Republic of the
Supreme Court
THIRD DIVISION
|
HON.
VICENTE P. EUSEBIO, LORNA A. BERNARDO, VICTOR ENDRIGA, and the CITY OF PASIG,
Petitioners, - versus - JOVITO
M. LUIS, LIDINILA LUIS
Respondents. |
G.R.
No. 162474 Present:
CARPIO, J., Chairperson, CHICO-NAZARIO, VELASCO, JR., nachura, and PERALTA,
JJ. Promulgated: October 13, 2009
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D E C I S I O N
PERALTA, J.:
This
resolves the Petition for Review on Certiorari under Rule 45 of the
Rules of Court, praying that the Decision[1]
of the Court of Appeals (CA) dated
The antecedent
facts are as follows:
Respondents
are the registered owners of a parcel of land covered by Transfer Certificate
of Title Nos. 53591 and 53589 with an area of 1,586 square meters. Said
parcel of land was taken by the City of P150.00 per
square meter. In a letter dated P2,000.00 per square meter
as the value of their land.
One of
the respondents also wrote a letter dated November 25, 1994 to Mayor Vicente P.
Eusebio calling the latter’s attention to the fact that a property in the same
area, as the land subject of this case, had been paid for by petitioners at the
price of P2,000.00 per square meter when said property was expropriated
in the year 1994 also for conversion into a public road. Subsequently, respondents’ counsel sent a
demand letter dated P5,000.00
per square meter, or a total of P7,930,000.00, as just compensation for
respondents’ property. In response,
Mayor Eusebio wrote a letter dated
Thus, on P500.00 per square meter, or P793,000.00, with legal
interest of 12% per annum from date of filing of the complaint until full
payment, or in the event that said property can no longer be returned, that
petitioners be ordered to pay just compensation in the amount of P7,930,000.00
and rental for sixteen years of use at P500.00 per square meter, or P793,000.00,
both with legal interest of 12% per annum from the date of filing of the
complaint until full payment. In
addition, respondents prayed for payment of moral and exemplary damages,
attorney’s fees and costs.
After
trial, the RTC rendered a Decision[3]
dated
WHEREFORE,
in view of the foregoing, judgment is hereby rendered in favor of the
plaintiffs and against the defendants:
1. Declaring as ILLEGAL and UNJUST the action of the
defendants in taking the properties of plaintiffs covered by Transfer
Certificates of Title Nos. 53591 and 53589 without their consent and without
the benefit of an expropriation proceedings required by law in the taking of
private property for public use;
2. Ordering the defendants to jointly RETURN the
subject properties to plaintiffs with payment of reasonable rental for its use
in the amount of P793,000.00 with legal interest at the rate of 6% per
annum from the filing of the instant Complaint until full payment is made;
3. In the event that said properties can no longer be
returned to the plaintiffs as the same is already being used as a public road
known as A. Sandoval Avenue, Pasig City,
the defendants are hereby ordered to jointly pay the plaintiffs the fair and
reasonable value therefore at P5,000.00 per square meter or a total of P7,930,000.00
with payment of reasonable rental for its use in the amount of P500.00
per square meter or a total of P793,000.00, both with legal interest at
the rate of 6% per annum from the filing of the instant Complaint until full
payment is made; and
4. Ordering the defendants to jointly pay the
plaintiffs attorney’s fees in the amount of P200,000.00.
No pronouncement as to costs.
SO ORDERED.
Petitioners then appealed the
case to the CA, but the CA affirmed the RTC judgment in its Decision dated
Petitioners’
motion for reconsideration of the CA Decision was denied per Resolution dated
Hence,
this petition where it is alleged that:
I.
PUBLIC
II.
PUBLIC
RESPONDENT COURT ERRED IN FIXING THE FAIR AND REASONABLE COMPENSATION FOR
RESPONDENTS’ PROPERTY AT P5,000.00 PER SQUARE METER DESPITE THE GLARING
FACT THAT AT THE TIME OF TAKING IN THE YEAR 1980 THE FAIR MARKET VALUE WAS
PEGGED BY AN APPRAISAL COMMITTEE AT ONE HUNDRED SIXTY PESOS (PHP160.00);
III.
PUBLIC
RESPONDENT COURT ERRED IN UPHOLDING THE JUDGMENT OF THE LOWER COURT AWARDING
THE AMOUNT OF P793,000.00 AS REASONABLE RENTAL FOR THE USE OF
RESPONDENTS’ PROPERTY IN SPITE OF THE FACT THAT THE SAME WAS CONVERTED INTO A
PUBLIC ROAD BY A PREVIOUSLY ELECTED MUNICIPAL MAYOR WITHOUT RESPONDENTS’
REGISTERING ANY COMPLAINT OR PROTEST FOR THE TAKING AND DESPITE THE FACT THAT
SUCH TAKING DID NOT PERSONALLY BENEFIT THE PETITIONERS BUT THE PUBLIC AT LARGE;
AND
IV.
