G.R. No. 244115, February 03, 2021
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, Petitioner, v. HEIRS OF ANDRES FRANCISCO, Respondents.
D E C I S I O N
Before the Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court seeking to annul and set aside the Decision2 dated June 13, 2018 and the Resolution3 dated January 10, 2019 of the Court of Appeals (CA) in CA-G.R. CV No. 108050. The CA partially granted the Decision4 dated February 22, 2016 and the Order5 dated September 1, 2016 of the Regional Trial Court (RTC) of Valenzuela City, Branch 172, in Civil Case No. 169-V-12. It remanded the case to
the RTC for the proper determination of the just compensation and
deleted the award of consequential damages and attorney's fees for lack
of adequate factual and legal bases.
Essentially, the Republic of the Philippines, represented by the
Department of Public Works and Highways (DPWH; petitioner), is
questioning the CA's imposition of the interest rate of 12% per annum
from the time of taking until June 30, 2013 considering that the subject lots were taken after the payment of the just compensation.
WHEREFORE, judgment is hereby rendered fixing the just compensation of the total subject of 1,260.50 square meters lot of the defendants in the amount of SEVEN THOUSAND FIVE HUNDRED PESOS (Php7,500.00) per square meter or in the total amount of NINE MILLION FOUR HUNDRED FIFTY-THREE THOUSAND SEVEN HUNDRED FIFTY PESOS (Php9,453,750.00), and authorizing the payment thereof by the plaintiff to the defendants for the property condemned, deducting the provisional deposit previously, made and subject to the payment of all unpaid property taxes and other relevant taxes, by the defendant up to the filing of the complaint, if there be any. The plaintiff is also directed to pay defendants the amount of ONE MILLION PESOS (Php 1,000,000.00) by way of consequential damages and ONE HUNDRED THOUSAND PESOS (Php100,000.00) as attorney's fees. The plaintiff is ordered to pay interest at the rate of 12% per annum on the unpaid balance of just compensation on the lot, as well as the damages, computed from the time of the taking of the property until July 1, 2013 and thereafter the rate of 6% per annum shall apply until the same shall have been paid in full, as per BSP Circular No. 799.The RTC pegged the amount of just compensation at P7,500.00 per sq. m. taking into account its decisions in similar expropriation cases involving residential properties in Gen. T. De Leon, Valenzuela City. In 2007 and 2008, the RTC fixed the just compensation in condemnation proceedings between P3,000.00 to P5,000.00 per sq. m. It opined that petitioner's valuation at P400.00 and P2,100.00 per sq. m. for the subject lots cannot be applied in a complaint for expropriation filed in 2012.20 Petitioner filed a Motion for Reconsideration, but the same was denied in an Order21 dated September 1, 2016.
SO ORDERED.19
WHEREFORE, the present appeal is PARTIALLY GRANTED. The February 22, 2016 Decision and its subsequent September 1, 2016 Order in Civil Case No. 169-V-12, is hereby MODIFIED as follows:The CA remanded the case to the RTC because of the absence of reliable and actual data as bases in fixing the value of the condemned properties. It declared that the RTC seemed to have overlooked that the classification and use for which the properties are suited are not the only criteria for the determination of the just compensation.
a. This case is REMANDED to the Regional Trial Court (RTC) of Valenzuela City, Branch 172, for the proper determination of just compensation in conformity with this Decision. To forestall any farther delay in the resolution of the case, the trial court is ordered to make the determination within six (6) months from receipt of this Decision and afterwards to report to this Court its compliance thereon.
b. From the date of taking of the property on February 8, 2013 until June 30, 2013, the unpaid balance of the just compensation to be determined by the trial court shall earn interest at 12% per annum. From July 1, 2013 until the finality of the decision fixing the just compensation, the legal interest shall be 6% per annum. The total amount due shall earn a straight 6% per annum interest from the finality of the decision fixing the just compensation until full payment.
c. The trial court's award of consequential damages and attorney's fees are hereby DELETED for lack of adequate factual and legal bases.
