter's total payments; and (c) the cost of an additional scenic
elevator enclosure amounting to P1,123,708.68. This prompted respondent to file the instant case for sum
of money with damages against petitioner before.the RTC, docketed as Civil Case No. 68850.7

In defense, petitioner maintained that: (a) it had the right to retain the amounts of P40,880.00 and
P227,500.00 as they represented damages arising from respondent's substandard workmanship; and (b)
the subject contract is lump sum in nature, hence, it cannot be liable for the amount representing the
additional scenic elevator enclosure absent any instruction authorizing the construction of the same. 8

Page 158 of 169

 The RTC Ruling

In a Decision9 dated August 3, 2010, the RTC granted respondent's claim for the amount of P227,500.00
plus legal interest, but denied the rest of the latter's claims. 10

The RTC found that petitioner is already estopped from claiming damages purportedly arising from
respondent's substandard workmanship, considering its issuance of a Certificate of Completion and
Acceptance11 signifying its acceptance of respondent's work as up to par. As such, petitioner must remit the
amount of P227,500.00 to respondent.12 However, the RTC held that since the subject contract is lump sum
in nature, petitioner cannot be held liable for the cost of the additional scenic elevator enclosure amounting
to P1,123,708.68 as its liability is already fixed at the lump sum contract price of P29,000,000.00. 13

Aggrieved, respondent appealed14 to the CA.

The CA Ruling

In a Decision15 dated December 27, 2013, the CA affirmed the RTC ruling with modification, ordering
petitioner to pay respondent the amounts of P40,880.00 and P1,123,708.68 as well, both with legal interest
at the rate of twelve percent (12%) per annum from the time of default until full payment. 16

The CA agreed with the RTC that petitioner is estopped from asserting respondent's poor workmanship in
view of its issuance of a Certificate of Completion and Acceptance. As such, petitioner must pay not only the
amount of P227,500.00 initially ordered by the RTC, but also the amount of P40,880.00 withheld by
petitioner on account of respondent's purported defective works, which was overlooked by the RTC in its
ruling.17

However, contrary to the RTC's finding, the CA held that the subject contract is not fixed lump sum in nature
and, thus, petitioner's liability over the subject contract cannot be limited to P29,000,000.00 as stipulated.
Hence, the parties may stipulate on additional works beyond what was specified in the subject contract, as
in this case where they agreed on the installation of an additional scenic elevator enclosure which cost
P1,123,708.68. In this light, respondent must be paid the cost for the additional elevator; otherwise, it will
constitute unjust enrichment on the part of petitioner. 18

Dissatisfied, petitioner moved for reconsideration,19 which was, however, denied in a Resolution20 dated June
25, 2014; hence, this petition.

The Issue Before the Court

The issue for the Court's resolution is whether or not the CA correctly ordered petitioner to pay the following
amounts to respondent: (a) balance of the retention fee amounting to P40,880.00; (b) additional deduction
of P227,500.00 due to purported substandard work of the latter; and (c) the cost of an additional scenic
elevator enclosure amounting to P1,123,708.68.

The Court's Ruling

The petition is denied.

At the outset, it must be stressed that a petition for review under Rule 45 of the Rules of Court covers only
questions of law. Questions of fact are not reviewable, 21 absent any of the exceptions recognized by case
law.22 This rule is rooted on the doctrine that findings of fact made by a trial court are accorded the highest
degree of respect by an appellate tribunal and, absent a clear disregard of the evidence before it that can
otherwise affect the results of the case, those findings should not be ignored. 23 Hence, absent any clear
showing of abuse, arbitrariness or capriciousness committed by the lower court, its findings of facts,
especially when affirmed by the CA, are binding and conclusive upon this Court. 24

In the instant case, both the RTC and the CA found that petitioner had issued to respondent a Certificate of
Completion and Acceptance25 signifying that it had already accepted respondent's work as up to par. As
correctly pointed out by the RTC and the CA, this factual finding already estops petitioner from withholding
the amounts due to respondent's purported substandard workmanship.It is settled that "[w]henever a party
has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a
particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration,
act or omission, be permitted to falsify it,"26 as in this case. Therefore, it is but proper that petitioner remit

Page 159 of 169

to respondent the amounts of P40,880.00 and P227,500.00 it withheld from the latter.