PUBLIC
RESPONDENT COURT OF APPEALS ERRED IN AFFIRMING THE P200,000.00 AWARD FOR
ATTORNEY’S FEES TO THE PRIVATE RESPONDENTS’ COUNSEL DESPITE THE ABSENCE OF
NEGLIGENCE OR
At the
outset, petitioners must be disabused of their belief that respondents’ action
for recovery of their property, which had been taken for public use, or to
claim just compensation therefor is already barred by prescription. In Republic
of the Philippines v. Court of Appeals,[5]
the Court emphasized “that
where private property is taken by the Government for public use without first
acquiring title thereto either through expropriation or negotiated sale, the
owner’s action to recover the land or the value thereof does not prescribe.”
The Court went on to remind government agencies not to exercise the
power of eminent domain with wanton disregard for property rights as Section 9,
Article III of the Constitution provides that “private property shall not be
taken for public use without just compensation.” [6]
The remaining
issues here are whether respondents are entitled to regain possession of their
property taken by the city government in the 1980’s and, in the event that said
property can no longer be returned, how should just compensation to respondents
be determined.
These
issues had been squarely addressed in Forfom
Development Corporation v. Philippine National Railways,[7]
which is closely analogous to the present case.
In said earlier case, the Philippine National Railways (PNR) took
possession of the private property in 1972 without going through expropriation
proceedings. The San Pedro-Carmona
Commuter Line Project was then implemented with the installation of railroad
facilities on several parcels of land, including that of petitioner Forfom. Said owner of the private property then
negotiated with PNR as to the amount of just compensation. No agreement having been reached, Forfom
filed a complaint for Recovery of Possession of Real Property and/or Damages
with the trial court sometime in August 1990.
In said
case, the Court held that because the landowner did not act to question the
lack of expropriation proceedings for a very long period of time and even
negotiated with the PNR as to how much it should be paid as just compensation,
said landowner is deemed to have waived its right and is estopped from questioning
the power of the PNR to expropriate or the public use for which the power was
exercised. It was further declared
therein that:
x x x recovery of possession of the property by
the landowner can no longer be allowed on the grounds of estoppel and, more
importantly, of public policy which imposes upon the public utility the
obligation to continue its services to the public. The
non-filing of the case for expropriation will not necessarily lead to the
return of the property to the landowner.
What is left to the landowner is the right of compensation.
x x x It
is settled that non-payment of just compensation does not entitle the private landowners
to recover possession of their expropriated lot.[8]
Just like
in the Forfom case, herein respondents
also failed to question the taking of their property for a long period of time
(from 1980 until the early 1990’s) and, when asked during trial what action
they took after their property was taken, witness Jovito Luis, one of the
respondents, testified that “when we have an occasion to talk to Mayor Caruncho
we always asked for compensation.”[9]
It
is likewise undisputed that what was constructed by the city government on
respondents’ property was a road for public use, namely,
Now, with
regard to the trial court’s determination of the amount of just compensation to
which respondents are entitled, the Court must strike down the same for being
contrary to established rules and jurisprudence.
The
prevailing doctrine on judicial determination of just compensation is that set
forth in Forfom.[10] Therein, the Court ruled that even if there
are no expropriation proceedings instituted to determine just compensation, the
trial court is still mandated to act in accordance with the procedure provided
for in Section 5, Rule 67 of the 1997 Rules of Civil Procedure, requiring the
appointment of not more than three competent and disinterested commissioners to
ascertain and report to the court the just compensation for the subject
property. The Court reiterated its
ruling in National Power Corporation v. Dela
Cruz[11]
that “trial with the aid of commissioners is a substantial right that may not
be done away with capriciously or for no reason at all.”[12] It was also emphasized therein that although
ascertainment of just compensation is a judicial prerogative, the
commissioners’ findings may only be disregarded or substituted with the trial
court’s own estimation of the property’s value only if the commissioners have
applied illegal principles to the evidence submitted to them, where they have
disregarded a clear preponderance of evidence, or where the amount allowed is
either grossly inadequate or excessive. Thus,
the Court concluded in Forfom that:
The
judge should not have made a determination of just compensation without first
having appointed the required commissioners who would initially ascertain and
report the just compensation for the property involved. This being the case, we find the valuation made by the trial court to be ineffectual,
not having been made in accordance with the procedure provided for by the rules.[13]
Verily,
the determination of just compensation for property taken for public use must
be done not only for the protection of the landowners’ interest but also for
the good of the public. In Republic v. Court of Appeals,[14]
the Court explained as follows:
The concept of just compensation, however, does not
imply fairness to the property owner alone.
