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10/30/21, 8:03 PM SUPREME COURT REPORTS ANNOTATED 833

CASES REPORTED

SUPREME COURT REPORTS ANNOTATED

____________________
 
 
 

G.R. No. 204530.  July 26, 2017.*


 
REPUBLIC OF THE PHILIPPINES, represented by the
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS,
petitioner, vs. POTENCIANO A. LARRAZABAL, SR.,
VICTORIA LARRAZABAL LOCSIN and BETTY
LARRAZABAL MACATUAL, respondents.

Prospectivity of Laws; The Supreme Court (SC) ruled that


Republic Act (RA) No. 8974 cannot be made to apply retroactively
since it is a substantive law; there is nothing in RA No. 8974
which expressly provides for retroactive application; and
retroactivity could not necessarily be implied from RA No. 8974 or
in any of its provi-

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_______________

*  FIRST DIVISION.

 
 
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2 SUPREME COURT REPORTS ANNOTATED


Republic vs. Larrazabal, Sr.

sions.—The Court ruled that RA No. 8974 cannot be made to


apply retroactively since it is a substantive law; there is nothing
in RA No. 8974 which expressly provides for retroactive
application; and retroactivity could not necessarily be implied
from RA No. 8974 or in any of its provisions. Thus, the Court
ruled: It is a well-entrenched principle that statutes, including
administrative rules and regulations, operate prospectively unless
the legislative intent to the contrary is manifest by express terms
or by necessary implication because the retroactive application of
a law usually divests rights that have already become vested.
This is based on the Latin maxim: Lex prospicit non respicit (the
law looks forward, not backward). In the application of RA No.
8974, the Court finds no justification to depart from this rule.
First, RA No. 8974 is a substantive law. Second, there is nothing
in RA No. 8974 which expressly provides that it should have
retroactive effect. Third, neither is retroactivity necessarily
implied from RA No. 8974 or in any of its provisions.
Unfortunately for the petitioners, the silence of RA No. 8974 and
its Implementing Rules on the matter cannot give rise to the
inference that it can be applied retroactively. In the two (2) cases
wherein this Court applied the provisions of RA No. 8974, the
complaints were filed at the time the law was already in full force
and effect. Thus, these cases cannot serve as binding precedent to
the case at bench.
Expropriation Proceedings; Just Compensation; As ruled in
National Power Corporation v. Diato-Bernal, 638 SCRA 660
(2010), [i]t is settled that just compensation is to be ascertained as
of the time of the taking, which usually coincides with the
commencement of the expropriation proceedings.—The RTC’s
reliance on the sale of the properties of William Gothong and
Mariano Tan deviated from the settled rule that just
compensation should be determined as of the time of the taking.
Thus, as ruled in National Power Corporation v. Diato-Bernal,
638 SCRA 660 (2010), “[i]t is settled that just compensation is to
be ascertained as of the time of the taking, which usually
coincides with the commencement of the expropriation
proceedings. Where the institution of the action precedes entry
into the property, the just compensation is to be ascertained as of
the time of the filing of the complaint.”

PETITION for review on certiorari of the decision and


resolution of the Court of Appeals.

 
 
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Republic vs. Larrazabal, Sr.
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The facts are stated in the opinion of the Court.


   The Solicitor General for petitioner.
   Larrazabal Law Office for respondents.

CAGUIOA, J.:
 
The Case
 
This is petition for review on certiorari1 of the Decision2
and Resolution3 dated October 19, 2011 and November 12,
2012, respectively, of the Court of Appeals (CA) in C.A.-
G.R. CEB-CV No. 00810. The CA affirmed the Decision4
dated December 5, 2003 of the Regional Trial Court (RTC)
of Ormoc City, Branch 12 in Civil Case No. 3734-0 which
fixed the just compensation for the lot of respondent
Potenciano A. Larrazabal (Potenciano) at P10,000.00 per
square meter, the improvements therein at P1,000,000.00;
and for the lots of respondents Victoria Larrazabal Locsin
(Victoria) and Betty Larrazabal Macatual (Betty) at
P4,000.00 per square meter.
 