SO ORDERED.22
SEC. 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:In Evergreen Manufacturing Corp. v. Republic,34 the Court noted that the just compensation contemplated in R.A. No. 8974 contemplates the completion of two payments to the property owner, to wit: (1) the initial payment of the amount equivalent to the sum of 100% of the value of the property based on the current relevant BIR zonal valuation and the value of the improvements and/or structures thereon, which is made upon the filing of the complaint; and (2) the payment of the difference between the amount already paid and the just compensation as determined by the court, which is made after the trial court's decision becomes final and executory. Upon initial payment of the so-called provisional value of the condemned property, the court shall issue a writ of possession in order to provide the government the "flexibility to immediately take the property pending the court's final determination of just compensation"35 and commence the implementation of the infrastructure 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 (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. (Emphases and underscoring supplied)
Ideally, just compensation should be immediately 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. However, if full compensation is not paid for the property taken, then the State must pay 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. Interest on the unpaid compensation becomes due as compliance with the constitutional mandate on eminent domain and as a basic measure of fairness.Thus, interest in eminent domain cases "runs as a matter of law and follows as a matter of course from the right of the landowner to be placed in as good a position as money can accomplish, as of the date of taking." (Emphasis supplied)We echoed the above pronouncement in Apo Fruits Corporation v. Land Bank of the Philippines,38 where we expounded on the raison d'etre for the imposition of legal interest in the payment of just compensation:
The award of interest is intended to compensate the property owner for the income it would have made had it been properly compensated for its property at the time of the taking. "The need for prompt payment and the necessity of the payment of interest is to compensate for any delay in the payment of compensation for property already taken." "The award of interest is imposed in the nature of damages for delay in payment which, in effect, makes the obligation on the part of the government one of forbearance to ensure prompt payment of the value of the land and limit the opportunity loss of the owner." (Emphases and underscoring supplied)To excuse itself from the payment of interest, petitioner insists that there was no delay in the payment of the value of the expropriated properties because of its initial deposit with the RTC. We do not agree. It cannot be overemphasized that the initial payment made by petitioner only represents the provisional value of the subject properties which "serves the double-purpose of (a) pre-payment if the property is fully expropriated, and (b) indemnity for damages if the proceedings are dismissed.39 It does not, in anyway, constitute the full and fair equivalent of the expropriated properties for it is the court which can judicially determine the same. Here, it is crystal clear that when the RTC adjudged the amount of just compensation, petitioner has already taken the condemned properties and respondents have already been deprived of the income that their properties would have made. There was already a delay in fully satisfying the payment of the just compensation. "Without prompt payment, compensation cannot be considered 'just' inasmuch as the property owner is made to suffer the consequences of being immediately deprived of his land while being made to wait for a decade or more before actually receiving the amount necessary to cope with his loss."40 Accordingly, the difference between the final amount to be adjudged by the RTC and the initial payment made by petitioner should earn interest. Petitioner anchors its argument on the case of Republic v. Soriano41 where the Court deleted the RTC's imposition of interest at 12% per annum for being unjustified. A plain reading of Soriano will readily show that it is not on all fours with the present dispute. The Court explicitly stated therein that the Republic "did not delay in