EN BANC
G.R. No. 179334, April 21, 2015
SECRETARY OF THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS AND DISTRICT ENGINEER CELESTINO R. CONTRERAS, Petitioners, v. SPOUSES HERACLEO AND RAMONA TECSON, Respondents.
R E S O L U T I O N
PERALTA, J.:
For resolution is the Motion for Reconsideration1 filed by respondents-movants spouses Heracleo and Ramona Tecson imploring the Court to take a second look at its July 1, 2013 Decision, the dispositive portion of which reads:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Court of Appeals Decision dated July 31, 2007 in CA-G.R. CV No. 77997 is MODIFIED, in that the valuation of the subject property owned by respondents shall be P0.70 instead of P1,500.00 per square meter, with interest at six percent (6%) per annum from the date of taking in 1940 instead of March 17, 1995, until full payment.2cralawlawlibraryIn view of the contrasting opinions of the members of the Third Division on the instant motion, and the transcendental importance of the issue raised herein, the members of the Third Division opted to refer the issue to the En Banc for resolution.
Citing the views of Justices Presbitero J. Velasco, Jr. and Marvic Mario Victor F. Leonen in their Dissenting and Concurring Opinion and Separate Opinion, respectively, respondents-movants insist that gross injustice will result if the amount that will be awarded today will be based simply on the value of the property at the time of the actual taking. Hence, as proposed by Justice Leonen, they suggest that a happy middle ground be achieved by meeting the need for doctrinal precision and the thirst for substantial justice.7
- THE HONORABLE COURT MAY LOOK INTO THE "JUSTNESS" OF THE MISERABLE AMOUNT OF COMPENSATION BEING AWARDED TO THE HEREIN RESPONDENTS; and
- THE HONORABLE COURT MAY SETTLE FOR A HAPPY MIDDLE GROUND IN THE NAME OF DOCTRINAL PRECISION AND SUBSTANTIAL JUSTICE.6
x x x In Land Bank of the Philippines v. Orilla, a valuation case under our agrarian reform law, this Court had occasion to state:chanroblesvirtuallawlibraryIndeed, the State is not obliged to pay premium to the property owner for appropriating the latter's property; it is only bound to make good the loss sustained by the landowner, with due consideration of the circumstances availing at the time the property was taken. More, the concept of just compensation does not imply fairness to the property owner alone. Compensation must also be just to the public, which ultimately bears the cost of expropriation.16Constitutionally, "just compensation" is the sum equivalent to the market value of the property, broadly described as the price fixed by the seller in open market in the usual and ordinary course of legal action and competition, or the fair value of the property as between the one who receives and the one who desires to sell, it being fixed at the time of the actual taking by the government. Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. It has been repeatedly stressed by this Court that the true measure is not the taker's gain but the owner's loss. The word "just" is used to modify the meaning of the word "compensation" to convey the idea that the equivalent to be given for the property to be taken shall be real, substantial, full and ample. [Emphasis supplied.]15cralawlawlibrary
We recognized in Republic v. Court of Appeals the need for prompt payment and the necessity of the payment of interest to compensate for any delay in the payment of compensation for property already taken. We ruled in this case that:chanroblesvirtuallawlibraryIn other words, the just compensation due to the landowners amounts to an effective forbearance on the part of the State—a proper subject of interest computed from the time the property was taken until the full amount of just compensation is paid—in order to eradicate the issue of the constant variability of the value of the currency over time.21 In the Court's own words:chanroblesvirtuallawlibraryThe constitutional limitation of "just compensation" is considered to be the sum equivalent to the market value of the property, broadly described to be the price fixed by the seller in open market in the usual and ordinary course of legal action and competition or the fair value of the property as between one who receives, and one who desires to sell, i[f] fixed at the time of the actual taking by the government. Thus, if property is taken for public use before compensation is deposited with the court having jurisdiction over the case, the final compensation must include interest[s] on its just value to be computed from the time the property is taken to the time when compensation is actually paid or deposited with the court. In fine, between the taking of the property and the actual payment, legal interestfsj accrue in order to place the owner in a position as good as (but not better than) the position he was in before the taking occurred. [Emphasis supplied]20cralawlawlibrary
The Bulacan trial court, in its 1979 decision, was correct in imposing interests on the zonal value of the property to be computed from the time petitioner instituted condemnation proceedings and "took" the property in September 1969. This allowance of interest on the amount found to be the value of the property as of the time of the taking computed, being an effective forbearance, at 12% per annum should help eliminate the issue of the constant fluctuation and inflation of the value of the currency over time x x x.22cralawlawlibraryOn this score, a review of the history of the pertinent laws, rules and regulations, as well as the issuances of the Central Bank (CB) or Bangko Sentral ng Pilipinas (BSP) is imperative in arriving at the proper amount of interest to be awarded herein.
Section 1. The rate of interest for the loan or forbearance of any money goods, or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall be six per centum per annum or such rate as may be prescribed by the Monetary Board of the Central Bank of the Philippines for that purpose in accordance with the authority hereby granted.Under the aforesaid law, any amount of interest paid or stipulated to be paid in excess of that fixed by law is considered usurious, therefore unlawful.25
Sec. 1-a. The Monetary Board is hereby authorized to prescribe the maximum rate or rates of interest for the loan or renewal thereof or the forbearance of any money, goods or credits, and to change such rate or rates whenever warranted by prevailing economic and social conditions.
In the exercise of the authority herein granted, the Monetary Board may prescribe higher maximum rates for loans of low priority, such as consumer loans or renewals thereof as well as such loans made by pawnshops finance companies and other similar credit institutions although the rates prescribed for these institutions need not necessarily be uniform. The Monetary Board is also authorized to prescribe different maximum rate or rates for different types of borrowings, including deposits and deposit substitutes, or loans of financial intermediaries.24cralawlawlibrary
By virtue of the authority granted to it under Section 1 of Act No. 2655, as amended, otherwise known as the "Usury Law," the Monetary Board, in its Resolution No. 1622 dated July 29, 1974, has prescribed that the rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall be twelve per cent (12%) per annum.26cralawlawlibraryThe foregoing rate was sustained in CB Circular No. 90527 which took effect on December 22, 1982, particularly Section 2 thereof, which states:chanroblesvirtuallawlibrary
Sec. 2. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall continue to be twelve per cent (12%) per annum.28cralawlawlibraryRecently, the BSP Monetary Board (BSP-MB), in its Resolution No. 796 dated May 16, 2013, approved the amendment of Section 2 of Circular No. 905, Series of 1982, and accordingly, issued Circular No. 799, Series of 2013, effective July 1, 2013, the pertinent portion of which reads:chanroblesvirtuallawlibrary
The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of interest in the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No. 905, Series of 1982:Accordingly, the prevailing interest rate for loans and forbearance of money is six percent (6%) per annum, in the absence of an express contract as to such rate of interest.
Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions are hereby amended accordingly.
This Circular shall take effect on 01 July 2013.29cralawlawlibrary
It is important to note, however, that interest shall be compounded at the time judicial demand is made pursuant to Article 221230 of the Civil Code of the Philippines, and sustained in Eastern Shipping Lines v. Court of Appeals,31 then later on in Nacar v. Gallery Frames,32 save for the reduction of interest rate to 6% for loans or forbearance of money, thus:chanroblesvirtuallawlibrary
Law, Rule and Regulations, BSP Issuances Date of Effectivity Interest RateAct No. 2655 May 1, 1916 6% CB Circular No. 416 July 29, 1974 12% CB Circular No. 905 December 22, 1982 12% CB Circular No. 799 July 1, 2013 6%
Applying the foregoing law and jurisprudence, respondents-movants are entitled to interest in the amount of One Million Seven Hundred Eighteen Thousand Eight Hundred Forty-Eight Pesos and Thirty-Two Centavos (P1,718,848.32) as of September 30, 2014,34 computed as follows:chanroblesvirtuallawlibrary
- When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.33
Considering that respondents-movants only resorted to judicial demand for the payment of the fair market value of the land on March 17, 1995, it is only then that the interest earned shall itself earn interest.
January 1, 194035 to July 28, 1974 P 10,553.4937July 29, 1974 to March 16, 1995 26,126.3138March 17, 199536 to June 30, 2013 232,070.3339July 1, 2013 to September 30, 2014 250,098.1940Market Value of the Property at the time of taking including interest P 518,848.32Market value of the property at the time of taking including interest P 518,848.32Add: Exemplary damages 1,000,000.00Attorney's fees 200,000.00Total Amount of Interest due to Respondents-Movants as of September 30, 2014 P1,718,848.16
However, in taking respondents' property without the benefit of expropriation proceedings and without payment of just compensation, the City of Pasig clearly acted in utter disregard of respondents' proprietary rights. Such conduct cannot be countenanced by the Court. For said illegal taking, the City of Pasig should definitely be held liable for damages to respondents. Again, in Manila International Airport Authority v. Rodriguez, the Court held that the government agency's illegal occupation of the owner's property for a very long period of time surely resulted in pecuniary loss to the owner. The Court held as follows:chanroblesvirtuallawlibrarySimilarly, in Republic v. CA,44 We held that the failure of the government to initiate an expropriation proceeding to the prejudice of the landowner may be corrected with the awarding of exemplary damages, attorney's fees and costs of litigation. Thus:chanroblesvirtuallawlibrarySuch 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:chanroblesvirtuallawlibraryThe 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.43cralawlawlibrary
The Court will not award attorney's fees in light of respondent's choice not to appeal the CA Decision striking down the award. However, we find it proper to award temperate and exemplary damages in light of NIA's misuse of its power of eminent domain. Any arm of the State that exercises the delegated power of eminent domain must wield that power with circumspection and utmost regard for procedural requirements. A government instrumentality that fails to observe the constitutional guarantees of just compensation and due process abuses the authority delegated to it, and is liable to the property owner for damages.Applying the aforequoted doctrines to the present case, considering that respondents-movants were deprived of beneficial ownership over their property for more than seventy (70) years without the benefit of a timely expropriation proceedings, and to serve as a deterrent to the State from failing to institute such proceedings within the prescribed period under the law, a grant of exemplary damages in the amount of One Million Pesos (P1,000,000.00) is fair and reasonable. Moreover, an award for attorney's fees in the amount of Two Hundred Thousand Pesos (P200,000.00) in favor of respondents-movants is in order.