The Facts
 
Sometime in November 1991, heavy rains in Ormoc City
caused the Malbasag River to overflow resulting in a flash-­
flood throughout the city.5 To avoid a similar tragedy, the

_______________

1  Rollo, pp. 24-57.


2   Id., at pp. 60-69. Penned by Associate Justice Ramon Paul L.
Hernando, with Associate Justices Edgardo L. Delos Santos and Victoria
Isabel A. Paredes, concurring.
3   Id., at pp. 71-72. Penned by Associate Justice Ramon Paul L.
Hernando, with Associate Justices Edgardo L. Delos Santos and
Carmelita Salandanan Manahan, concurring.
4   Id., at pp. 95-99. Penned by Presiding Judge Francisco C. Gedorio,
Jr.
5  Id., at p. 61.

 
 
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4 SUPREME COURT REPORTS ANNOTATED


Republic vs. Larrazabal, Sr.

petitioner, through the Department of Public Works and


Highways, undertook a massive flood mitigation project at
the Malbasag River, which required a right-of-way.6
On September 15, 1999, petitioner filed a Complaint7
with the RTC for expropriation of portions of three parcels
of land that respondents Potenciano, Victoria, and Betty
owned.
Respondent Potenciano’s commercial property is Lot No.
844 located at Poblacion, Municipality of Ormoc, Leyte,
covered by Transfer Certificate of Title (TCT) No. 28 with a
total area of 2,629 square meters.8 Respondents Victoria’s
and Betty’s residential properties are Lot No. 1 located at
Barangay Can-adieng, Ormoc City, Leyte, covered by TCT
No. 16337, and with a total area of 5,682 square meters,
and Lot No. 2 in the same barangay, covered by TCT No.
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16518, with a total area of 5,683 square meters,


respectively.9 Petitioner sought to expropriate 1,027 square
meters of respondent Potenciano’s property, 575 square
meters of respondent Victoria’s property, and 4,638 square
meters of respondent Betty’s property.10 Based on
Resolution No. 8-98, Series of 1998,11 of the Ormoc City
Appraisal Committee (Resolution No. 8-98), the properties
were appraised at P1,000.00 per square meter for
commercial lots and P800.00 for residential lots.12
After the filing of the Complaint, petitioner was allowed
to enter the properties, demolish the improvements
thereon, and to deposit the amounts corresponding to the
provisional payments for the properties.13 Subsequently,
respondents filed their Answer where they prayed that the
just compensation for respondent Potenciano’s property be
fixed at P25,000.00

_______________

6   Id., at pp. 61-62.


7   Id., at pp. 73-80.
8   Id., at p. 61.
9   Id.
10  Id., at p. 62.
11  Id., at p. 94.
12  Id., at p. 62.
13  Id.

 
 
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VOL. 833, JULY 26, 2017 5


Republic vs. Larrazabal, Sr.

per square meter, and P15,000.00 per square meter for


respondents Victoria’s and Betty’s properties.14
On December 16, 1999, the RTC directed the release of
the cash that petitioner deposited in the amount of
P5,745,520.00, divided as follows: P1,575,120.00 to
respondent Potenciano; P460,000.00 to respondent Victoria,
and P3,710,400.00 to respondent Betty.15 And on February
18, 2000, the RTC appointed a set of Commissioners
composed of Atty. Bibiano C. Reforzado, Clerk of Court of
the RTC, as Chairman, Atty. Arturo P. Suarez, Register of
Deeds of Ormoc City, and Alfredo P. Pantino, resident of
Fatima Village, Cogon, Ormoc City, to evaluate and
recommend the amount of just compensation for the
properties.16
On November 20, 2001, the Commissioners submitted
their Report17 with the following estimated fair market
values of the properties: P10,000.00 per square meter for
respondent Poten­ciano’s property, or a total of
P12,620,000.00; and P4,000.00 per square meter for
respondents Victoria’s and Betty’s properties, or a total of
P2,300,000.00 and P18,552,000.00, respectively.18
The Commissioners considered the three properties as
commercial lots19 and found that one real estate
transaction — sale of the property of William Gothong and
Aboitiz where the lot was sold at P30,000.00 per square
meter — nearly reflected the fair market value of

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commercial lots in Ormoc City.20 The Commissioners’


Report states:

2.  Finding the Buyer’s Market – that is how much really the
buyer paid for the property is quite hard to

_______________

14  Id., at p. 63.
15  Id., at p. 97.
16  Id., at p. 63. See CA Decision note 11.
17  Records, pp. 140-145.
18  Rollo, p. 64; see Records, p. 144.
19  Records, p. 142.
20  Id., at p. 143.