On the other hand, anent the issue of whether or not petitioner is liable to respondent in the amount of
P1,123,708.68 representing the cost of an additional scenic elevator enclosure, the RTC and the CA had
different factual findings which then led to different conclusions. As already adverted to, the RTC found the
subject contract to be fixed lump sum in nature and, thus, adjudged petitioner liable only for the amount of
P29,000,000.00; on the other hand, the CA held otherwise, resulting in its ruling that petitioner should be
held liable for the cost of the additional scenic elevator enclosure. In view of the conflicting factual findings
of the RTC and the CA on this matter, the Court is constrained to make its own determination as to whether
or not the subject contract is fixed lump sum in nature, and thereafter, resolve if petitioner is indeed liable
for the amount of P1,123,708.68.27

Fixed lump sum contracts are governed by Article 1724 of the Civil Code, which reads:
Art. 1724. The contractor who undertakes to build a structure or any other work for a stipulated price, in
conformity with plans and specifications agreed upon with the landowner, can neither withdraw from the
contract nor demand an increase in the price on account of the higher cost of labor or materials, save when
there has been a change in the plans and specifications, provided: chanRoblesvirtualLawlibrary

(1) Such change has been authorized by the proprietor in writing; and

(2) The additional price to be paid to the contractor has been determined in writing by both parties.
In a fixed lump sum contract, the project owner agrees to pay the contractor a specified amount for
completing a scope of work involving a variety of unspecified items of work without requiring a cost
breakdown. The contractor estimates the project cost based on the scope of work and schedule and
considers probable errors in measurement and changes in the price of materials. 28 Otherwise stated, in fixed
lump sum contracts, the project owner's liability to the contractor is generally limited to what is stipulated
therein.

However, it must be clarified that Article 1724 of the Civil Code does not preclude the parties from
stipulating on additional works to the project covered by said fixed lump sum contract which would entail
added liabilities on the part of the project owner. In fact, the said provision allows contractors to recover
from project owners additional costs in fixed lump sum contracts, as well as the increase in price for any
additional work due to a subsequent change in the original plans and specifications, provided that there
exists: (a) a written authority from the developer or project owner ordering or allowing the written changes
in work; and (b) written agreement of the parties with regard to the increase in price or cost due to the
change in work or design modification. Jurisprudence instructs that compliance with these two (2) requisites
is a condition precedent for recovery and hence, the absence of one or the other condition bars the claim
for additional costs. Notably, neither the authority for the changes made nor the additional price to be paid
therefor may be proved by any evidence other than the written authority and agreement as above-
mentioned.29

In the instant case, pertinent portions of the subject contract read:

ARTICLE I - SCOPE OF WORK

1.1 The CONTRACTOR shall furnish all materials, labor, equipment,

supervision and all other accessories, fixings and incidentals
necessary to complete the Supply and Installation of Metal
Works Requirements (referred to either as the "Contract Works" or
the "Works") and hand-over the works to Filinvest in accordance with
the Approved Plans, Technical Specifications, General Conditions of
Contract and other Bid Documents all included in the Notice of Award
dated 30 April 1997 (Annex A hereof) inclusive of all its attachments and
Annexes all of which are made integral parts of this Agreement by
reference.

ARTICLE II - CONTRACT PRICE

Page 160 of 169

2.1 For and in consideration of the services to be rendered by the
CONTRACTOR as herein above specified, FILINVEST shall pay the
CONTRACTOR the Lump Sum Contract Price of PESOS: TWENTY
NINE MILLION AND 00/100 (P29,000,000.00), inclusive of Value
Added Tax (VAT), in the manner set forth under Article III hereof (the
"Manner of Payment").

x x x x30 (Emphases and underscoring supplied)

In this relation, key provisions of the General Conditions state: chanRoblesvirtualLawlibrary

ARTICLE IX - VARIATION ORDERS

1.0 Site Instruction: Variation or Change Orders and Extra Works shall
be performed by the CONTRACTOR only upon the issuance of
official Site Instruction from the Engineer or from any duly
designated representative of FILINVEST. Before issuing an official
variation instruction, FILINVEST may require the CONTRACTOR to
submit within ten (10) days a detailed account of the time and cost
implications of complying with the proposed variation order. FILINVEST
has the sole prerogative to award the variation order to the
CONTRACTOR, or to any other party, whichever is advantageous to
FILINVEST. Any work performed without any accompanying official site
instruction and which is not part of the original scope of work shall not
be paid by FILINVEST.

xxxx

3.0 Valuation of Variation or Change Orders: The value of all variations shall
be initiated by the CONTRACTOR subject to acceptance and approval by
FILINVEST in accordance with the following guidelines:

