MANILA
INTERNATIONAL G.R. No. 161836
AIRPORT AUTHORITY and
FRANCISCO E. ATAYDE, Present:
Petitioners,
QUISUMBING, J.,
Chairman,
CARPIO,
-
versus - CARPIO-MORALES, and
TINGA,
JJ.
JOAQUIN RODRIGUEZ, Promulgated:
Respondent.
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Tinga,
J.:
Once again the perennial clash
between government taking for public purpose, on one hand, and
individual property rights, on the other,
comes to fore, with the present case rendered interesting by a couple of
twists. Apparently the taking was effected without the aegis of an
expropriation case and yet the present owner of the property who is claiming
compensation purchased it knowing that it has long been used as part of the
airport runway.
In
the early seventies, petitioner Manila International Airport Authority (MIAA),
the government-owned and controlled corporation managing and operating the
Ninoy Aquino International Airport Complex, implemented expansion programs for
its runway. This necessitated the acquisition and occupation of some of the
properties surrounding its premises.
Expropriation proceedings were thus initiated over most of the
properties.
On 12 January 1996, the MIAA through its then General Manager, petitioner
Francisco Atayde (Atayde), received a letter[1]
from respondent Joaquin Rodriguez (Rodriguez) proposing to sell at P2,350.00
per square meter, one of the lots already occupied by the expanded runway but assumed as not yet
expropriated by the MIAA. The proposal
did not ripen to a deal. Subsequently, on 29 April 1996, Rodriguez
bought the bigger lot a portion of which was occupied by the runway, as well as all the rights to claim reasonable
rents and damages for the occupation, from its owner then, Buck Estate, Inc.,
for P4,000,000.00.[2] The property purchased per the covering
title[3]
has a total area of 9,687 square meters, of which a portion consisting of 7,687.5
square meters was then already occupied by the runway. This occupied portion is hereinafter referred to as the subject lot.
In
a letter dated P468,800,000.00.[4] As he did not reach an agreement with the
MIAA, Rodriguez filed a case for accion reinvindicatoria with damages.[5] Finding that the MIAA had illegally taken
possession of the property, the trial
court held:
WHEREFORE,
judgment is hereby rendered:
1. Ordering
defendant to pay plaintiff the amount of
P70,868,936.72 as rental for the property from 1972 to 1998;
2. Ordering defendant to pay P15,000.00 per square
meter as purchase price of the property occupied by it;
3. Ordering defendant
to pay exemplary damages in the amount of P1,000,000.00;
4. Ordering defendant to pay attorney’s fees equivalent
to 5% of the amount due.
SO ORDERED.[6]
The MIAA elevated the case to the
Court of Appeals, imputing as errors:
(i) the award of rentals commencing from 1972; (ii) the award of exemplary damages; and (iii) the order to pay P145,305,000.00 as
purchase price of the property.[7] In its Decision of
The parties filed separate motions
for reconsideration.[9] On
WHEREFORE,
premises considered, this Court resolves to:
(1)
PARTIALLY
GRANT plaintiff-appellees’
motion for reconsideration by including the following rate of legal interest in
the award of rentals:
“Six (6%) percent per annum to be computed from the
time of the judicial demand and twelve (12%) percent interest, in lieu of the
six (6%) percent, upon the finality of the decision until the payment thereof.”
(2)
DENY defendant-appellants’ motion for reconsideration for
lack of merit.