 
 
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6 SUPREME COURT REPORTS ANNOTATED


Republic vs. Larrazabal, Sr.

produce. It is widely practiced in real estate transactions that the


documented deed of sale is very much undervalued or reduced to
evade capital gains and Documentary taxes. There is one real
estate transaction which nearly reflects the average FMV of
commercial lots in Ormoc City. Last November 14, 1997, William
Gothong and Aboitiz sold commercial lot located at Corner
Bonifacio and Burgos Sts., Ormoc City for P30,000.00 per square
meter on the documented deed of sale (Annex 3). This could be
much higher considering its location which is a choice lot (highly
commercial). Please take note that the authority given to the
undersigned broker ranges from P25,000.00 to P30,000.00 per
square meter which we can safely presume that it is the FMV of
highly commercial lots in the city.21

 
The Commissioners found that the estimated fair
market value of Potenciano’s property was P10,000.00 per
square meter, and P4,000.00 per square meter for Betty’s
and Victoria’s properties, thus:

A. POTENCIANO LARRAZABAL, SR. – Lot No. 844 with an area


of 2,629 sq. m. is located along the banks of Malbasag River.
On the Northern side, it is facing Lot 829 and 841 likewise also
owned by Mr. Larrazabal. Lot 829 & 841 is facing Aviles St.
According to some information, there were some bodega
building inside the perimeter which were demolished but we
could not give some appraisals because at the time of
inspection they were already leveled-off and new perimeter
CHB walling were already installed along the boundary of the
expropriated land and other remaining areas.
LAND = 1,262 sq. meters [at] P10,000.[00] = P12,620,000.00
B. BETTY L. MACATUAL – Property of Mrs. Betty Macatual (Lot
2) is also located along Malbasag [R]iver. It has no
improvement that were affected

_______________

21  Id., at pp. 143-144.

 
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Republic vs. Larrazabal, Sr.

by the JICA Project. Its location is in Brgy. Can­-adieng, Ormoc


City. This area is classified as commercial/residential and class
C.
LAND = 4,638 sq. meters at P4,000.00 = P18,552,000.00
C. VICTORIA L. LOCSIN – Property of Mrs. Locsin is located
beside that of Mrs. Betty Macatual. This area is also classified
as Commercial C.
LAND = 575 sq. meters at P4,000.00 = P2,300,000.0022

 
Petitioner then filed its Comment on the Commissioners’
Report stating that the appraisal values as stated in
Resolution No. 8-98 should be applied instead of the just
compensation determined by the Commissioners.23
 
Ruling of the RTC
 
In its Decision, the RTC approved the value of the
properties as fixed by the Commissioners in their Report.24
The RTC ruled that in eminent domain cases, the value of
the property as of the date of the filing of the complaint is
generally determinative of the just compensation.25 The
RTC further ruled that “sales so taken in the neighborhood
of the same year of taking, have been considered fair
enough as to reflect fair market value of the property.”26
As basis for approving the value fixed by the
Commissioners, the RTC relied on the sales of properties
that were made on November 14, 1997 involving the
property of William Gothong and Aboitiz and on July 10,
2000 involving the property of Mariano Tan, thus:

_______________

22  Id., at p. 144.
23  Rollo, p. 97.
24  Id., at p. 99.
25  Id., at p. 98.
26  Id., citing Republic v. Lichauco, 122 Phil. 33; 46 SCRA 305 (1972).

 
 
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8 SUPREME COURT REPORTS ANNOTATED


Republic vs. Larrazabal, Sr.