3.1. Where a Schedule of Rates (upon which the Lump Sum

Price or Unit Priced Contract Sum was based) has been
made part of the Contract, the prices in the said Unit Rates
be used in the valuation of variation orders.

x x x x31 (Emphases and underscoring supplied)

A reading of the subject contract clearly reveals that it is fixed lump sum in nature as the parties agreed
that respondent shall "furnish all materials, labor, equipment, supervision and all other accessories, fixings
and incidentals necessary to complete the Supply and Installation of Metal Works Requirements" of
petitioner's Filinvest Festival Supermall. In exchange for such works, respondent shall be remunerated "the
Lump Sum Contract Price of PESOS: TWENTY NINE MILLION AND 00/100 (P29,000,000.00)."

Page 161 of 169

As already explained above, the fixed lump sum nature of the subject contract did not preclude the parties
from agreeing on additional works and/or changes to the project. Pursuant to the rule laid down by Article
1724 of the Civil Code, the General Conditions allowed the parties to stipulate on extra works through the
issuance of Site Instructions, as what happened in this case when petitioner issued two (2) Site Instructions,
dated August 1, 199732 and January 23, 1998,33 pertaining to the construction of an additional scenic
elevator enclosure in the project. In this regard, and as correctly pointed out by the CA, the valuation of this
additional work was lifted from the Bill of Quantities34 previously agreed upon by the parties and was put
into writing as evidenced by the Cost Breakdown for Claim of Change Orders 35and the Material Quantity
Breakdown for Scenic Elevator Enclosure36 submitted by respondent to petitioner. The foregoing shows that:
(a) there was a written authority from petitioner for respondent to proceed with the construction of the
additional scenic elevator enclosure; and (b) the parties have a written agreement as to the proper valuation
of such additional works to be made on the project. As the construction of an additional scenic elevator
enclosure was covered by a valid extra work order to the subject contract, respondent is entitled to recover
from petitioner the cost of the same amounting to P1,123,708.68.

On a final note, all the amounts due to respondent - namely the: (a) balance of the retention fee amounting
to P40,880.00; (b) additional deduction of P227,500.00 due to purported substandard work of the latter;
and (c) the cost of an additional scenic elevator enclosure amounting to P1,123,708.68 should be subject
to legal interest at the rate of twelve percent (12%) per annum from extrajudicial demand until June 30,
2013 and six percent (6%) per annum thereafter until full payment, in accordance with recent
jurisprudence.37

WHEREFORE, the petition is DENIED. Accordingly, the Decision dated December 27, 2013 and the
Resolution dated June 25, 2014 of the Court of Appeals in CA-G.R. CV No. 97025 are
hereby AFFIRMEDwith MODIFICATION imposing legal interest at the rate of twelve percent (12%) per
annum on all monetary awards from extrajudicial demand until June 30, 2013 and six percent (6%) per
annum thereafter until full payment.

SO ORDERED. chanroblesvirtuallawlibrary

Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Perez, JJ., concur. chanrobleslaw

Endnotes:

Rollo, pp. 11-28.

1

2
Id. at 34-43. Penned by Associate Justice Sesinando E. Villon with Associate Justices Florito S. Macalino
and Zenaida T. Galapate-Laguilles concurring.

3
Id. at 45.

4
Id. at 46-58. Penned by Presiding Judge Leoncio M. Janolo, Jr.

5
Id. at 59-63.

6
Id. at 81-92.

7
See id. at 34-36.

8
See id. at 36.

9
Id. at 46-58.

10
Id. at 57.

11
Records, Vol. 1, pp. 387-388

12
See rollo, p. 57.

13
See id. at 56.

Page 162 of 169

14
See Brief for the Appellant dated February 22, 2012; id. at 165-182.

15
Id. at 34-43.

16
Id. at 42.

17
See id. at 41-42.

18
See id. at 37-41.

19
See motion for reconsideration dated January 21, 2014; CA rollo pp 143-154.

20
See rollo, p. 45.

21
See Uyboco v. People, G.R. No. 211703, December 10, 2014, citing Microsoft Corp. v. Maxicorp, Inc., 481
Phil. 550, 561 (2004).