SO ORDERED.[10]
Both the MIAA and Atayde, as petitioners,
have thus come before this Court. They claim that Rodriguez was a buyer in bad
faith, having purchased the subject lot in a highly speculative and scheming
manner,[11] and
in anticipation of a grossly disproportionate amount of profit at the expense
of the Government.[12] This bad faith, according to petitioners, was
made evident by the fact that: (i)Rodriguez knew that the airport had been occupying the
subject property even before he bought it, and he bought it at the very low
price of P4,000,000.00; (ii)
three months before he purchased the property, Rodriguez had written to Atayde,
claiming to have the certificate of
title in his name and offering to sell the lot
to the MIAA for P2,350.00 per square meter; and (iii) after
purchasing the property, Rodriguez increased his asking price to P9,000.00
per square meter.[13] Since Rodriguez was a buyer in bad faith, petitioners
stress that the decisions of the courts below
entitling him to amass profits of more than
P200,000,000.00 is contrary to morals, good customs and public
policy, and would lead to his unjust
enrichment.[14]
Further, petitioners allege that
there is no basis for awarding exemplary damages and attorney’s fees in favor
of Rodriguez since the MIAA in fact exerted efforts to negotiate with
Rodriguez. Considering that the Court of
Appeals had ruled that Rodriguez could not claim damages in the form of rentals
from 1972 to 1995, the alleged encroachment starting in 1972 should not be used
as basis for computing and awarding damages and attorney’s fees, petitioners
add.[15]
Petitioners posit that compared to
Rodriguez’s conduct of bad faith, the MIAA
acted in good faith when it occupied the subject lot. They claim that the property, which was then
comprised of two (2) smaller lots owned by one Eugenio Cruz, had already been
expropriated by the Republic of the
Finally, even assuming that the MIAA
is required to pay compensation for the subject lot once more, the same could
not be at the current price of P15,000.00 per square meter as ruled by
the appellate court, but rather in the price at the time of the taking,[17]
petitioners close.
On the other hand, Rodriguez argues
that the instant petition calls for a review of the finding of facts of the
Court of Appeals which is not allowed in a petition for certiorari under Rule
45. Besides, the appellate court did not
commit any reversible error.
Private property shall not be taken for public
use without just compensation.[18] This is a constitutional mandate that we must
once more put in force. Pertinently, therefore, the Court must determine the basis
of compensation, as well as the kind and form of damages due Rodriguez as a
consequence of the MIAA’s use and occupation of the subject lot. Likewise, the
Court has to decide on the alleged bad faith on the part of Rodriguez in
purchasing the property.
The petition is partly meritorious.
While the instant case stemmed from
the accion reinvindicatoria that Rodriguez had filed, it
essentially revolves around the taking of the subject lot by the MIAA. There is
“taking” when the expropriator enters private property not only for a momentary
period but for a more permanent duration, or for the purpose of devoting the property
to a public use in such a manner as to oust the owner and deprive him of
all beneficial enjoyment thereof.[19] In this context, there was taking when the
MIAA occupied a portion thereof for its
expanded runway.
The instant case is certainly neither
unique nor of first impression. Where actual
taking was made without the benefit of expropriation proceedings, and the owner
sought recovery of the possession of the property prior to the filing of expropriation proceedings, the Court has
invariably ruled that it is the value of
the property at the time of taking that is controlling for purposes of
compensation.
Thus, in Commissioner of Public
Highways v. Burgos,[20]
wherein it took the owner of a parcel of land thirty-five (35) years before she
filed a case for recovery of possession taken by the local government unit for a road-right-of-way purpose, this Court
held:
…there being no other legal provision cited which would justify a departure form the rule that
just compensation is determined on the basis of the value of the property at
the time of the taking thereof in expropriation by the Government, the value of
the property as it is when the Government took possession of the land in
question, not the increased value resulting from the passage of time which
invariably brings unearned increment to landed properties, represents the true
value to be paid as just compensation for the property taken.[21]
In
Ansaldo v. Tantuico, Jr.,[22]
where the owners of two (2) lots used by
the Government for road widening sought compensation twenty-six (26) years after
the lots were taken, the Court ruled in the same vein, thus:
The sole question thus confronting the Court involves
the precise time at which just compensation should be fixed, whether as of the
time of actual taking of possession by the expropriating entity or, as the
Ansaldos maintain, only after conveyance of title to the expropriator pursuant
to expropriation proceedings duly instituted since it is only at such a time
that the constitutional requirements of due process aside from those of just
compensation may be fully met.[23]
x
x x x
It is as of the time of such a taking, to repeat, that
the just compensation for the property is to be established. As stated in
Republic v. Philippine National Bank,
". . . (W)hen
plaintiff takes possession before the institution of the condemnation
proceedings, the value should be fixed as of the time of the taking of said
possession, not of filing of the complaint and the latter should be the basis
for the determination of the value, when the taking of the property involved
coincides with or is subsequent to, the commencement of the proceedings.
Indeed, otherwise, the provision of Rule 69, Section 3, directing that
compensation 'be determined as of the date of the filing of the complaint'
would never be operative. As intimated in Republic v. Lara (supra), said
provision contemplates 'normal circumstances,' under which 'the complaint
coincides or even precedes the taking of the property by the plaintiff.'"