Applying now as basis the sales of the properties of William


Gothong and Aboitiz located at Corner Bonifacio and Burgos Sts.,
Ormoc City sold at P30,000.00 per square meter on November 14,
1997 (Annex “3”); and that of Mariano Tan located at Real St.,
Ormoc City which was at P6,726.00 per square meter made on
July 10, 2000 (Annex “5”), this Court hereby fixes just
compensation on the property of defendant Potenciano A.
Larrazabal, Sr. at P10,000.00 per square meter and the properties
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of defendants Victoria Larrazabal Locsin and Betty Larrazabal


Macatual at P4,000.00 per square meter thus approving the value
fixed by the Commissioners in their Report dated November 20,
2001.27

 
The dispositive portion of the RTC Decision states:

WHEREFORE, foregoing premises considered, judgment is


hereby rendered directing plaintiff to pay the amount of just
compensation for defendant Potenciano A. Larrazabal, Sr. for Lot
No. 844 covered by TCT No. 288 with an expropriated area of
1,262 square meters at P10,000.00 per square meter, or an
aggregate amount of P12,620,000.00 plus 1 Million pesos for the
improvements, for defendant Victoria Larrazabal Locsin for Lot
No. 1 covered by TCT No. 16337 with an expropriated area of 575
square meters at P4,000.00 per square meter, or an aggregate
amount of P2,300,000.00; for defendant Betty Larrazabal
Macatual for Lot No. 2 covered by TCT No. 16518 with an
expropriated area of 4,638 square meters at P4,000.00 per square
meter, or an aggregate amount of P18,552,000.00 plus twelve
percent (12%) interest thereof per annum computed from the date
of the filing of the present complaint on September 23, 1999 until
fully paid. No pronouncement as to costs.
SO ORDERED.28

_______________

27  Id., at p. 99.
28  Id.

 
 

VOL. 833, JULY 26, 2017 9


Republic vs. Larrazabal, Sr.

Ruling of the Court of Appeals


 
The CA in its Decision and Resolution affirmed the RTC
Decision. The CA made an extensive discussion on why the
RTC correctly disregarded Republic Act (RA) No. 8974,
entitled An Act to Facilitate the Acquisition of Right-of-
Way, Site or Location for National Government
Infrastructure Projects and for Other Purposes and its
Implementing Rules in determining the just compensation
to be paid to respondents for their properties.29
The CA ruled that RA No. 8974 was not applicable since
it only applies prospectively. Since the Complaint was filed
as early as September 15, 1999, RA No. 8974 was not
applicable because it was signed into law on November 7,
2000 and became effective only on November 26, 2000.30
The dispositive portion of the CA Decision states:

WHEREFORE, premises considered, the assailed


December 5, 2003 Decision of RTC, Branch 12, Ormoc City,
in Civil Case No. 3734-0, is hereby AFFIRMED. No costs.
SO ORDERED.31

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Petitioner moved for reconsideration,32 but the CA


denied it in its Resolution.
Hence, this petition.
 
Issues
 
The issues in this petition have focused on whether RA
No. 8974 is applicable to the determination of the just com-

_______________

29  Id., at pp. 66-68.


30  Id., at p. 66.
31  Id., at p. 69.
32  Id., at pp. 122-135.

 
 
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Republic vs. Larrazabal, Sr.

pensation to be paid to respondents for their properties,


and whether the CA acted correctly in affirming the RTC
Decision on the just compensation for the properties.
 
Ruling of the Court
 
The petition is GRANTED in part.
Petitioner, through the Office of the Solicitor General
(OSG), posits that it was error for the CA, the RTC, and the
Commissioners to disregard the standards set in RA 8974
on the argument that RA 8974 can and should be made to
apply.33 Petitioner is mistaken.

The Court had already squarely ruled in Spouses


Arrastia v. National Power Corporation34 that RA No. 8974
applies only prospectively. In Spouses Arrastia, the
complaint for eminent domain was filed on December 4,
1996. After the approval of RA No. 8974 on November 7,
2000, the petitioners therein moved for the RTC to require
respondent National Power Corporation (NPC) to comply
with the provisions of RA No. 8974 on payment of the
amount equivalent to 100% of the current zonal value of
the property upon filing of the complaint. The RTC granted
the motion and ruled that RA

No. 8974 was procedural in nature and could therefore be


35
given retroactive effect.
This was set aside by the CA which ruled that RA No.
8974 cannot be applied retroactively because to do so would
inflict substantial injury to a substantive right of the State.
The CA further ruled that a retroactive application of RA
No. 8974 would impose a greater burden on the State
where none had existed before.36

_______________

33  See Petition, p. 30, id., at p. 53.


34  555 Phil. 263; 528 SCRA 287 (2007).
35  Id., at pp. 266 and 268; p. 292.
36  Id., at p. 269; p. 293.

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Republic vs. Larrazabal, Sr.