Temperate or moderate damages may be recovered if pecuniary loss has been suffered but the amount cannot be proved with certainty from the nature of the case. Here, the trial and appellate courts found that the owners were unable to plant palay on 96,655 square meters of the Property for an unspecified period during and after NIA's construction of the canals in 1972. The passage of time, however, has made it impossible to determine these losses with any certainty. NIA also deprived the owners of the Property of possession of a substantial portion of their land since 1972. Considering the particular circumstances of this case, an award of P150,000 as temperate damages is reasonable.
NIA's irresponsible exercise of its eminent domain powers also deserves censure. For more than three decades, NIA has been charging irrigation fees from respondent and other landowners for the use of the canals built on the Property, without reimbursing respondent a single cent for the loss and damage. NIA exhibits a disturbingly cavalier attitude towards respondent's property rights, rights to due process of law and to equal protection of the laws. Worse, this is not the first time NIA has disregarded the rights of private property owners by refusing to pay just compensation promptly. To dissuade NIA from continuing this practice and to set an example for other agencies exercising eminent domain powers, NIA is directed to pay respondent exemplary damages of P250,000.45cralawlawlibrary
This Court is not unaware that at present, stringent laws and rules are put in place to ensure that owners of real property acquired for national government infrastructure projects are promptly paid just compensation. Specifically, Section 4 of Republic Act No. 8974 (R.A. 8974),46 which took effect on November 26, 2000, provides sufficient guidelines for implementing an expropriation proceeding, to wit:chanroblesvirtuallawlibrary
Market value of the property at the time of taking in 1940 including interest P 518,848.32Add: Exemplary Damages 1,000,000.00Attorney's fees 200,000.00Total Amount due to Respondents- movants as of September 30, 2014 P1,718,848.32
Section 4. Guidelines for Expropriation Proceedings. - Whenever it is necessary to acquire real property for the right-of-way or location for any national government infrastructure project through expropriation, the appropriate implementing agency shall initiate the expropriation proceedings before the proper court under the following guidelines:chanroblesvirtuallawlibraryFailure to comply with the foregoing directives shall subject the government official or employee concerned to administrative, civil and/or criminal sanctions, thus:chanroblesvirtuallawlibraryUpon compliance with the guidelines abovementioned, the court shall immediately issue to the implementing agency an order to take possession of the property and start the implementation of the project.
(a) Upon the filing of the complaint, and after due notice to the defendant, the implementing agency shall immediately pay the owner of the property the amount equivalent to the sum of (I) one hundred percent (100%) of the value of the property based on the current relevant zonal valuation of the Bureau of Internal Revenue (BIR); and (2) the value of the improvements and/or structures as determined under Section 7 hereof; (b) In provinces, cities, municipalities and other areas where there is no zonal valuation, the BIR is hereby mandated within the period of sixty (60) days from the date of the expropriation case, to come up with a zonal valuation for said area; and (c) In case the completion of a government infrastructure project is of utmost urgency and importance, and there is no existing valuation of the area concerned, the implementing agency shall immediately pay the owner of the property its proffered value taking intoconsideration the standards prescribed in Section 5 hereof.
Before the court can issue a Writ of Possession, the implementing agency shall present to the court a certificate of availability of funds from the proper official concerned.
In the event that the owner of the property contests the implementing agency's proffered value, the court shall determine the just compensation to be paid the owner within sixty (60) days from the date of filing of the expropriation case. When the decision of the court becomes final and executory, the implementing agency shall pay the owner the difference between the amount already paid and the just compensation as determined by the court.
Section 11. Sanctions. - Violation of any provisions of this Act shall subject the government official or employee concerned to appropriate administrative, civil and/or criminal sanctions, including suspension and/or dismissal from the government service and forfeiture of benefits.
While the foregoing provisions, being substantive in nature or disturbs substantive rights, cannot be retroactively applied to the present case, We trust that this established mechanism will surely deter hasty acquisition of private properties in the future without the benefit of immediate payment of the value of the property in accordance with Section 4 of R.A. 8974. This effectively addresses J. Velasco's concerns that sustaining our earlier rulings on the matter would be licensing the government to dispense with constitutional requirements in taking private properties. Moreover, any gap on the procedural aspect of the expropriation proceedings will be remedied by the aforequoted provisions.
In effect, R.A. 8974 enshrines a new approach towards eminent domain that reconciles the inherent unease attending expropriation proceedings with a position of fundamental equity.47
Despite the foregoing developments, however, We emphasize that the government's failure, to initiate the necessary expropriation proceedings prior to actual taking cannot simply invalidate the State's exercise of its eminent domain power, given that the property subject of expropriation is indubitably devoted for public use, and public policy imposes upon the public utility the obligation to continue its services to the public. To hastily nullify said expropriation in the guise of lack of due process would certainly diminish or weaken one of the State's inherent powers, the ultimate objective of which is to serve the greater good. Thus, 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.48
All told, We hold that putting to rest the issue on the validity of the exercise of eminent domain is neither tantamount to condoning the acts of the DPWH in disregarding the property rights of respondents-movants nor giving premium to the government's failure to institute an expropriation proceeding. This Court had steadfastly adhered to the doctrine that its first and fundamental duty is the application of the law according to its express terms, interpretation being called for only when such literal application is impossible.49 To entertain other formula for computing just compensation, contrary to those established by law and jurisprudence, would open varying interpretation of economic policies — a matter which this Court has no competence to take cognizance of. Time and again, we have held that no process of interpretation or construction need be resorted to where a provision of law peremptorily calls for application.50 Equity and equitable principles only come into full play when a gap exists in the law and jurisprudence.51 As we have shown above, established rulings of this Court are in place for full application to the case at bar, hence, should be upheld.cralawred
WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit.
SO ORDERED.chanroblesvirtuallawlibrary
Sereno, C. J., Carpio, Leonardo-De Castro, Del Castillo, Villarama, Jr., Perez, Mendoza, Reyes, and Jardeleza, JJ., concur.
Velasco, Jr., and Leonen, JJ., see dissenting opinion.
Brion, J., pls. see separate concurring opinion.
Bersamin, and Perlas-Bernabe, JJ., no part due to prior participation in the CA.
Endnotes:
1Rollo, pp. 255-259.
2Id. at 237.
3Id. at 230.
4Id. at 236.
5Id.
6Id. at 256.
7Id. at 257.
8Secretary of the Department of Public Works and Highways v. Tecson, G.R. No. 179334, July 1, 2013, 700 SCRA 243, 254.
9Id. at 255.
10 594 Phil. 10 (2008).
11 G.R. No. 162474, October 13, 2009, 603 SCRA 576.
12 518 Phil. 750, 757 (2006).
13 505 Phil. 253 (2005).
14 G.R. No. 164195, October 12, 2010, 632 SCRA 727.
15Apo Fruits Corporation and Hijo Plantation, Inc. v. Land Bank of the Philippines, supra, at 741. (Italics supplied)
16Republic v. Court of Appeals, 494 Phil. 494, 510 (2005).
17Apo Fruits Corporation and Hijo Plantation, Inc. v. Land Bank of the Philippines, supra note 14, at 747.
18Id.
19Id. at 754-755.
20Id. at 743-744 (Citations omitted; italics ours)
21Id. at 745.
22Republic of the Philippines v. Court of Appeals, 433 Phil. 106, 123 (2002). (Emphasis ours; citations omitted)
23 An Act Fixing Rates of Interest on Loans Declaring the Effect of Receiving or Taking Usurious, Rates and For Other Purposes.
24 Emphasis supplied.
25Spouses Puerto v. Court of Appeals, 432 Phil. 743, 752 (2002).
26 Emphasis supplied.
27 CB Circular 905 was issued by the Central Bank's Monetary Board pursuant to P.D. 1684 empowering them to prescribe the maximum rates of interest for loans and certain forbearances, to wit:
Sec. 1. Section 1-a of Act No. 2655, as amended, is hereby amended to read as follows:
Sec. 1-a. The Monetary Board is hereby authorized to prescribe the maximum rate of interest for the loan or renewal thereof or the forbearance of any money, goods or credits, and to change such rate or rates whenever warranted by prevailing economic and social conditions: Provided, That changes in such rate or rates may be effected gradually on scheduled dates announced in advance.
In the exercise of the authority herein granted, the Monetary Board may prescribe higher maximum rates for loans of low priority, such as consumer loans or renewals thereof as well as such loans made by pawnshops, finance companies and other similar credit institutions although the rates prescribed for these institutions need not necessarily be uniform. The Monetary Board is also authorized to prescribed different maximum rate or rates for different types of borrowings, including deposits and deposit substitutes, or loans of financial intermediaries.
28 Emphasis supplied.
29 Emphasis supplied.
30Art. 2212. Interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent upon this point.
31 G.R. No. 97412, July 12, 1994, 234 SCRA 78 (1994).
32 G.R. No. 189871, August 13,2013,703 SCRA 439 (2013).
33Id. 457-458.
34 The amount of interest shall be computed from the time of actual taking until full payment. Considering that the date of full payment cannot be determined at the moment, We ought to peg the same on September 30, 2014 for purposes of illustration and to assign an absolute value to the same.
35 Considering that the actual date of taking cannot be determined from the records of the case, the date of taking is pegged on January 1, 1940. Consequently, the interest accruing therefrom shall be for the entire year of 1940.
36 This pertains to the date of the Complaint filed by respondents-movants to recover the possession of their property with damages.
37 [(P5,087.60 * 6% * 34 years) + (P5,087.60 * 6% * 209 days/365 days)]. For accuracy, the period from January 1, 1940 to December 31, 1973 is determined by number of years, while the period from January 1, 1974 to July 28, 1974 is determined by number of days.