Compensation must be just not
only to the property owner, but also to the public which ultimately bears the
cost of expropriation.[15]
It is quite clear that the Court,
in formulating and promulgating the procedure provided for in Sections 5 and 6,
Rule 67, found this to be the fairest way of arriving at the just compensation to
be paid for private property taken for public use.
With
regard to the time as to when just compensation should be fixed, it is settled
jurisprudence that where property was taken without the benefit of
expropriation proceedings, and its owner files an action for recovery of
possession thereof before the commencement of expropriation proceedings, it is
the value of the property at the time of taking that is controlling.[16] Explaining the reason for this rule in Manila International Airport Authority v. Rodriguez,[17]
the Court, quoting Ansaldo v. Tantuico,
Jr.,[18] stated,
thus:
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.’[19]
In this case, the trial court
should have fixed just compensation for the property at its value as of the
time of taking in 1980, but there is nothing on record showing the value of the
property at that time. The trial court,
therefore, clearly erred when it based its valuation for the subject land on the
price paid for properties in the same location, taken by the city government
only sometime in the year 1994.
However,
in taking respondents’ property without the benefit of expropriation
proceedings and without payment of just compensation, the City of
Such pecuniary loss entitles him to adequate
compensation in the form of actual or compensatory damages, which in
this case should be the legal interest (6%) on the value of the land at the
time of taking, from said point up to full payment by the MIAA. 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.”
The award of interest renders unwarranted the grant
of back rentals as
extended by the courts below. In Republic v. Lara, et al.,
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. More
explicitly, the Court held in Republic v. Garcellano 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.
x
x x x
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.[21]
Lastly, with
regard to the liability of petitioners Vicente P. Eusebio, Lorna A. Bernardo,
and Victor Endriga all officials of the city government the
Court cannot uphold the ruling that said petitioners are jointly liable in
their personal capacity with the City of Pasig for payments to be made to
respondents. There is a dearth of
evidence which would show that said petitioners were already city government
officials in 1980 or that they had any involvement whatsoever in the illegal
taking of respondents’ property. Thus, any
liability to respondents is the sole responsibility of the City of
IN
VIEW OF THE FOREGOING, the petition is PARTIALLY
GRANTED. The Decision of the Court
of Appeals dated
1.
The valuation of just compensation and award of back rentals made by the
2.
The City of P200,000.00 as exemplary damages and P200,000.00 as
attorney’s fees.
No costs.
SO
ORDERED.
DIOSDADO M. PERALTA
Associate Justice
WE
CONCUR:
ANTONIO
T. CARPIO
Associate Justice
Chairperson
MINITA V. CHICO-NAZARIO PRESBITERO
J. VELASCO, JR.
Associate Justice Associate Justice
ANTONIO EDUARDO B. NACHURA
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.
ANTONIO
T. CARPIO
Associate
Justice
Third
Division, Chairperson
CERTIFICATION
Pursuant
to Section 13, Article VIII of the Constitution, and the Division Chairperson’s
Attestation, I certify that the conclusions in the above Decision were reached
in consultation before the case was assigned to the writer of the opinion of
the Court’s Division.
LEONARDO A. QUISUMBING
Acting Chief Justice
* The Court of Appeals is dropped as one of the respondents in accordance with Section 4, Rule 45 of the Rules of Court, which states that the petition shall not implead the lower courts or judges thereof either as petitioners or respondents.
1 Penned by Associate Justice Renato C. Dacudao, with Associate Justices Cancio C. Garcia (now retired SC Associate Justice) and Danilo B. Pine, concurring; rollo, pp. 44-56.
[2]
[3] Rollo, pp. 41-42.
[4]
[5] G.R. No. 147245,
[6]
[7] G.R. No. 124795,
[8] Emphasis ours.
[9] TSN,
[10] Supra. See note 7.
[11] G.R. No. 156093,
[12]
[13] Supra note 7. (Emphasis and underscoring ours.)
[14] Supra note 5.
[15]
[16] Forfom v. Philippine National Railways, supra note 7; Manila International Airport Authority v. Rodriguez, G.R. No. 161836, February 28, 2006, 483 SCRA 619, 627; Republic v. Court of Appeals, supra note 5, at 534-535.
[17] Supra, at 628.
[18] G.R. No. 50147,
[19]
[20] Supra note 16.
[21]