In the appeal before this Court, the OSG, representing


respondent NPC, argued against the retroactive
application of RA No. 897437 — a position that it is
completely opposite to the position it now takes in this
petition.
In affirming the CA, the Court ruled that RA No. 8974
cannot be made to apply retroactively since it is a
substantive law; there is nothing in RA No. 8974 which
expressly provides for retroactive application; and
retroactivity could not necessarily be implied from RA No.
8974 or in any of its provisions.38 Thus, the Court ruled:

It is a well-entrenched principle that statutes, including


administrative rules and regulations, operate prospectively unless
the legislative intent to the contrary is manifest by express terms
or by necessary implication because the retroactive application of
a law usually divests rights that have already become vested.
This is based on the Latin maxim: Lex prospicit non respicit (the
law looks forward, not backward).
In the application of RA No. 8974, the Court finds no
justification to depart from this rule. First, RA No. 8974 is a
substantive law. Second, there is nothing in RA No. 8974 which
expressly provides that it should have retroactive effect. Third,
neither is retroactivity necessarily implied from RA No. 8974 or in
any of its provisions. Unfortunately for the petitioners, the silence
of RA No. 8974 and its Implementing Rules on the matter cannot
give rise to the inference that it can be applied retroactively. In
the two (2) cases wherein this Court applied the provisions of RA
No. 8974, the complaints were filed at the time the law was
already in full force and effect. Thus, these cases cannot serve as
binding precedent to the case at bench.39 (Citations omitted)

_______________

37  Id., at p. 270; p. 294.


38  Id., at p. 272; p. 296.
39  Id.

 
 
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Republic vs. Larrazabal, Sr.

The Court follows the foregoing ruling, and reiterates


here that RA No. 8974 can only be applied prospectively.
Here, since the complaint for eminent domain was filed
on September 15, 1999, or prior to the effectivity of RA No.
8974 on November 26, 2000, then RA No. 8974 and the
standards indicated therein are not applicable in
determining the just compensation in the present case.

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That said, as to the issue of whether the CA acted


correctly in affirming the RTC Decision on the just
compensation for the properties, the Court, for reasons
given below, is constrained to reverse the CA and the RTC,
and to order the remand of this case to the RTC for the
proper determination of just compensation.
The RTC Decision — which was affirmed by the CA —
had relied on the Commissioners’ Report that, in turn,
considered only the sale of the property of William Gothong
and Aboitiz located at Bonifacio corner Burgos Streets,
Ormoc City, sold at P30,000.00 per square meter on
November 14, 199740 as the transaction that “x x x nearly
reflects the average [fair market value] of commercial lots
in Ormoc City.”41 The RTC also mentioned the sale of the
property of Mariano Tan located at Real Street, Ormoc
City, which sold at P6,726.00 per square meter made on
July 10, 2000.42 Although the sale of the property of
Mariano Tan was attached to the Commissioners’ Report,
the Commissioners did not mention the sale of the property
in arriving at the fair market value of the properties of
Potenciano, Betty, and Victoria. Also attached to the
Commissioners’ Report was the sale of a property on
December 28, 1995 between Spouses Emmanuel and
Evelyn Antig and Marie Paz Kathryn Porciuncula of a 138-
square meter property for P450,000.00.43

_______________

40  Rollo, p. 99.
41  Records, p. 143.
42  Rollo, p. 99.
43  See Deed of Absolute Sale, Records, pp. 152-153.

 
 

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Republic vs. Larrazabal, Sr.

The RTC’s reliance on the sale of the properties of


William Gothong and Mariano Tan deviated from the
settled rule that just compensation should be determined
as of the time of the taking. Thus, as ruled in National
Power Corporation v. Diato-Bernal,44 “[i]t is settled that
just compensation is to be ascertained as of the time of the
taking, which usually coincides with the commencement of
the expropriation proceedings. Where the institution of the
action precedes entry into the property, the just
compensation is to be ascertained as of the time of the
filing of the complaint.”45
Since the Complaint in this case was filed on September
15, 1999, with petitioner being allowed entry to the
property thereafter, the just compensation should therefore
be reckoned as of the time of the filing of the Complaint.
The two sales relied upon by the RTC were made on
November 14, 1997 and July 10, 2000. These sales — the
first being almost 2 years prior to, and the second, being 10
months after, the filing of the Complaint on September 15,
1999 — were not and could not have been proper bases for
determining the just compensation for the properties. The