22
"As a rule, only questions of law may be raised in a petition for review under Rule 45 of the Rules of
Court. In many instances, however, this Court has laid down exceptions to this general rule, as
follows:chanRoblesvirtualLawlibrary

(1) When the factual findings of the [CA] and the trial court are
contradictory;
(2) When the conclusion is a finding grounded entirely on speculation,
surmises or conjectures;
(3) When the inference made by the [CA] from its Findings of fact is
manifestly mistaken, absurd or impossible;
(4) When there is grave abuse of discretion in the appreciation of facts;
(5) When the appellate court, in making its findings, went beyond the
issues of the case, and such findings are contrary to the admissions of
both appellant and appellee;
(6) When the judgment of the [CA] is premised on misapprehension of
facts;
(7) When the [CA] failed to notice certain relevant facts which, if properly
considered, would justify a different conclusion;
(8) When the findings of fact are themselves conflicting;
(9) When the findings of fact are conclusions without citation of the specific
evidence on which they are based; and
(10) When the findings of fact of the [CA] are premised on the absence of
evidence but such findings are contradicted by the evidence on record."

(Treas v. People, 680 Phil. 368, 378 [2012], citing Salcedo v. People, 400 Phil. 1302, 1308-1309 [2000].)

23
See Uyboco v. People, supra note 21, citing Navallo v. Sandiganbayan, G.R. No. 97214, July 18, 1994,
234 SCRA 175, 185-186.

Page 163 of 169

24
See id., citing Plameras v. People, G.R. No. 187268, September 4, 2013, 705 SCRA 104, 122.

25
Records, Vol. 1, pp. 387-388.

26
Pasion v. Melegrito, 548 Phil. 302, 311 (2007), citing Section 2 (a), Rule 131 of the Rules of Court.

27
"Under Rule 45 of the Rules of Court, jurisdiction is generally limited to the review of errors of law
committed by the appellate court. The Supreme Court is not obliged to review all over again the evidence
which the parties adduced in the court a quo. Of course, the general rule admits of exceptions, such as
where the factual findings of the CA and the trial court are conflicting or contradictory." (Miro v. Mendoza
Vda. de Erederos, G.R. Nos. 172532 and 172544-45, November 20, 2013, 710 SCRA 371, 386, citing Recto
v. Heirs of Spouses Altamirano, G.R. No. 182349, July 24, 2013, 702 SCRA 137, 147.)

28
Leighton Contractors Phils., Inc. v. CNP Industries, Inc., 628 Phil. 547, 560 (2010).

29
See The President of the Church of Jesus Christ of Latter Day Saints v. BTL Construction Corporation, G.R.
No. 176439, January 15, 2014, 713 SCR A 455, 466-467.

30
Rollo, p. 60.

31
Id. at 88.

32
Records, Vol. 2, p. 622.

33
Id. at 622-A.

34
Id. at 626-627.

35
Id. at 624.

36
Id. at 625.

37
See Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA 439, 456.

Page 164 of 169

 FIRST DIVISION

G.R. No. 208113, December 02, 2015

DOLORES DIAZ, Petitioner, v. PEOPLE OF THE PHILIPPINES AND LETICIA S. ARCILLA,Respondents.

DECISION

PERLAS-BERNABE, J.:

Before the Court is a petition for review on certiorari1 assailing the Decision2 dated January 30, 2013 and the
Resolution3 dated July 10, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 97571, which directed
petitioner Dolores Diaz (petitioner) to pay respondent Leticia S. Arcilla, (respondent) the amount of
P32,000.00, with legal interest at the rate of six percent (6%) per annum (p.a.) from July 28, 1998 until
finality of the decision and thereafter, interest at the rate of twelve percent (12%) p.a. on the outstanding
balance until full satisfaction.

The Facts

On March 11, 1999, an Information4 for estafa was filed against petitioner before the Regional Trial Court of
Manila, Branch 5 (RTC) for her alleged failure to return or remit the proceeds from various merchandise
valued at P32,000.00 received by her in trust - i.e., on consignment basis from respondent.5 During
arraignment, petitioner entered a negative plea. Thereafter, trial on the merits ensued. 6

The prosecution anchored its case on the testimony of respondent who claimed to be a businesswoman
engaged in the business of selling goods/merchandise through agents (one of whom is petitioner) under the
condition that the latter shall turn over the proceeds or return the unsold items to her a month after they
were entrusted. Respondent averred that on February 20, 1996, she entrusted merchandise consisting of
umbrellas and bath towels worth P35,300.00 to petitioner 7 as evidenced by an acknowledgment
receipt8 dated February 20, 1996 duly signed by the latter. However, on March 20, 1996, petitioner was only
able to remit the amount of P3,300.009 and thereafter, failed to make further remittances and ignored
respondent's demands to remit the proceeds or return the goods. 10