38 [(P10,553.49 * 12% * 155 days/365 days) + (P10,553.49 * 12% * 20 years) + (P10,553.49 * 12% * 75 days/365 days)]. For accuracy, the periods from July 29, 1974 to December 31, 1974 and January 1, 1995 to March 16, 1995 is determined by number of days while the period from January 1, 1975 to December 31, 1994 is determined by number of years.
39 [P26,126.31 * (1 + 1%)2195 months]. For accuracy and in view of the complications of compounding the interest, the period from March 17, 1995 to June 30, 2013 is determined by number of months. Accordingly, the rate of interest of 12% is divided by 12 to get the applicable monthly interest rate. The formal equation to calculate monthly compounded interest is P1=P(1+m)t, where P is the starting or average balance; m is the monthly interest rate; t is the number of months; and P 1 is the balance after monthly interest is added.
40 [P232,070.33 * (1 + 0.5%)15 months]. For accuracy and in view of the complications of compounding the interest, the period from July 1, 2013 to September 30, 2014 is determined by number of months. Accordingly, the rate of interest of 6% is divided by 12 to get the applicable monthly interest rate. The formal equation to calculate monthly compounded interest is P1=P(1+m)t, where P is the starting or average balance; m is the monthly interest rate; t is the number of months; and P 1 is the balance after monthly interest is added.
41Apo Fruits Corporation and Hijo Plantation, Inc. v. Land Bank of the Philippines, supra note 14 at 758.
42Supra note 11, at 585.
43Eusebio v. Luis, supra, at 587-588. (Italics ours; emphasis in the original; citations omitted)
44 494 Phil. 494 (2005).
45Republic v. CA, supra, at 512-513. (Emphasis ours; citations omitted)
46 AN ACT TO FACILITATE THE ACQUISITION OF RIGHT-OF-WAY, SITE OR LOCATION FOR NATIONAL GOVERNMENT INFRASTRUCTURE PROJECTS AND FOR OTHER PURPOSES.
47Republic v. Gingoyon, G.R. No. 166429, December 19, 2005.
48Forfom Development Corporation (Forfom) v. Philippine National Railways (PNR), supra note 10.
49Quijano v. Development Bank of the Philippines, 146 Phil. 283, 291 (1970).
50Id.
51Apo Fruits Corporation and Hijo Plantation, Inc. v. Land Bank of the Philippines, supra note 14, at 758-759.
VELASCO, JR., J.:
Respondent spouses Heracleo and Ramona Tecson (respondents) are the co-owners of a 7,268-square meter lot located in San Pablo, Malolos, Bulacan, and covered by Transfer Certificate of Title (TCT) No. T-43006. This parcel of land is among the private properties traversed by the Mac Arthur Highway, a government project undertaken sometime in 1940. The taking appears to have been made absent the requisite expropriation proceedings and without respondents' consent.On March 22, 2002, the RTC, Br. 80, of Malolos City rendered a Decision,3 directing the Department of Public Works and Highways (DPWH) to compensate respondents for the value of the property taken at the rate of one thousand five hundred pesos (PhP1,500.00) per square meter, adopting the recommendation of the PAC.4 On appeal by petitioners, the CA affirmed with modification the RTC Decision, adding 6% interest computed from the time of the suit's filing on March 17, 1995 until full payment.5
After the lapse of more than forty (40) years, respondents, in a letter dated December 15, 1994, demanded payment equivalent to the fair market value of the subject property from the Department of Public Works and Highways (DPWH). Petitioner Celestino R. Contreras (petitioner Contreras), then District Engineer of the First Bulacan Engineering District of DPWH, responded with an offer to pay just compensation at the rate of PhP0.70 per square meter based on Resolution No. XII dated January 15, 1950 of the Provincial Appraisal Committee (PAC) of Bulacan. Respondents made a counter-offer that the government either return the subject property or pay just compensation based on the current fair market value.
As the parties failed to reach any agreement on the price, respondents filed a suit for recovery of possession with damages against DPWH and petitioner Contreras (collectively referred to as "petitioners") on March 17, 1995. In their Complaint, docketed as Civil Case No. 208-M-95 and raffled to Branch 80 of the RTC of Malolos City, respondents claimed that the subject property was assessed at PhP2,543,800.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Court of Appeals Decision dated July 31, 2007 in CA-G.R. CV No. 77997 is MODIFIED, in that the valuation of the subject property owned by respondents shall be P 0.70 instead of P1,500.00 per square meter, with interest at six percent (6%) per annum from the date of taking in 1940 instead of March 17, 1995, until full payment.In its ruling, the Court invoked the teaching in Republic v. Lara,6 which considered the date of taking as the crucial point in determining just compensation. The Court wrote:chanroblesvirtuallawlibrary
xxx "[T]he value of the property should be fixed as of the date when it was taken and not the date of the filing of the proceedings." For where 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 xxx.On the theory that the reduced valuation of the property is inequitable, respondents timely moved for reconsideration.chanRoblesvirtualLawlibrary
Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.Exactly the same sequential restrictive provisions were likewise found in Art. III of the 1935 Constitution, then in force at the time the property in issue was taken.9x x x x
Section 9. Private property shall not be taken for public use without just compensation.
By "due process of law" we mean "a law which hears before it condemns; which proceeds upon inquiry, and renders judgment only after trial....... " (4 Wheaton, U.S. 518, 581.)"; or, as this Court has said, "Due process of law" contemplates notice and opportunity to be heard before judgment is rendered, affecting one's person or property (Lopez vs. Director of Lands, 47 Phil. 23, 32)." (Sicat vs. Reyes, L-1 1023, Dec. 14, 1956.) And it may not be amiss to mention here also that the "due process" clause of the Constitution is designed to secure justice as a living reality; not to sacrifice it by paying undue homage to formality, (emphasis added)Evidently, Sec. 1, Art. III of the Constitution requires that the act of deprivation should be preceded by compliance with procedural due process, part and parcel of which includes the filing of an expropriation case. This is so because by filing the action for expropriation, the government, in effect, serves notice that it is taking title and possession of the property.12 Hence, without an expropriation suit, private property is being taken without due notice to the landowner, in violation of his constitutional right.
This Tribunal does not look with favor on the practice of the Government or any of its branches, of taking away property from a private landowner, especially a registered one, without going through the legal process of expropriation or a negotiated sale and paying for said property without delay. The private owner is usually at a great and distinct disadvantage. He has against him the whole Government, central or local, that has occupied and appropriated his property, summarily and arbitrarily, sometimes, if not more often, against his consent. There is no agreement as to its price or its rent. In the meantime, the landowner makes requests for payment, rent, or even some understanding, patiently waiting and hoping that the Government would soon get around to hearing and granting his claim. The officials concerned may promise to consider his claim and come to an agreement as to the amount and time for compensation, but with the not infrequent government delay and red tape, and with the change in administration, specially local, the claim is pigeon holed and forgotten and the papers lost, mislaid, or even destroyed as happened during the last war. And when finally losing patience and hope, he brings a court action and hires a lawyer to represent him in the vindication of his valid claim, he faces the government represented by no less than the Solicitor General or the Provincial Fiscal or City Attorney, who blandly and with self-assurance, invokes prescription. The litigation sometimes drags on for years. In our opinion, that is neither just nor fair. When a citizen, because of this practice loses faith in the government and its readiness and willingness to pay for what it gets and appropriates, in the future said citizen would not allow the Government to even enter his property unless condemnation proceedings are first initiated, and the value of the property, as provisionally ascertained by the Court, is deposited, subject to his disposal. This would mean delay and difficulty for the Government, but all of its own making, (emphasis added)Unfortunately, the bleak picture painted in Alfonso does not stray far from the factual milieu of the extant case. It is not disputed herein that the DPWH took the subject lot without the respondents' consent. Worse, it has been almost 70 years since the time of taking, yet the DPWH has failed, during that stretch, to institute the expropriation case as necessary, let alone pay respondents just compensation. Instead, it was the respondents themselves who, ironically, initiated the proceedings to recover just compensation while the DPWH had the audacity to traverse respondents' claim of ownership over the subject lot. What is more, as this Court has foreshadowed in Alfonso, petitioner made much of the fact that the respondents only filed their claim in 1995, or about 55 years from the time of taking and argued that their right to just compensation has already prescribed, as though unmindful of its obligation to initiate the proceedings itself.
Section 2. Entry of plaintiff upon depositing value with authorized government depositary. — Upon the filing of the complaint or at any time thereafter and after due notice to the defendant, the plaintiff shall have the right to take or enter upon the possession of the real property involved if he deposits with the authorized government depositary an amount equivalent to the assessed value of the property for purposes of taxation to be held by such bank subject to the orders of the court. Such deposit shall be in money, unless in lieu thereof the court authorizes the deposit of a certificate of deposit of a government bank of the Republic of the Philippines payable on demand to the authorized government depositary, (emphasis added)A similar requirement of posting a deposit is likewise demanded under Sec. 19 of the Local Government Code, with respect to the exercise of a local government unit's power of eminent domain.14 The purpose of the deposit is explained in City of Manila v. Alegar Corporation,15 thusly:chanroblesvirtuallawlibrary
But the advance deposit required under Section 19 of the Local Government Code constitutes an advance payment only in the event the expropriation prospers. Such deposit also has a dual purpose: as prepayment if the expropriation succeeds and as indemnity for damages if it is dismissed. This advance payment, a prerequisite for the issuance of a writ of possession, should not be confused with payment of just compensation for the taking of property even if it could be a factor in eventually determining just compensation. If the proceedings fail, the money could be used to indemnify the owner for damages, (emphasis added)As expounded in City of Manila, the deposit serves as security in favor of the landowner—that if expropriation prospers, the landowner would promptly receive, at least, partial payment based on the property's assessed value; and that if the expropriation case is dismissed, the landowner will immediately receive indemnity for having been deprived of his property. In either case, the landowner is assured that he will receive some form of compensation since the deposit, in a way, can be construed as earnest money for the sale. Stated in the alternate, the filing of a deposit is an indication on the part of the government that it will not renege on its obligation to pay, whatever the outcome, when it entered into an involuntary sale.
