On the case of expropriated land

(First of two parts)

The case Republic v. Espina & Madarang, Co. and Makar Agricultural Corp. concerned three lots (collectively, “subject land”), which the Philippine government had taken for public use since they traversed along a portion of the national highway in General Santos City.

Claiming to own the subject land, the estate of Insolvencia Voluntaria de Olarte Hermanos y Cia (“Olartes”), through its attorney-in-fact, sought road right of eay (RROW) compensation from petitioner Department of Public Works and Highways (DPWH).

The DPWH then received the corresponding court orders in relation to the settlement of Olartes’ estate, which it had been complying with by paying the RROW claim in installments.

Respondents Espina & Madarang, Co. (EMC) and Makar Agricultural Corp. (MAC) filed against Olartes, her heirs, the DPWH, and the Register of Deeds a complaint before the Regional Trial Court (RTC).

In their complaint, EMC and MAC alleged that the subject land had been mortgaged to El Hogar Filipino to secure a loan.

Upon Olartes’ failure to pay the loan, the subject land was sold at public auction to sisters Salud, Soledad, Mercedes, and Asuncion Espina (collectively, “Espina sisters”). The Espina sisters sold the subject land to MAC, which then sold a portion thereof to EMC.

The DPWH manifested that it had been paying Olarte’s heirs upon their representation that they owned the subject land; and with the dispute over the property’s ownership, it would support the consequent proceedings and suspend payment until the issue was resolved.

EMC and MAC sought the RTC to dismiss their complaint for being moot and academic, considering the Court of Appeals’ decision in an earlier case, which affirmed their ownership over the subject land. The RTC favorably ruled on EMC and MAC’s motion.

Thereafter, it issued a supplemental order clarifying the amount to be paid by the DPWH to EMC and MAC.

The DPWH, represented by the Republic, appealed the RTC’s ruling, which both the Court of Appeals and Supreme Court denied. By then, upon EMC and MAC’s motion, the RTC directed its sheriff to immediately implement the writ of execution it had issued, pending the resolution of the DPWH’s appeal.

The DPWH appealed the RTC’s relevant orders, which the Court of Appeals denied. It then filed the instant appeal before the Supreme Court.

The DPWH now argues that the immediate execution of the orders directing it to pay the RROW claim and garnishing its funds effectively deprive the Commission on Audit (COA) of its constitutional mandate to examine and audit the disbursement of public funds.

Moreover, the proceedings in the payment of the RROW compensation were supposedly tainted with irregularities, such that: (a) EMC and MAC were not properly determined as the owners of the subject land; and (b) the amount representing the RROW compensation was not properly established as the full and fair equivalent of the property taken.

Even if the issues of ownership and just compensation were established, the DPWH argued that the execution of the monetary award could not proceed, absent the corresponding and without the COA’s approval.

In this regard, EMC and MAC’s proper recourse would purportedly be to recover the payments already made to Olarte’s heirs, and not to compel the DPWH to disburse public funds for this purpose.

Meanwhile, EMC and MAC countered that: (a) the the DPWH could no longer raise these issues since pursuant to the principle of res judicata, they had already been settled and should no longer be disturbed; and thus, (b) they were entitled to compensation for the RROW.

Moreover, the COA’s approval to disburse the consequent public funds is unnecessary, considering one of its circulars, which has effectively lifted the pre-audit activities on government transactions.

The Supreme Court affirmed with modification the Court of Appeals’ ruling, thus: (a) declaring that the issues concerning EMC and MAC’s ownership of the subject land and their entitlement to the RROW compensation had long been settled; and (b) directing EMC and MAC to file a money claim before the COA to satisfy and enforce the judgment on their claim for just compensation.

It nevertheless clarified that the COA’s jurisdiction here was only confined to the execution stage since it had no power or authority to overturn a court’s final and executory judgment against the State. (To be continued)