The reason for the rule, as pointed out in Republic v. Lara, is that —
". . . (W)here
property is taken ahead of the filing of the condemnation proceedings, the
value thereof may be enchanced by the public purpose for which it is taken; the
entry by the plaintiff upon the property may have depreciated its value
thereby; or, there may have been a natural increase in the value of the
property from the time the complaint is filed, due to general economic
conditions. The owner of private property should be compensated only for what
he actually loses; it is not intended that his compensation shall extend beyond
his loss or injury. And what he loses is only the actual value of his property
at the time it is taken. This is the only way that compensation to be paid can
be truly just; i.e., 'just not only to the individual whose property is taken,'
'but to the public, which is to pay for it.'"
Clearly, then, the value of the Ansaldos' property
must be ascertained as of the year 1947, when it was actually taken, and not at
the time of the filing of the expropriation suit, which, by the way, still has
to be done. It is as of that time that the real measure of their loss may
fairly be adjudged. The value, once fixed, shall earn interest at the legal
rate until full payment is effected, conformably with other principles laid
down by case law.[24]
The
ruling was reiterated in Eslaban v. Vda. De Onorio.[25] There,
a main irrigation canal was constructed over a
piece of land by the National
Irrigation Administration but the property owner filed the complaint seeking compensation
only nine (9) years later. The Court
declared:
Thus, the value of the property must be determined
either as of the date of the taking of the property or the filing of the
complaint, “whichever came first.” Even before the new rule, however, it was
already held in Commissioner of Public Highways v.
Indeed, the value of the land may be affected by many
factors. It may be enhanced on account
of its taking for public use, just as it may depreciate. As observed in Republic v. Lara:
[W]here
property is taken ahead of the filing of the condemnation proceedings, the value
thereof may be enhanced by the public purpose for which it is taken; the entry
by the plaintiff upon the property may have depreciated its value thereby; or
there may have been a natural increase in the value of the property from the
time it is taken to the time the complaint is filed, due to general economic
conditions. The owner of private
property should be compensated only for what he actually loses; it is not
intended that his compensation shall extend beyond his loss or injury. And what he loses is only the actual value of
his property at the time it is taken.
This is the only way that compensation to be paid can be truly just, i.e., “just” not only to the individual
whose property is taken, “but to the public, which is to pay for it” . . . .
In this case, the proper valuation for the property in
question is P16,047.61 per hectare, the price level for 1982, based on
the appraisal report submitted by the commission (composed of the provincial
treasurer, assessor, and auditor of
Per
the findings of the trial court,[27]
the subject lot was occupied as a runway of the MIAA starting in 1972. Thus, the value of the lot in 1972 should
serve as the basis for the award of compensation to the owner. However, said value does not appear in the
record.
Now, the question of actual damages
for the occupation of the subject lot.
Undeniably,
the MIAA’s illegal occupation for more than twenty (20) years has resulted in pecuniary loss to Rodriguez
and his predecessors-in-interest. Such pecuniary loss entitles him to adequate
compensation in the form of actual or
compensatory damages,[28]
which in this case should be the legal interest (6%)[29]
on the value of the land at the time of taking, from said point up to full
payment by the MIAA.[30] This
is based on the principle that interest “runs as a matter of law and follows
from the right of the landowner to be placed in as good position as money can
accomplish, as of the date of the taking.”[31]
The award of interest renders unwarranted
the grant of back rentals as extended by
the courts below. In Republic v. Lara,
et al.,[32]
the Court ruled that the indemnity for
rentals is inconsistent with a property owner’s right to be paid legal interest
on the value of the property, for if the condemnor is to pay the compensation
due to the owners from the time of the actual taking of their property, the
payment of such compensation is deemed to retroact to the actual taking of the
property; and, hence, there is no basis for claiming rentals from the time of
actual taking.[33] More explicitly, the Court held in Republic
v. Garcellano[34] that :
The uniform rule of this Court, however, is that this
compensation must be, not in the form of rentals, but by way of 'interest from
the date that the company [or entity] exercising the right of eminent domain
take possession of the condemned lands, and the amounts granted by the court
shall cease to earn interest only from the moment they are paid to the owners
or deposited in court x x x.[35]
Petitioners claim that Rodriguez is a
buyer in bad faith since prior to his purchase he was aware of the MIAA’s occupation
of the property and therefore proceeded with the purchase in anticipation of enormous profits from the subsequent sale
to the MIAA. The point is irrelevant. Regardless of whether or not Rodriguez acted in bad faith,
all that he will be entitled to is the value of the property at the time
of the taking, with legal interest thereon
from that point until full payment of the compensation by the MIAA. Besides, assuming the question is of any
consequence, the circumstances surrounding Rodriguez’s purchase may not even
amount to bad faith. Bad faith has been defined as a state of mind
affirmatively operating with furtive design or with
some motive of
self-interest or ill will or for an
ulterior purpose, and implies a
conscious and intentional design to do a wrongful act for a dishonest purpose
or moral obliquity.[36] There is nothing wrongful or dishonest in
expecting to profit from one’s investment. However, Rodriguez can fault but
only himself for taking an obvious risk in purchasing property already being used
for a public purpose. It was a self-inflicted misfortune that his
investment did not generate the windfall he had expected. For ostensibly little did he know that he
could not acquire more rights than the previous owners had since the government
taking had taken place earlier.