Sec. 4. The State shall, by law, undertake an agrarian reform program founded on the rights of the farmers and regular farmworkers, who are landless, to own directly or collectively the land they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining the retention limits, the State shall respect the right of small landowners. The state shall further provide incentives for voluntary land-sharing. (emphasis added)During deliberations on the subject at hand, the members of the Constitutional Commission discussed the then proposed amendment to include the word "just" to describe "compensation," thusly:chanroblesvirtuallawlibrary
MR. CONCEPCION. Thank you.Clearly then, it was the intention of the framers that (1) the concept of just compensation in the country's agrarian reform programs should be the same as in other cases of eminent domain; and that (2) the concept of just compensation requires that partial payment in the form of a deposit be made, consistent with Our ruling in City of Manila.
I think the thrust of the amendment of Commissioner Treñas is that the term "just compensation" is used in several parts of the Constitution, and, therefore, it must have a uniform meaning. It cannot have in one part a meaning different from that which appears in the other portion. If, after all, the party whose property is taken will receive the real value of the property on just compensation, that is good enough. Any other qualification would lead to the impression that something else other than that meaning of just compensation is used in other parts of the Constitution.
x x x x
MR. RODRIGO. I was about to say what Commissioner Concepcion said. I just want to add that the phrase "just compensation" already has a definite meaning in jurisprudence. And, of course, I would like to reiterate the fact that "just compensation" here is not the amount paid by the farmers. It is the amount paid to the owner, and this does not necessarily have to come from the farmer. x x x
x x x x
THE PRESIDENT. Commissioner Regalado is recognized.
MR. REGALADO. Madam President, I propose an amendment to the proposed amendment of Commissioner Treñas. I support him in his statement that the words "just compensation" should be used there because it has jurisprudentially settled meaning, instead of putting in other ambivalent and ambiguous phrases which may be misconstrued, especially considering the fact that the words "just compensation" appear in different parts of the Constitution. However, my proposed amendment would read: "subject to THE PRIOR PAYMENT OF JUST COMPENSATION." Let me explain. The purpose of this land distribution scheme is that those whose properties may be under land reform may be thereby placed in a position after they have relinquished a portion of their property to invest in other gainful occupation. That was one of the purposes mentioned by the Committee. If we just provide for payment of just compensation without stating at what particular time that payment should be made, what happens to the landowners who has now been dispossessed of his property? Where can he make investments since he has not been given payment? We are aware of the Land Bank bond wherein the amount is realizable only after the lapse of 20 years. It cannot be even used to pay PNB or DBP loans; it can only be used to pay taxes.
Furthermore, it is also established in jurisprudence, in the case of Commissioner of Public Highways vs. San Diego, L-30098, February 18, 1970, that where a property has already been thereby condemned - I used the word "condemned" in the sense of expropriation, because that is the other term - even if there is already an award, such an award, even by a judicial order, is not realizable upon execution; so the poor landowners will have to wait patiently until such time as Congress appropriates the amount.
In the case of Commissioner of Public Highways vs. San Diego, it was specifically stated that the judgment rendered requiring payment of the award determined as just compensation for the condemned property, and as a condition precedent for the transfer of the title to the government, cannot be realized upon execution, as the legislative must first appropriate the amount over and above the provisional deposit.
So my question here is: If we do not require prior payment, what happens to the landowner now? Must he wait indefinitely? While in the meantime we have given priority to the landless, we have created another problem for the erstwhile landed gentry since they cannot, in any way, use either the property or the supposed proceeds from the property of which they were dispossessed. If the landless have rights, even the landed also have rights; or, as Clarence Darrow says, "Even the rich also have rights."
We are not talking about the rich here. He is already parting with his property, and yet we go into an ephemeral, indefinite statement, "subject to the payment of just compensation." And the question is: Where in point of time will that compensation be made? That is why I ask that this amendment be accepted subject to prior payment of just compensation.
MR. BENGZON. Madam President.
THE PRESIDENT. Commissioner Bengzon is recognized.
MR. BENGZON. There is no need to get excited, Madam President, because the Committee is not insensitive to the needs of the landowners. When the Committee placed this paragraph or statement here, it was the sense that the landowner would be immediately paid the just compensation. Otherwise, that compensation would not really be compensation at all.
x x x x
FR. BERNAS. Madam President.
THE PRESIDENT. Commissioner Bernas is recognized.
FR. BERNAS. Madam President, two points only. First, after listening to the observations of the Commissioner Ople and on the understanding that it does not exclude the possibility of subsidy, I would gladly remove that because I want to avoid a situation where we make acquisition of land so easy that, in effect, it may encourage the inefficient use of resources. So, provided that it is understood that we are not excluding subsidy whenever it is necessary, then I would be willing to limit the matter to the phrase "just compensation."
MS. NIEVA. Madam President, the Committee accepts.
THE PRESIDENT. Will the Committee please allow Commissioner Bernas to finish his statement?
FR. BERNAS. My second point is: I would object to the addition of the phrase "PRIOR COMPENSATION" because even if one looks at existing jurisprudence on expropriation, there is no requirement of immediate, prior compensation. Just compensation simply requires that there is an assurance that compensation will be given. Jurisprudence has not required prior compensation. So, if at this stage when we are trying to do something for the underprivileged, we make expropriation more difficult, then again we will be retrogressing.
Thank you, Madam President.
THE PRESIDENT. The original amendment of Commissioner Treñas stands.
x x x x
MR. MONSOD. Madam President, may we just read the phrase as now accepted by the Committee?
THE PRESIDENT. Please proceed.
MR. MONSOD. The phrase shall read: "and subject to the payment of just compensation."VOTING
THE PRESIDENT. We will not on the first, and then later on, if Commissioner Regalado insists on his amendment of inserting the word "PRIOR," we will vote on that later.
As many as are in favour of the Treñas amendment, please raise their hand. (Several Members raised their hand.)
As many as are against, please raise their hand. (No Member raised his hand)
The results show 39 votes in favor and none against, the amendment is approved.
As many as are in favor of inserting the word "PRIOR" . . .
MR. REGALADO. Before we do that, Madam President, may I just explain?
THE PRESIDENT. Commissioner Regalado is recognized.
MR. REGALADO. It is not correct to state that jurisprudence does not require prior payment. Even the recent presidential decrees of the President always require a partial deposit of a certain percentage and the rest by a guaranteed payment. What I am after here is that, as Commissioner Bernas has said, there must at least be an assurance. That assurance may be in the form of a bond which may be redeemable later. But to say that there has never been a situation where prior payment is not required, that is not so even under the Rules of Court as amended by presidential decrees. Even the government itself, upon entry on the land, has to make a deposit and the rest thereafter will be guaranteed under the judgment of a court, but which judgment, as I have pointed out, is not even realizable by executor process. Does it mean to say that the government can take its own time at determining when the payment is to be made? At least simultaneously, there should be an assurance in the form of partial payment in cash or other modes of payment, and the rest thereof being guaranteed by bonds, the issuance whereof should be simultaneous with the transfer. That is my only purpose in saying that there should be prior payment - not payment in cash physically but, at least, contract for payment in the form of an assurance, a guarantee or a promissory undertaking.
THE PRESIDENT. Will Commissioner Regalado please restate his proposed amendment?
MR. REGALADO. The proposed amendment will read: "and subject to THE PRIOR PAYMENT OF just compensation."
THE PRESIDENT. It was accepted by the Committee.
MR. REGALADO. The word "payment" there should be understood in the sense that I have explained, that there must at least be an assurance on the part of the government.
FR. BERNAS. Madam President.
THE PRESIDENT. Commissioner Bernas is recognized.
FR. BERNAS. I must say, I did misunderstand Commissioner Regalado. I read him as requiring prior full compensation. But if the intention is merely to maintain what obtains now, mainly, that it is enough that there is a partial deposit as it exists under existing law, I would agree with him that that is fine. But then I would still oppose putting it down in writing by itself because it can be construed as requiring prior full compensation.
THE PRESIDENT. What does the Committee say?
MR. REGALADO. Madam President, Commissioner Bengzon has just told me that anyway those remarks are already in the Record. And my remarks, according to Commissioner Bengzon, have already been taken into account and have been accepted in the sense in which they were intended. Then, provided it appears in the Record that that is the purpose of the amendment and such explanation in the Record shall stay, I withdraw the proposed amendment to the amendment.
MR. DAVIDE. Madam President.
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. If the withdrawal is based on what was supposedly agreed with the Committee, I will still object because we will have the concept of just compensation for the farmers and farm workers more difficult than those in other cases of eminent domain. So, we should not make a distinction as to the manner of the exercise of eminent domain or expropriations and the manner that just compensation should be paid. It should be uniform in all others because if we now allow the interpretation of Commissioner Regalado to be the concept of just compensation, then we are making it hard for the farmers and the farm workers to enjoy the benefits allowed them under the agrarian reform policy.
MR. BENGZON. Madam President, as we stated earlier, the term "just compensation" is as it is defined by the Supreme Court in so many cases and which we have accepted. So, there is no difference between "just compensation" as stated here in Section 5 and "just compensation" as stated elsewhere. There are no two different interpretations.16 (emphasis added)
Section 4. Guidelines for Expropriation Proceedings. - Whenever it is necessary to acquire real property for the right-of-way or location for any national government infrastructure project through expropriation, the appropriate implementing agency shall initiate the expropriation proceedings before the proper court under the following guidelines:As can be gleaned, the above-quoted provision echoes the requirement of a filed expropriation case prior to takeover. Additionally, Congress guaranteed, under the declared policy of RA 9874, that "the State shall ensure that owners of real property acquired for national government infrastructure projects are promptly paid just compensation,"19 emphasizing the immediacy of initiating condemnation proceedings for without which, payment of just compensation, or at least the posting of a security deposit, cannot be made.
