G.R. No. 124795 ; December 10, 2008
FORFOM DEVELOPMENT CORPORATION, petitioner, vs. PHILIPPINE NATIONAL RAILWAYS, respondent.

FACTS

Petitioner Forfom Development Corporation (Forfom) is the registered owner of parcels of land in San Pedro, Laguna, originally owned by its predecessor-in-interest, Dr. Felix Limcaoco. In 1972, then President Ferdinand E. Marcos approved the Presidential Commuter Service Project (Carmona Project). Respondent Philippine National Railways (PNR), pursuant to its charter (Presidential Decree No. 741) and a board resolution, implemented the San Pedro-Carmona Commuter Line Project. During construction, a 100,128 square-meter portion of Forfom’s property was traversed and used as a right-of-way for railroad tracks and facilities. PNR claimed the acquisition was through negotiation and that other affected landowners were paid compensation at P1.25 per square meter, but Forfom was not paid because its predecessor failed to present the corresponding titles. Forfom alleged the taking was forcible, without its consent, and involved the destruction of crops. In 1990, Forfom filed a complaint for Recovery of Possession of Real Property and/or Damages before the Regional Trial Court (RTC) of Biñan, Laguna. The RTC dismissed the complaint, ruling that PNR had a lawful right to acquire the property through expropriation and ordered Forfom to accept payment at P1.25 per square meter. The Court of Appeals affirmed the RTC decision. Forfom elevated the case to the Supreme Court via a Petition for Review on Certiorari.

ISSUE

Whether the respondent PNR lawfully exercised its power of eminent domain over the petitioner’s property and whether just compensation was duly determined and paid.

RULING

The Supreme Court DENIED the petition and AFFIRMED the decision of the Court of Appeals. The Court held that PNR, as a government corporation engaged in proprietary functions and vested with the power of eminent domain under its charter, lawfully took the petitioner’s property for a public purpose—the construction of a commuter line to serve a resettlement area. The taking occurred in 1972, and the filing of the complaint in 1990 constituted an action for the recovery of possession, which is improper when the property has been appropriated for public use. The correct remedy is an action for the determination and payment of just compensation. The Court ruled that just compensation must be based on the value of the property at the time of taking in 1972, not its current value. The case was remanded to the RTC solely for the determination of just compensation, computed as the fair market value at the time of taking in 1972, plus legal interest from the time of taking until full payment. The RTC was directed to receive evidence specifically for this purpose and to compute just compensation based on the standard outlined in the decision.