For more than twenty (20) years, the
MIAA occupied the subject lot without the benefit of expropriation proceedings
and without the MIAA exerting efforts to ascertain ownership of the lot and
negotiating with any of the owners of the property. To our mind, these are wanton and
irresponsible acts which should be suppressed and corrected. Hence, the award of exemplary damages and
attorneys fees is in order. However, while Rodriguez is entitled to such exemplary
damages and attorney’s fees, the award granted by the courts below should be
equitably reduced. We hold that Rodriguez is entitled only to P200,000.00
as exemplary damages, and attorney’s fees equivalent to one percent (1%) of the
amount due.
The MIAA argues that it had already expropriated
the subject lot back in the 1970s. However, the Court cannot pass upon this
defense, it having been brought up for the first time. Points of law, theories,
issues and arguments not adequately brought to the attention of the trial court
need not be, and ordinarily will not be, considered by a reviewing court as
they cannot be raised for the first time on appeal.[37] Moreover, this new theory of previous
expropriation is negated by the fact that petitioners negotiated with Rodriguez
when the latter offered the subject property for sale to the MIAA, as evidenced
by the correspondence between the parties.[38]
If the MIAA already owned the property, there would be no more need to
negotiate with Rodriguez; petitioners would have asserted such fact as soon as
Rodriguez had offered to sell the
property to them.
WHEREFORE,
the petition is GRANTED IN PART. The Decision of the Court of Appeals is
MODIFIED as follows:
a.
The
MIAA is ordered to pay Joaquin Rodriguez just compensation for the subject lot,
the portion actually occupied by the runway consisting of or based on the value thereof
at the time
of taking in
1972, with interest thereon at the
legal rate of six percent (6%) per annum from the time of the taking until full
payment is made. For the purpose of determining said value, the case is
remanded to the lower court. Said court
is ordered to make the determination with deliberate dispatch;
b.
The
award of back rentals as damages is DELETED;
c.
The
MIAA is ordered to PAY exemplary damages in the reduced amount of P200,000.00,
and attorney’s fees equivalent to one percent (1%) of the amount due.
No
pronouncement as to costs.
SO ORDERED.
DANTE O. TINGA Associate Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairman
ANTONIO T. CARPIO CONCHITA CARPIO-MORALES
Associate Justice Associate
Justice
ATTESTATION
I attest that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairman, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution,
and the Division Chairman’s Attestation, it is hereby certified that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
ARTEMIO V. PANGANIBAN
Chief
Justice
[3]After the purchase, TCT No. 109416 of the Registry of Deeds of Parañaque was issued to Rodriguez; id. at 87-88.
[19]Ansaldo v. Tantuico, Jr., G.R. No. 50147, 3 August 1990, 188 SCRA 300, 304, citing Municipality of La Carlota v. NAWASA, 12 SCRA 164.
[29]In Urtula v. Republic, No. L-22061,
[30]Amigable v.
[32]96 Phil. 170 (1954).
[34]103
Phil. 231 (1958), also cited in Valderhueza,
et al. v. Republic, No. L-21032,
[36]The Philippine American Life and General Insurance