(a) Upon the filing of the complaint, and after due notice to the defendant, the implementing agency shall immediately pay the owner of the property the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on the current relevant zonal valuation of the Bureau of Internal Revenue (BIR) and (2) the value of the improvements and/or structures as determined under Section 7 hereof; (b) In provinces, cities, municipalities and other areas where there is no zonal valuation, the BIR is hereby mandated within the period of sixty (60) days from the date of the expropriation case, to come up with a zonal valuation for said area; and (c) In case the completion of a government infrastructure project is of utmost urgency and importance, and there is no existing valuation of the area concerned, the implementing agency shall immediately pay the owner of the property its proffered value taking into consideration the standards prescribed in Section 5 hereof.
Upon compliance with the guidelines abovementioned, the court shall immediately issue to the implementing agency an order to take possession of the property and start the implementation of the project.
Before the court can issue a Writ of Possession, the implementing agency shall present to the court a certificate of availability of funds from the proper official concerned.
In the event that the owner of the property contests the implementing agency's proffered value, the court shall determine the just compensation to be paid the owner within sixty (60) days from the date of filing of the expropriation case. When the decision of the court becomes final and executory, the implementing agency shall pay the owner the difference between the amount already paid and the just compensation as determined by the court.
Section 5. Standards for the Assessment of the Value of the Land Subject of Expropriation Proceedings or Negotiated Sale. - In order to facilitate the determination of just compensation, the court may consider, among other well-established factors, the following relevant standards:Additionally, the uniformity of the concept of just compensation under the agrarian reform program with that in other eminent domain cases, as contemplated by the Constitutional Commission, becomes demonstrable by a comparison of RA 8974 with the Comprehensive Agrarian Reform Law. Similar with RA 8974, RA 9700,20 which amended Sec. 17 of RA 6657,21 requires that just compensation be based, in part, on the current value of like properties. As elucidated in Land Bank of the Philippines v. Spouses Costo:22ChanRoblesVirtualawlibrary
(a) The classification and use for which the property is suited;
(b) The developmental costs for improving the land;
(c) The value declared by the owners;
(d) The current selling price of similar lands in the vicinity;
(e) The reasonable disturbance compensation for the removal and/or demolition of certain improvement on the land and for the value of improvements thereon;
(f) This size, shape or location, tax declaration and zonal valuation of the land;
(g) The price of the land as manifested in the ocular findings, oral as well as documentary evidence presented; and
(h) Such facts and events as to enable the affected property owners to have sufficient funds to acquire similarly-situated lands of approximate areas as those required from them by the government, and thereby rehabilitate themselves as early as possible. (emphasis added)
x x x In determining just compensation, the RTC is required to consider several factors enumerated in Section 17 of R.A. No. 6657.From the above-cited statutes, it becomes apparent that what Congress clearly intends to be considered as just compensation is the amount with which the private landowners will be able to rehabilitate themselves from the property loss suffered. With this in mind, it is plain to see that it is difficult, nay impossible, for respondents to acquire at this time similarly-situated lands if they are merely going to be paid at a measly unit price of PhP0.70 per square meter 70 years after their property has been taken from them, when the value of similarly-situated lands has already skyrocketed to PhP1,500.00 per square meter after a significant lapse of time. As a corrective measure, the law indicates that the current selling price of similar lands in the vicinity should be considered in determining just compensation. "Current" should be understood to pertain to the time that the subject property comes within the jurisdiction of the court since it is only at that time that the property becomes susceptible to scrutiny and more accurate valuation for purposes of just and equitable compensation, rendering rehabilitation more attainable and realizable for the landowners.
Section 17 of R.A. No. 6657 has defined the parameters for the determination of the just compensation, to wit:chanroblesvirtuallawlibrarySection 17. Determination of Just Compensation.— In determining just compensation, the cost of acquisition of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the assessment made by government assessors shall be considered. The social and economic benefits contributed by the farmers and the farmworkers and by the Government to the property as well as the nonpayment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation.Thus, in determining just compensation, the RTC is required to consider the following factors: (1) the acquisition cost of the land; (2) the current value of the properties; (3) its nature, actual use, and income; (4) the sworn valuation by the owner; (5) the tax declarations; (6) the assessment made by government assessors; (7) the social and economic benefits contributed by the farmers and the farmworkers, and by the government to the property; and (8) the non-payment of taxes or loans secured from any government financing institution on the said land, if any.23cralawlawlibrary
The ponencia's additional award of exemplary damages and attorney's fees, although a positive approach, does not cure the basic infirmity. Exemplary or corrective damages are imposed upon the wrongdoer as a deterrent to the commission of similar acts in the future.25 On the other hand, the award of attorney's fees in this case is justified by the fact that respondents were compelled to litigate in view of the government's own failure to initiate, as it should have, condemnation proceedings. Lest we be misled, these awards are more akin to penalties imposed on the government for its omission and they do not, in any way, form part of just compensation which respondents are entitled to at any event. Without including the award for damages in the sum, it becomes readily apparent that what was awarded to respondents does not constitute real, substantial, full and ample value of the property, less than just compensation for the property unlawfully taken 70 years prior.
Property Valuation 70/100 pesos per sqm based on 1940 pricesTotal Market Value of the 7,268 square meter property PhP5,087.60Interests January 1, 1940 to July 28, 1974 PhP10,248.23July 29, 1974 to March 16, 1995 12,594.95March 17, 1995 to June 30, 2013 220,167.99July 1, 2013 to September 30, 2014 19,272.99 262,284.16Total amount due to respondents Php267,371.76
Guilty of reiteration, this point is consistent with our pronouncement in Alfonso:27ChanRoblesVirtualawlibrary
Property Valuation PhP1,500 pesos per sqm based on 1995 prices Total Market Value of the 7,268 square meter property PhP10,902,000.00 Interests from March 17, 1995 to January 12, 2015 12,973,380.00Total amount due to respondents PhP23,875,380.00
This Tribunal does not look with favor on the practice of the Government or any of its branches, of taking away property from a private landowner, especially a registered one, without going through the legal process of expropriation or a negotiated sale and paying for said property without delay, x x x When a citizen, because of this practice loses faith in the government and its readiness and willingness to pay for what it gets and appropriates, in the future said citizen would not allow the Government to even enter his property unless condemnation proceedings are first initiated, and the value of the property, as provisionally ascertained by the Court, is deposited, subject to his disposal. This would mean delay and difficulty for the Government, but all of its own making. (emphasis added)The ponencia has already cited a plethora of cases in all fours with the present scenario wherein this Court has sustained the validity of expropriation sans condemnation proceedings and the requisite deposit. To continue condomng such acts would be licensing the government to dispense with constitutional requirements in taking private property and converting into reality and norm what was then a mere foreshadowing of an evil divined in Alfonso, inimical to a democratic state, if not criminal. The RTC and the CA, therefore, rightly ruled that the value of the land, for purposes of just compensation, ought to be determined from the time respondents filed the initiatory complaint, earning interest therefrom. To hold otherwise, as the ponencia did, would validate the state's act as one of expropriation in spite of procedural infirmities, which, in turn, would amount to unjust enrichment on its part.
Endnotes:
1Secretary of Public Works and Highways v. Tecson, G.R. No. 179334, 700 SCRA 243.
2 Id. at 260-261.
3Rollo, p. 165.
4 Id. at 40.
5 Id. at 124.
6Republic v. Lara, 96 Phil. 170, 177-178 (1954).
7Heirs of Juancho Ardona v. Reyes, Nos. L-60549, 60553 & 60555, October 26, 1983, 125 SCRA 220, 230-231.
8Republic v. Court of Appeals, G.R. No. 146587, July 2, 2002, 383 SCRA 611, 619.
9 Section10Sales v. Sandiganbayan, G.R. No. 143802, November 16, 2011, 269 SCRA 293, 310.
- No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.
- Private property shall not be taken for public use without just compensation
11Albert v. University Publishing Co., Inc., No. L-19118, January 30, 1965, 13 SCRA 84.
12Air Transportation Office (ATO) v. Gopuco, Jr., G.R. No. 158563, June 30, 2005, 462 SCRA 544, 557.
13 No. L-12754, January 30, 1960.
14Section 19. Eminent Domain. - A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted: Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated: Provided, finally, That, the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property.
15 G.R. No. 187604, June 25, 2012.
16 Record of the Constitutional Commission Proceedings and Debates, Vol. 3, pp. 16-21; Minutes of the Constitutional Commission dated August 7, 1986.
17 J. Velasco, Jr., Dissenting Opinion, Secretary of Public Works and Highways v. Tecson, supra note 1, at 270; citing Eusebio v. Luis, G.R. No. 162474, October 13, 2009, 603 SCRA 576.
18 An Act to Facilitate the Acquisition of Right-of-Way, Site or Location for National Government Infrastructure Projects and for Other Purposes.
19 Section 2, RA 8974.
20 An Act Strengthening the Comprehensive Agrarian Reform Program (CARP), Extending the Acquisition and Distribution of All Agricultural Lands, Instituting Necessary Reforms, Amending for the Purpose Certain Provisions of Republic Act No. 6657, Otherwise Known as the Comprehensive Agrarian Reform Law of 1988, as Amended, and Appropriating Funds Therefor.
21 An Act Instituting a Comprehensive Agrarian Reform Program to Promote Social Justice and Industrialization, Providing the Mechanism for Its Implementation, and for Other Purposes.