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same is true for the sale between Emmanuel Antig and


Marie Paz Kathryn Porciuncula as the sale was made on
December 28, 1995, or almost four years before the filing of
the Complaint. Sales around the time of September 15,
1999, or the year 1999, are the proper bases for
determining the just compensation for the properties,
especially considering that no reasons can be found in the
records as to why no such sales during this period were
considered by the Commissioners or the RTC.
More than this, however, the error of the RTC was
exacerbated by its reliance solely on comparative sales of
other properties. As ruled in National Power Corporation v.
YCLA

_______________

44  653 Phil. 345; 638 SCRA 660 (2010).


45   Id., at p. 354; p. 669, citing B.H. Berkenkotter & Co. v. Court of
Appeals, 290-A Phil. 371, 375; 216 SCRA 584, 587 (1992).

 
 
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Republic vs. Larrazabal, Sr.

Sugar Development Corporation,46 factors such as


acquisition cost, current market value of like properties,
tax value of the properties of respondents, and the sizes,
shapes, and locations of the properties, should have been
considered,47 thus:

[J]ust compensation cannot be arrived at arbitrarily; several factors must


be considered such as, but not limited to, acquisition cost, current market
value of like properties, tax value of the condemned property, its size,
shape, and location. But before these factors can be considered and given
weight, the same must be supported by documentary evidence. The
amount of just compensation could only be attained by using reliable and
actual data as bases for fixing the value of the condemned property. A
commissioners’ report of land prices which is not based on any
documentary evidence is manifestly hearsay and should be disregarded by
the court.48 (Citations omitted)

 
Here, the records reveal that the RTC’s determination of
just compensation did not consider any of the foregoing
factors. The RTC Decision miserably failed to even explain
how the amounts of P10,000.00 per square meter for
respondent Potenciano’s property, and P4,000.00 per
square meter for respondents Victoria’s and Betty’s
properties were arrived at. There was no consideration
made of the acquisition cost, current market value of like
properties, the tax value of the properties of respondents,
and the size, shape and location of the properties. Clearly,
in the absence of any actual and reliable data — and the
abject failure to explain this absence — there can be no
other conclusion that can be drawn except that the RTC’s
determination of just compensation was arbitrary.
In view of the foregoing, the Court is left with no option
except to reverse and set aside the CA Decision and
Resolution that affirmed the RTC Decision.
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46  723 Phil. 616; 712 SCRA 550 (2013).


47  Id., at p. 624; p. 559.
48  Id., at pp. 624-625; p. 559.

 
 
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VOL. 833, JULY 26, 2017 15


Republic vs. Larrazabal, Sr.

The Court, however, is not in a position to fix the


amount of just compensation for indeed, a review of the
records shows that there is no sufficient evidence to allow
any determination of the proper just compensation. In this
regard, the Court cannot also rely only on Resolution No. 8-
98 as this cannot substitute for the judicial determination
of just compensation, based on all the factors mentioned
above as jurisprudentially mandated.
WHEREFORE, in consideration of the foregoing
disquisitions, the instant petition is PARTIALLY
GRANTED. The Decision dated October 19, 2011 of the
Court of Appeals in C.A.-G.R. CEB-CV No. 00810 and the
Decision dated December 5, 2003 of the Regional Trial
Court of Ormoc City, Branch 12, in Civil Case No. 3734-0
are hereby SET ASIDE. This case is REMANDED to the
trial court which is ordered to make, with utmost dispatch,
the proper determination of just compensation, in
conformity with this Decision.
SO ORDERED.

Sereno (CJ., Chairperson), Leonardo-De Castro, Del


Castillo and Perlas-Bernabe, JJ., concur.

Petition partially granted, judgment set aside, case


remanded to trial court.

Notes.—As a general rule, laws shall have no


retroactive effect. However, exceptions exist, and one such
exception concerns a law that is procedural in nature.
(Dacudao vs. Gonzales, 688 SCRA 109 [2013])
It is well-settled that the amount of just compensation is
to be ascertained as of the time of the taking. (Sy vs. Local
Government of Quezon City, 697 SCRA 621 [2013])
 
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