its payment of just compensation as it had deposited the pertinent amount in full due to respondent on January 24, 2011 or four months before the taking thereof x x x." The Republic deposited the amount of P420,000.00 as initial payment and took possession of the property. Subsequently, the RTC pegged the just compensation at P2,100.00 per sq. m. or in the total amount of P420,000.00 for the 200-sq. m. expropriated property. There being no unpaid balance of the just compensation, the Court ruled that the RTC's award of legal interest at 12% per annum is unwarranted. Undoubtedly, petitioner's reliance on Soriano is misplaced. In ascertaining the proper legal interest to be imposed, we are guided by the Court's declaration in Republic v. Spouses Silvestre:42
[T]he delay in the payment of just compensation is a forbearance of money and, as such, is necessarily entitled to earn interest. Thus, the difference in the amount between the final amount as adjudged by the Court, which in this case is P15,225,000.00, and the initial payment made by the government, in the amount of P3,654,000.00 — which is part and parcel of the just compensation due to the property owner — should earn legal interest as a forbearance of money. Moreover, with respect to the amount of interest on this difference between the initial payment and the final amount of just compensation, as adjudged by the Court, we have upheld, in recent pronouncements, the imposition of 12% interest rate from the time of taking, when the property owner was deprived of the property, until July 1, 2013, when the legal interest on loans and forbearance of money was reduced from 12% to 6% per annum by Bangko Sentral ng Pilipinas Circular No. 799. Accordingly, from July 1, 2013 onwards, the legal interest on the difference between the final amount and initial payment is 6% per annum. (Underscoring supplied)Petitioner instituted the complaint for expropriation on October 19, 2012 and was issued the writ of possession on February 8, 2013. The just compensation shall be appraised as of October 19, 2012 as it preceded the actual taking of the properties. The legal interest at 12% per annum on the difference between the final amount to be adjudged by the RTC and the initial payment made shall accrue from February 8, 2013 until June 30, 2013. From July 1, 2013 until the finality of the RTC Decision, the difference between the initial payment and the final amount to be adjudged by the RTC shall earn interest at the rate of 6% per annum. Thereafter, the total amount of just compensation shall earn legal interest of 6% per annum from the finality of this Decision until full payment thereof.43
Endnotes:
1Rollo, pp. 11-26.
2 Id. at 29-43; penned by Associate Justice Edwin D. Sorongon, with Associate Justices Sesinando E. Villon and Maria Filomena D. Singh, concurring.
3 Id. at 45-47.
4 Id. at 49-61; penned by Judge Nancy Rivas-Palmones.
5 Id. at 62.
6 Id. at 14; A residential lot covered by TCT No. V-20112.
7 Id.; A residential lot covered by TCT No. V-14472.
8 Id. at 13-14.
9 Id. at 14.
10 Id. at 15.
11 Id.
12 Id. at 31.
13 Id. at 15; Land Bank Treasury Check Nos. 740975 and 0001251025 in the amounts of P2,647,050.00 and P1,559,560.62, respectively.
14 Id. at 31.
15 Id.
16 Id.
17 Id. at 32.
18 Id. at 49-61.
19 Id. at 60-61.
20 Id. at 57-59.
21 Id. at 62.
22 Id. at 42.
23 Id.
24 Id. at 41-42.
25 Supra note 3.
26 755 Phil. 187 (2015).
27 Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum.
28 817 Phil. 1048 (2017).
29Apo Fruits Corporation v. Land Bank of the Philippines, 647 Phil. 251, 269 (2010).
30 Id. at 271, citing Land Bank of the Philippines v. Spouses Orilla, 578 Phil. 663, 676 (2008).
31Evergreen Manufacturing Corp. v. Republic, supra note 28, at 1064.
32 769 Phil. 21 (2015).
33 An Act to Facilitate the Acquisition of Right-of-Way, Site or Location for National Government Infrastructure Projects and for other Purposes.
34 Supra note 28.
35Republic v. Judge Mupas, supra note 32, at 197.
36 Sec. 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: (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.
37 Supra note 32, at 194-195.
38 828 Phil. 652, 667-668 (2018).
39Felisa Agricultural Corporation v. National Transmission Corporation, 834 Phil. 861, 874 (2018).
40Land Bank of the Philippines v. Spouses Avanceña, 785 Phil. 755, 764 (2016).
41 Supra note 26.
42 G.R. No. 237324, February 6, 2019.
43 Id.cralawredlibrary