22 G.R. No. 174647, December 5, 2012.
23 In Land Bank of the Philippines v. Celada (G.R. No. 164876, January 23, 2006), the Court ruled that the factors enumerated under Section 17 of R.A. No. 6657 had already been translated into a basic formula by the DAR pursuant to its rule-making power under Section 49 of R.A. No. 6657. Thus, the Court held that the formula outlined in DAR AO No. 5, series of 1998, should be applied in computing just compensation. DAR AO No. 5, series of 1998, provides:A. There shall be one basic formula for the valuation of lands covered by VOS or CA:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all three factors are present, relevant and applicable.A1. When the CS factor is not present and CNI and MV are applicable, the formula shall be:LV = (CNIx0.9) + (MVx0.l)
A2. When the CNI factor is not present, and CS and MV are applicable, the formula shall be:LV = (CSx0.9) + (MVx0.1)
A3. When both the CS and CNI are not present and only MV is applicable, the formula shall be:LV = MV x 2
In no case shall the value of idle land using the formula MV x 2 exceed the lowest value of land within the same estate under consideration or within the same barangay or municipality (in that order) approved by LBP within one (1) year from receipt of claimfolder;
See also Land Bank of the Philippines v. Spouses Costo, G.R. No. 174647, December 5, 2012.
24Landbank of the Philippines v. Vda. de Abello, G.R. No. 168631, April 7, 2009, 584 SCRA 342, 354.
25Rotea v. Halili, G.R. No. 12030, September 30, 1960.
26Forform Development Corporation v. Philippine National Railways, G.R. No. 124795 December 10, 2008.
27 Supra note 13.
BRION, J.:
Petitioners Secretary of the DPWH and District Engineer Celestino R. Contreras dispute these arguments in favor of the established rule that the amount of just compensation should be the fair market value of the property at the time of its taking in 1940, i.e., P0.70 per square meter, and not its present value as the respondents' tax declarations (TDs) indicate.chanRoblesvirtualLawlibrary
- The Honorable Court may look into the "justness" of the miserable amount of compensation being awarded to the herein respondents; and
- The Honorable Court may settle for a happy middle ground in the name of doctrinal precision and substantial justice.4
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages.The Court upheld the imposition of the 12% interest rate in just compensation cases, as ruled in Republic, in Reyes v. National Housing Authority,16Land Bank of the Philippines v. Wycoco,17Republic v. Court of Appeals,18Land Bank of the Philippines v. Imperial,19Philippine Ports Authority v. Rosales-Bondoc,20 and Curata v. Philippine Ports Authority.21
II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:chanroblesvirtuallawlibrary1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.
Interests on loans or forbearance of money are primarily governed by Act No. 265526 which took effect on May 1, 1916. Section 1 of this Act provides that the "rate of interest for the loan or forbearance of money of any money, x x x in the absence of express contract as to such rate of interest, shall be six per centum per annum x x x." Section 1 likewise grants the Monetary Board of the Central Bank of the Philippines to set an interest rate different from the 6% interest rate.Finally, as the ponencia does, the Court should also take note of Article 2212 of the Civil Code. Article 2212 provides that "interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent upon this point."
On July 29, 1974, the CB Monetary Board (MB), pursuant to its granted authority under Section 1 of Act No. 2655, issued Resolution No. 1622. On even date, the CB issued Circular No. 41627 implementing MB Resolution No. 1622. MB Resolution No. 1622 and CB Circular No. 416 increased to 12% the rate of interest for loans and forbearance of money.
On December 10, 1982, the CB issued Circular No. 90528 pursuant to MB Resolution No. 2224 dated December 3, 1982, maintaining the 12% interest rate established in CB Circular No. 416. CB Circular No. 905 took effect on December 22, 1982.
On June 21, 2013, the BSP issued Circular No. 799,29 pursuant to MB Resolution No. 796 dated May 16, 2013, reducing to 6% the interest rate on loans and forbearance of money. CB Circular No. 799 took effect on July 1, 2013.
We have ruled in Arsenal v. Intermediate Appellate Court xxx that it is a long standing principle that equity follows the law. Courts exercising equity jurisdiction are bound by rules of law and have no arbitrary discretion to disregard them. In Zabat, Jr. v. Court of Appeals xxx, this Court was more emphatic in upholding the rules of procedure. We said therein:In my view, Justice Leonen's use of the economic concept of present values in order to approximate and return to the respondents the "fair equivalent" of their property, considering the 74-year time lapse, has no basis in law and jurisprudence and was an unnecessary and misplaced approach.34As for equity, which has been aptly described as "justice outside legality," this is applied only in the absence of and never against, statutory law or, as in this case, judicial rules of procedure. Aequetas nunquam contravenit legis. This pertinent positive rules being present here, they should preempt and prevail over all abstract arguments based only on equity. [Italics supplied.]
Endnotes:
1Rollo, pp. 255-259.
2 Penned by Associate Justice Lucas P. Bersamin (now a Supreme Court Associate Justice), and concurred in by Associate Justices Portia Alino-Hormachuelos and Estela M. Perlas-Bernabe (now a Supreme Court Associate Justice), rollo, pp. 124-137.
3 Citing Manila International Airport Authority v. Rodriguez, 51 8 Phil. 750, 757 (2006).
4Rollo, p. 256.
5NPC v. Manubay Agro-Industrial Development Corp., G.R. No. 150936, 480 Phil. 470, 479 (2004), citing Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, G.R. No. 78742, July 14, 1989, 175 SCRA 343; Apo Fruits Corporation and Hijo Plantation, Inc. v. Land Bank of the Philippines, G.R. No. 164195, October 12, 2010, 632 SCRA 727, 744, Resolution.
6Apo Fruits Corporation and Hijo Plantation, Inc. v. Land Bank of the Philippines, supra note 5.
7 Id.
8 See National Power Corp. v. Henson, 360 Phil. 922, 929 (1998), citations omitted; and NAPOCOR v. Spouses Igmedio, 452 Phil. 649, 664 (2003).
9 See Rep of the Philippines v. Vda. de Castelvi, 157 Phil. 329, 344 (1974); and Manila International Airport Authority v. Rodriguez, supra note 3.
10Apo Fruits Corporation and Hijo Plantation, Inc. v. Land Bank of the Philippines, supra note 5.
11 Id., citing Republic v. CA, 43 Phil. 106 (2002). See also Sy v. Local Government of Quezon City, G.R. No. 202690, June 5, 2013, 697 SCRA 621.
12Apo Fruits Corporation and Hijo Plantation, Inc. v. Land Bank of the Philippines, supra note 5.
13 G.R. Nos. 60225-26, May 8, 1992, 208 SCRA 542, 548.
14 Supra note 11.
15 G.R. No. 97412, July 12, 1994, 234 SCRA 78, 95.
16 443 Phil. 603 (2003).
17 464 Phil. 83 (2004).
18 494 Phil. 494 (2005).
19 544 Phil. 378 (2007).
20 557 Phil. 737 (2007).
21 608 Phil. 9 (2009).
22Supra note 5.
23 G.R. No. 182431, November 17, 2010, 635 SCRA 285.
24 G.R. No. 174007, June 27, 2012, 675 SCRA 187.
25 G.R. No. 182209, October 3, 2012, 682 SCRA 264.
26 An Act Fixing Rates of Interest on Loans Declaring the Effect of Receiving or Taking Usurious Rates and For Other Purposes. Enacted February 24, 1916.
27 The pertinent portion of CB Circular No. 416 reads:chanroblesvirtuallawlibraryBy virtue of the authority granted to it under Section 1 of Act No. 2655, as amended, otherwise known as the "Usury Law," the Monetary Board, in its Resolution No. 1622 dated July 29, 1974, has prescribed that the rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in its judgments, in the absence of express contract as to such rate of interest, shall be twelve per cent (12%) per annum. [Emphasis and italics supplied.]28 CB Circular No. 905 pertinently provides:
Sec. 2. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall continue to be twelve per cent (12%) per annum. [Emphasis and italics supplied.]
29 Circular No. 799 reads in part:
Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall be six per cent (6%) per annum. [Emphasis and italics supplied.]
30 Article 8 of the Civil Code of the Philippines.
See Caltex v. Palomar, 124 Phil. 763 (1966), where the Court held that "judicial decisions assume the same authority as the statute itself and, until authoritatively abandoned, necessarily become, to the extent that they are applicable, the criteria which must control the actuations not only of those called upon to abide thereby but also of those in duty bound to enforce obedience thereto."
In Chavez v. Bonto, 312 Phil. 88, 98 (1995), the Court declared that "[o]ur courts are basically courts of law and not courts of equity."
31 Willard Riano, Civil Procedure (A Restatement for the Bar), 2007, p. 30.
32J.B.L. Reyes, The Trend towards Equity versus Positive Law in Philippine Jurisprudence, 58 Phil. L.J. 1,4. See also Agra v. PNB, 368 Phil. 829 (1999). In Philippine Rabbit v. Arciaga, 232 Phil. 400, 405 (1987), the Court declared that:chanroblesvirtuallawlibraryThe rule is, 'equity follows the law' and as discussed in Pomeroy's Equity Jurisprudence Vol. 2 pp. 188-189 (as cited in Appellant's Brief p. 20), the meaning of the principle is stated as follows:33Supra note 30.
There are instances, indeed, in which a court of equity gives a remedy, where the law gives none; but where a particular remedy is given by the law, and that remedy is bounded and circumscribed by particular rules, it would be very improper for the court to take it up where the law leaves it and to extend it further than the law allows. [Italics supplied.]
34Patricia Wald (Chief Judge, United States Court of Appeals for the District of Columbia), Limits on the Use of Economic Analysis in Judicial Decision Making (Law and Contemporary Problems, Vol. 50, No. 4, 1988), had this to say:chanroblesvirtuallawlibraryThe most troublesome limitation on judicial use of economic analysis is the limits of a judge's ability to analyze its techniques and ascertain the extent to which they incorporate assumptions that she is not ready to accept. It may not be easy, or even sensible, for judges to use economic analysis here and there—"on the margin," if you will-to the extent that analysis is fueled by controversial, powerful, and purposefully comprehensive assumptions about human beings, society, and courts.Thus, although economic analysis/theories may be useful in decision-making, she concludes that the application of economic theories and/or analysis in jurisprudential philosophy is premature, partly because these economic theories are still consistently being debated. See http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=3928&context=lcp
Because some of the economists' assumptions are neither intuitively persuasive, nor documented to any degree. I would find it premature to adopt them as tenets for a comprehensive jurisprudential philosophy. [Italics supplied.]