In her defense, petitioner admitted having previous business dealings with respondent but not as an agent.
She clarified that she was a client who used to buy purchase order cards (POCs) and gift checks (GCs) from
respondent on installment basis and that, during each deal, she was made to sign a blank sheet of paper
prior to the issuance of POCs and GCs. She further claimed that their last transaction was conducted in
1995, which had long been settled. However, she denied having received P32,000.00 worth of merchandise
from respondent on February 20, 1996.11

The RTC Ruling

Page 165 of 169

In a Decision12 dated June 29, 2011, the RTC acquitted petitioner of the charge of estafa but held her civilly
liable to pay respondent the amount of P32,000.00, with interest from the filing of the Information on March
11, 1999 until fully paid, and to pay the costs.

The RTC found that the prosecution failed to establish any intent on the part of the petitioner to defraud
respondent and, thus, could not be held criminally liable.13 However, it adjudged petitioner civilly liable
"having admitted that she received the [GCs] in the amount of P32,000.00." In this relation, it further
considered the relationship of respondent and petitioner as in the nature of a principal-agent which renders
the agent civilly liable only for damages which the principal may suffer due to the non-performance of his
duty under the agency.14

With the foregoing pronouncement, petitioner elevated the civil aspect of the case before the CA on appeal,
docketed as CA-G.R. CV No. 97571.

The CA Ruling

In a Decision15 dated January 30, 2013, the CA upheld petitioner's civil liability.

It ruled that respondent was able to establish by preponderance of evidence her transaction with petitioner,
as well as the latter's failure to remit the proceeds of the sale of the merchandise worth P32,000.00, or to
return the same to respondent in case the items were not sold, the fact of which having been substantiated
by the acknowledgment receipt dated February 20, 1996.16 To this, the CA rejected petitioner's attempt to
discredit the said receipt which she denied executing on the ground that she was only made to sign blank
documents, finding that even if petitioner was indeed made to sign such blank documents, such was merely
a safety precaution employed by respondent in the event the former reneges on her obligation. 17

However, the CA modified the award of interests by reckoning the same from the time of extrajudicial
demand on July 28, 1998.18 Accordingly, it directed petitioner to pay respondent the amount of P32,000.00
with legal interest at the rate of 6% p.a. from July 28, 1998 until finality of the decision and thereafter, at
the rate of 12% p.a. on the outstanding balance until full satisfaction.

Dissatisfied, petitioner filed a motion for reconsideration19 which was denied in a Resolution20 dated July 10,
2013; hence, this petition.

The Issue Before the Court

The essential issue for the Court's resolution is whether or not the CA committed reversible error in finding
petitioner civilly liable to respondent.

The Court's Ruling

The petition lacks merit.

At the outset, it is noteworthy to mention that the extinction of the penal action does not carry with it the
extinction of the civil liability where the acquittal is based on reasonable doubt as only preponderance of
evidence, or "greater weight of the credible evidence," is required. 21 Thus, an accused acquitted
of estafa may still be held civilly liable where the facts established by the evidence so warrant, 22 as in this
case.

In upholding the civil liability of petitioner, the CA did not dwell into the purported admission of petitioner
anent her receipt of GCs in the amount of P32,000.00 as found by the RTC. Instead, the CA hinged its
ruling23 on the acknowledgment receipt24 dated February 20, 1996, the documentary evidence that
respondent had duly identified25 and formally offered26 in the course of these proceedings.

For her part, petitioner denied having entered into the subject transaction with respondent, claiming that
she: (a) had not transacted with respondent as to other goods, except GCs 27 and POCs;28 (b) was made to
sign two (2) one-half sheets of paper and a trust receipt in blank prior to the issuance of the GCs and
POCs,29 and (c) was not able to retrieve the same after paying her obligation to respondent. 30

The Court agrees with the CA.