35 328 Phil. 546 (1997).
36 G.R. No. 175356, December 3, 2013.
37 See The Treasury Bill Market by Mamerto C. Singson, Jr., http://pre.econ.upd.edit.ph/index.php/pre/article/viewFile/804/l14
LEONEN, J.:
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Court of Appeals Decision dated My 31, 2007 in CA-GR. CV No. 77997 is MODIFIED, in that the valuation of the subject property owned by respondents shall be P0.70 instead of P1,500.00 per square meter, with interest at six percent (6%) per annum from the date of taking in 1940 instead of March 17, 1995, until full payment.27cralawlawlibraryThe majority based this Decision on the doctrine that "[j]ust compensation is 'the fair value of the property as between one who receives, and one who desires to sell, . . .fixed at the time of the actual taking by the government.'"28 Based on the majority's appreciation of the facts, the value of the property in 1940 was P0.70 per square meter.29
Elevated for this court en bane's consideration is the issue of whether the just compensation awarded in the Decision dated July 1, 2013 can be made fair without transgressing the doctrine that just compensation for expropriation cases should be computed at the time of taking.chanRoblesvirtualLawlibrary
- The honorable court may look into the "just-ness" of the miserable amount of compensation being awarded to the herein respondents; [and]
- The honorable court may settle for a happy middle ground in the name of doctrinal precision and substantial justice.30
The expropriation stands, and the owner as is the constitutional intent, is paid what he is entitled to according to the value of the property so devoted to public use as of the date of the taking. From that time, he had been deprived thereof. He had no choice but to submit. He is not, however, to be despoiled of such a right. No less than the fundamental law guarantees just compensation. It would be an injustice to him certainly if from such a period, he could not recover the value of what was lost.40 (Emphasis supplied)Just compensation approximates the value of the property determined in a fair and unencumbered transaction. It is that "sum of money which a person desirous but not compelled to buy, and an owner willing but not compelled to sell, would agree on as a price to be given and received therefor."41
This Tribunal does not look with favor on the practice of the Government or any of its branches, of taking away property from a private landowner, especially a registered one, without going through the legal process of expropriation or a negotiated sale and paying for said property without delay. The private owner is usually at a great and distinct disadvantage. He has against him the whole Government, central or local, that has occupied and appropriated his property, summarily and arbitrarily, sometimes, if not more often, against his consent. There is no agreement as to its price or its rent. In the meantime, the landowner makes requests for payment, rent, or even some understanding, patiently waiting and hoping that the Government would soon get around to hearing and granting his claim. The officials concerned may promise to consider his claim and come to an agreement as to the amount and time for compensation, but with the not infrequent government delay and red tape, and with the change in administration, specially local, the claim is pigeonholed and forgotten and the papers lost, mislaid, or even destroyed as happened during the last war. And when finally losing patience and hope, he brings a court action and hires a lawyer to represent him in the vindication of his valid claim, he faces the government represented by no less than the Solicitor General or the Provincial Fiscal or City Attorney, who blandly and with self-assurance, invokes prescription. The litigation sometimes drags on for years. In our opinion, that is neither just nor fair. When a citizen, because of this practice loses faith in the government and its readiness and willingness to pay for what it gets and appropriates, in the future said citizen would not allow the Government to even enter his property unless condemnation proceedings are first initiated, and the value of the property, as provisionally ascertained by the Court, is deposited, subject to his disposal. This would mean delay and difficulty for the Government, but all of its own making.43cralawlawlibraryIn Apo Fruits Corporation, et al. v. Land Bank of the Philippines,44 this court discussed the need to impose a 12% interest rate for late payment of just compensation:chanroblesvirtuallawlibrary
Apart from the requirement that compensation for expropriated land must be fair and reasonable, compensation, to be "just," must also be made without delay. Without prompt payment, compensation cannot be considered "just" if the property is immediately taken as the property owner suffers the immediate deprivation of both his land and its fruits or income.The main concern in Apo Fruits was that the downpayment of the principal amount of "fair market value at the time of taking" was "not enough to compensate the petitioners for the potential income the landholdings could have earned for them if no immediate taking had taken place."46 The time difference between taking and payment in Apo Fruits was merely 10 to 12 years, as opposed to the seventy-five-year gap in this case. Obviously, the Tecson spouses were denied a greater amount of potential income stream for not having been paid back in 1940. This inequity needs to be corrected.chanRoblesvirtualLawlibrary
This is the principle at the core of the present case where the petitioners were made to wait for more than a decade after the taking of their property before they actually received the full amount of the principal of the just compensation due them. What they have not received to date is the income of their landholdings corresponding to what they would have received had no uncompensated taking of these lands been immediately made.
....
The owner's loss, of course, is not only his property but also its income-generating potential. Thus, when property is taken, full compensation of its value must immediately be paid to achieve a fair exchange for the property and the potential income lost. The just compensation is made available to the property owner so that he may derive income from this compensation, in the same manner that he would have derived income from his expropriated property. If full compensation is not paid for property taken, then the State must make up for the shortfall in the earning potential immediately lost due to the taking, and the absence of replacement property from which income can be derived[.]45 (Emphasis in the original, citations omitted)
"Monetary interest refers to the compensation set by the parties for the use or forbearance of money." No such interest shall be due unless it has been expressly stipulated in writing. "On the other hand, compensatory interest refers to the penalty or indemnity for damages imposed by law or by the courts."52 (Citations omitted)These types of interest rates are not the same as the interest rate used to determine the present value of money.
we need a new style of judicial opinion writing (really a return to an older style), in which formalistic crutches — such as the canons of statutory construction and the pretense of deterministic precedent — exaggerate the autonomous elements in legal reasoning are replaced by a more candid engagement with the realistic premises of decision. Judicial decisionmaking must also become more receptive to the insights of social science. Lawyers and judges must overcome the prevalent (and disgraceful) math-block that afflicts the legal profession.56 (Emphasis supplied)Furthermore, legal interest rates is fixed at 6% or 12% depending on which prevailing Central Bank circular has been enacted. Meanwhile, computation of present value is dependent on the historical average of year-to-year interest rates.57
The determination of "just compensation" in eminent domain cases is a judicial function. The executive department or the legislature may make the initial determinations but when a party claims a violation of the guarantee in the Bill of Rights that private property may not be taken for public use without just compensation, no statute, decree, or executive order can mandate that its own determination shall prevail over the court's findings. Much less can the courts be precluded from looking into the "justness" of the decreed compensation.60cralawlawlibraryInstead of using 6% or 12%, we recommend that historical data be used in order to stay true to the constitutional mandate of "just compensation."
With the enactment of Republic Act No. 245 in 1948, the Secretary of Finance was authorized to issue, among others, "[t]reasury bills issued on a discount basis and payable at maturity without interest. Treasury bills may be offered for sale either on a competitive basis or at a fixed rate of discount and may be made payable at any date not later than one year from the date of issue."66 The Central Bank began offering one-year treasury bills in 1949. Prior to that, upon the Central Bank's creation, it assumed the liability of the treasury certificate fund offered by the Treasurer of the Philippines.67 Considering that treasury certificates are also short-term money instruments, they can be said to be the predecessor of treasury bills as we know them now.Table 1. Treasury Bill Rates Across Time
Year Annual Rate of Return for All Maturities 1940 1.500 1941 1.500 1942 1.500 1943 1.500 1944 1.500 1945 1.500 1946 1.500 1947 1.500 1948 1.500 1949 1.500 1950 2.000 1951 2.000 1952 1.875 1953 2.125 1954 2.250 1955 1.750 1956 1.750 1957 1.879 1958 2.549 1959 2.599 1960 3.000 1961 3.000 1962 3.000 1963 3.500 1964 3.500 1965 4.000 1966 6.603 1967 6.348 1968 6.944 1969 8.566 1970 13.372 1971 12.038 1972 12.154 1973 9.664 1974 10.260 1975 10.475 1976 10.406 1977 11.161 1978 10.950 1979 12.178 1980 12.316 1981 12.914 1982 14.415 1983 14.544 1984 36.985 1985 27.048 1986 16.040 1987 12.888 1988 15.510 1989 19.678 1990 24.742 1991 22.489 1992 17.008 1993 13.141 1994 13.750 1995 12.457 1996 13.014 1997 13.297 1998 16.283 1999 11.025 2000 10.904 2001 11.054 2002 6.038 2003 6.654 2004 8.127 2005 7.528 2006 6.196 2007 4.210 2008 6.355 2009 4.456 2010 4.034 2011 1.867 2012 1.826 2013 0.564 2014 1.495 AVERAGE 8.237
The Court has weighed all the circumstances relating to th[ese] expropriations proceedings, and in fixing the price of the lands that are being expropriated the Court arrived at a happy medium between the price as recommended by the commissioners and approved by the court, and the price advocated by the Republic. This Court has also taken judicial notice of the fact that the value of the Philippine peso has considerably gone down since the year 1959.74 (Emphasis supplied, citation omitted)In Commissioner of Public Highways v. Judge Burgos,75 government took privately-owned property in 1924 to construct Mango Avenue and Gorordo Avenue in Cebu City.76 The taking was made without proper expropriation proceedings. When the original landowner instituted recovery proceedings in the trial court, this court ordered that just compensation be computed by the trial court and awarded to the landowner.77 The trial court computed for just compensation only in 1973. The commissioners arrived at the value of P2.37 per square meter as the prevailing value of the property at the time of taking in 1924.78
It is clear that the foregoing provision applies only to cases where a contract or agreement is involved. It does not apply where the obligation to pay arises from law, independent of contract. The taking of private property by the Government in the exercise of its power of eminent domain does not give rise to a contractual obligation.As in this case, the payment of just compensation in Commissioner of Public Highways was made several years after the time of taking.
. . . .