Page 166 of 169

Petitioner's claim that she was required to sign two (2) one-half sheets of paper and a trust receipt in
blank31 during her transactions with respondent, which she allegedly failed to retrieve after paying her
obligations,32 is a bare allegation that cannot be given credence. It is well-settled that "[h]e who alleges a
fact has the burden of proving it and a mere allegation is not evidence." 33

On the contrary, the CA correctly found that respondent was able to prove by preponderance of evidence
the fact of the transaction, as well as petitioner's failure to remit the proceeds of the sale of the merchandise
worth P32,000.00, or to return the same to respondent in case such merchandise were not sold. This was
established through the presentation of the acknowledgment receipt 34 dated February 20, 1996, which, as
the document's name connotes, shows that petitioner acknowledged receipt from respondent of the listed
items with their corresponding values, and assumed the obligation to return the same on March 20, 1996 if
not sold.35

In this relation, it should be pointed out that under Section 3 (d), Rule 131 of the Rules of Court, the legal
presumption is that a person takes ordinary care of his concerns. To this, case law dictates that the natural
presumption is that one does not sign a document without first informing himself of its contents and
consequences.36 Further, under Section 3 (p) of the same Rule, it is equally presumed that private
transactions have been fair and regular.37 This behooves every contracting party to learn and know the
contents of a document before he signs and delivers it. 38 The effect of a presumption upon the burden of
proof is to create the need of presenting evidence to overcome the prima facie case created, thereby which,
if no contrary proof is offered, will prevail.39 In this case, petitioner failed to present any evidence to
controvert these presumptions. Also, respondent's possession of the document pertaining to the obligation
strongly buttresses her claim that the same has not been extinguished.40 Preponderance of evidence only
requires that evidence be greater or more convincing than the opposing evidence. 41 All things considered,
the evidence in this case clearly preponderates in respondent's favor.

In fine, the CA's ruling on petitioner's civil liability is hereby sustained. In line, however, with the
amendment introduced by the Bangko Sentral ng Pilipinas Monetary Board in BSP-MB Circular No.
799,42 series of 2013, there is a need to partially modify the same in that the interest accruing from the time
of the finality of this Decision should be imposed at the lower rate of six percent (6%) p.a., and not twelve
percent (12%) p.a. as imposed by the CA.

WHEREFORE, the petition is DENIED. The Decision dated January 30, 2013 and the Resolution dated July
10, 2013 of the Court of Appeals in CA-G.R. CV No. 97571 are hereby AFFIRMED withMODIFICATION,
directing petitioner Dolores Diaz to pay respondent Leticia S. Arcilla the amount of P32,000.00 with legal
interest at the rate of six percent (6%) per annum from July 28, 1998 until full payment.

SO ORDERED. chanroblesvirtuallawlibrary

Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Perez, JJ., concur. chanrobleslaw

Endnotes:

Rollo, pp. 10-24.

1

2
Id. at 37-43. Penned by Associate Justice Franchito N. Diamante with Associate Justices Celia C. Librea-
Leagogo and Melchor Q.C. Sadang concurring.

3
Id. at 45-46.

4
Records, pp. 1-2.

Rollo, p. 33.
5

6
Id. at 13.

7
Id. at 38.

8
Records, p. 92.

Page 167 of 169

9
Id.

10
See demand letter dated July 28, 1998; id. at 93.

11
Rollo, p. 39.

12
Id. at 31-35. Penned by Acting Judge Amor A. Reyes.

13
Id. at 34.

14
Id. at 35.

15
Id. at 37-43.

16
Id. at 40-41.

17
Id. at 40-41.

18
Id. at 42.

19
CA rollo, pp. 45-49.

20
Rollo, pp. 45-46.

21
Lim v. Mindanao Wines & Liquor Galleria, GR. No. 175851, July 4, 2012, 675 SCRA 628, 639-640.

22
Tabaniag v. People, 607 Phil. 429, 445 (2009).

23
Rollo, pp. 40-41.

24
Records, p. 92.

25
Transcript of Stenographic Notes (TSN), July 18, 2000, pp. 7-8.

26
Id. at 7.

27
TSN, April 29, 2002, pp. 9 and 12.

28
Id. at 4.

29
Id. at 3-4.

30
TSN, June 17, 2002, p. 12.

31
TSN, April 29, 2002, p. 4.

32
TSN, June 17, 2002, p. 12.

33
Luxuria Homes, Inc. v. CA, 361 Phil. 989, 1000 (1999).

34
Records, p. 92.

35
Id.

36
Allied Banking Corp. v. CA, 527 Phil. 46, 56-57 (2006).

37
Id.

38
Olbes v. China Banking Corporation, 519 Phil. 315, 322 (2006).

39
Lastrilla v. Granda, 516 Phil. 667, 686 (2006).

Page 168 of 169

40
See Bank of the Phil. Islands v. Sps. Royeca, 581 Phil. 188, 197 (2008).

41
Duarte v. Duran, 673 Phil. 241, 243 (2011).

42
Rate of interest in the absence of stipulation; dated June 21, 2013.

Page 169 of 169