We hold, therefore, that under the law, in the absence of any agreement to the contrary, even assuming that there has been an extraordinary inflation within the meaning of Article 1250 of the New Civil Code, a fact We decline to declare categorically, the value of the peso at the time of the establishment of the obligation, which in the instant case is when the property was taken possession of by the Government, must be considered for the purpose of determining just compensation. Obviously, there can be no "agreement to the contrary" to speak of because the obligation of the Government sought to be enforced in the present action does not originate from contract, but from law which, generally is not subject to the will of the parties. And there being no other legal provision cited which would justify a departure from 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.80 (Citation omitted)
Endnotes:
1Rollo, pp. 255-258.
2 Id. at 229-238.
3 Id. at 237.
4 Id. at 124.
5 Id. at 125.
6 Id. at 142.
7 Id. at 125.
8 Id. at 138-141.
9 Id. at 124.
10 Id. at 143-145.
11 Id. at 143.
12 Id. at 147-148.
13 Id.
14 Id. at 149.
15 Id. at 62-68. The Decision was penned by Associate Justice Artemon D. Luna (Chair) and concurred in by Associate Justices Delilah Vidallon-Magtolis and Rodrigo V. Cosico of the Second Division.
16 Id. at 155.
17 Id.
18 Id. at 162.
19 Id. at 163.
20 Id. at 164.
21 Id. at 165-167.
22 Id. at 167.
23 Id. at 168-182.
24 Id. at 37-49. The Decision was penned by Associate Justice Lucas P. Bersamin (now Supreme Court Associate Justice) and concurred in by Associate Justices Portia Alifto Hormachuelos (Chair) and Estela M. Perlas-Bernabe (now Supreme Court Associate Justice) of the Third Division.
25 Id. at 136.
26 Id. at 14-35.
27Secretary of the Department of Public Works and Highways v. Tecson, G.R.No. 179334, July 1, 2013, 700 SCRA 243, 259 [Per J. Peralta, Third Division].
28 Id. at 255, citing Republic v. Court of Appeals, 494 Phil. 494, 509 (2005) [Per J. Carpio, First Division].
29 Id. at 258.
30Rollo, p. 256.
31 Id.
32 J. Leonen, Separate Opinion in Secretary of the Department of Public Works and Highways v. Tecson, G.R. No. 179334, July 1, 2013, 700 SCRA 243, 274 [Per J. Peralta, Third Division].
33Rollo, p. 30.
34 Id. at 31-32.
35 Id.
36 CONST., art. III, sec. 9.
37See National Power Corporation v. Court of Appeals, 325 Phil. 29 (1996) [Per J. Panganiban, Third Division] and Municipality of La Carlota v. Spouses Gan, 150-A Phil. 588 (1972) [Per J. Fernando, En Banc].
38See Republic v. Lara, et al., 96 Phil. 170 (1954) [Per J. J.B.L. Reyes, En Banc] and Provincial Government of Rizal v. Caro de Araullo, 58 Phil. 308 (1.933) [Per J. Vickers, En Banc].
39 150-A Phil. 588 (1972) [Per J. Fernando, En Banc].
40 Id. at 596.
41See National Power Corporation v. Ong Co, 598 Phil. 58, 65 (2009) [Per J. Tinga, Second Division].
This court summarized: "Just compensation is the fair market value of the property. Fair market value is that 'sum of money which a person desirous but not compelled to buy, and an owner willing but not compelled to sell, would agree on as a price to be given and received therefor.'"
42 ROBERT COOTER AND THOMAS ULEN, LAW AND ECONOMICS 175 (4th ed., 2004).
43Alfonso v. Pasay City, 106 Phil. 1017, 1020-1021 (1960) [Per J. Montemayor En Banc].
44 647 Phil. 251 (2010) [Per J. Brion, En Banc].
45 Id. at 273-276.
46 Id. at 272.
47 PAUL A. SAMUELSON AND WILLIAM D. NORDHAUS, ECONOMICS 748 (18th Edition). Present value (of an asset) is defined as "the value for an asset that yields a stream of income over time."
48 N. GREGORY MANKIW, PRINCIPLES OF ECONOMICS 567 (2007). Stated otherwise, "[m]oney today is more valuable than the same amount of money in the future."
49 N. GREGORY MANKIW, ESSENTIALS OF ECONOMICS 414-415 (4th ed., 2007).
50 J. Leonen, Separate Opinion in Secretary of the Department of Public Works and Highways v. Tecson, G.R. No. 179334, July 1, 2013, 700 SCRA 243, 276-278 [Per J. Peralta, Third Division].
51 G.R. No. 183272, October 15, 2014 [Per J. Del Castillo, Second Division].
52 Id. at 7.
53National Power Corporation v. Angus, G.R. Nos. 60225-26, May 8, 1992, 208 SCRA 542, 549 [Per J. Paras, Second Division] used 6% legal interest rate. Republic v. Court of Appeals, 433 Phil. 106 (2002) [Per J. Vitug, First Division] used 12% interest rate by way of actual or compensatory damages, following the ruling in Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78 [Per J. Vitug, En Banc]. The Decision of this case dated July 1, 2013 reverted back to the 6% legal interest rate.
54See Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78 [Per J. Vitug, En Banc].
55 N. GREGORY MANKIW, PRINCIPLES OF ECONOMICS 532 (2007). Compounding is "the accumulation of a sum of money in, say, a bank account, where the interest earned remains in the account to earn additional interest in the future."
56 Richard A. Posner, The Decline of Law as an Autonomous Discipline: 1962-1987, 100 HARV. L. Rev. 761,778 (1987).
57 The Bangko Sentral ng Pilipinas has been compiling Selected Domestic Interest Rates since 1949 (visited April 10, 2014).
58National Power Corporation v. Angas, G.R. Nos. 60225-26, May 8, 1992, 208 SCRA 542, 548-549 [Per J. Paras, Second Division] used the 6% interest rate on the basis of Central Bank Circular No. 416 and Act No. 2655.
59 233 Phil. 313 (1987) [Per J. Gutierrez, Jr., En Banc].
60 Id. at 326.
61 Technically speaking, these "interest rates" are actually "rates-of-return" or "yield." Government sells these treasury bills at a discount, and the bills are redeemed at face value. The "interest rate" here accounts for the difference between what the investor pays and the face value of the treasury bill.
62 Mamerto C. Singson Jr., The Philippine Treasury Bill Market, 8 PHILIPPINE REVIEW OF ECONOMICS 2, 43-44 (1971).
63 FREDERIC S. MISHKIN, THE ECONOMICS OF MONEY, BANKING AND FINANCIAL MARKETS, Appendix to Chapter 2, p. 1 (7th ed).
64 Mario B. Lamberte, Central Banking in the Philippines: Then, Now and the Future, Philippine Institute for Development Studies Discussion Paper Series No. 2002-10 30 (footnote 33).
65 Selected Domestic Interest Rates, Bangko Sentral ng Pilipinas (visited April 10, 2014).
66 Rep. Act No. 245 (1948), sec. 1(a).
67 Rep. Act No. 265(1948), sec. 135.
68See Selected Domestic Interest Rates, Bangko Sentral ng Pilipinas (visited April 10, 2014). The Bangko Sentral ng Pilipinas explains that the savings deposit rate "[r]efer[s] to the annual percentage equivalent of commercial banks' actual monthly interest expenses on peso-savings deposits to the total outstanding levels of these deposits." It represents the interest rate that all commercial banks pay to their depositors per year.
69 Mamerto C. Singson Jr., The Philippine Treasury Bill Market, 8 PHILIPPINE REVIEW OF ECONOMICS 2, 43-44 (1971).
70 This amount was computed by finding 6% of P5,087.60, which is P305.26. This amount was multiplied by 75, assuming that government will pay in the year 2015 or 75 years after the land was taken. This yielded the amount of P22,894.20. With this added to the principal amount due and considering only the fair market value at the time of taking plus legal interest, the spouses will only be entitled to P27,891.80.
71 This higher interest rate for expropriation cases was defended by Justice Brion in the Resolution to the second Motion for Reconsideration in Apo Fruits (647 Phil. 251, 275-277 (2010) [Per J. Brion, En Banc]). The case cited several other expropriation cases that used 12% as the legal interest rate for delay in the payment of just compensation: Republic v. Court of Appeals, 433 Phil. 106 (2002) [Per J. Vitug, First Division]; Reyes v. National Housing Authority, 443 Phil. 603 (2003) [Per J. Puno, Third Division]; Land Bank of the Philippines v. Wycoco, 464 Phil. 83 (2004) [Per J. Ynares-Santiago, First Division]; Republic v. Court of Appeals, 494 Phil. 494 (2005). [Per J. Carpio, First Division]; Land Bank of the Philippines v. Imperial, 544 Phil. 378 (2007) [Per J. Quisumbing, Second Division]; Philippine Ports Authority v. Rosales-Bondoc, 557 Phil. 737 (2007) [Per J. Sandoval-Gutierrez, First Division]; and Spouses Curata, et al. v. Philippine Ports Authority, 608 Phil. 9 (2009) [Per J. Velasco, Jr., En Banc].
72 12% of P5,087.60 is P610.51. If interest is paid annually for the past 75 years, this will amount to P45,788.40. With this added to the principal amount, the Tecson spouses will only be entitled to P50,876.00.
73 157 Phil. 329 (1974) [Per J. Zaldivar, En Banc].
74 Id. at 359.
75 185 Phil. 606 (1980) [Per J. De Castro, First Division].
76 Id. at 607.
77 Id. at 607-608.
78 Id. at 608-609.
79 Id. The case stated that the trial court awarded P49,459.34 for the 6,167-square-meter property. From this, it appears that the price computed, considering currency devaluation, was at P8.02 per square meter.
80 Id. at 610-611.
81 PAUL A. SAMUELSON AND WILLIAM D. NORDHAUS, ECONOMICS 741 (Eighteenth Edition). "Hyperinflation is inflation at extremely high rates (say, 1000, 1 million, or even 1 billion percent a year)."
82 TEODORO A. AGONCILLO, HISTORY OF THE FILIPINO PEOPLE 402 (1990).
83 433 Phil. 106 (2002) [Per J. Vitug, First Division].
84 Id. at 123.