817 Phil. 1048
CARPIO, ACTING C.J.:
WHEREFORE, premises considered, judgment is hereby rendered fixing the amount of just compensation for 173.08 square meters of the subject parcel of land being expropriated at Twenty Five Thousand Pesos (P25,000.00) per square meter.Both Republic-DPWH and Evergreen filed their respective Motions for Partial Reconsideration. Republic-DPWH argued that the just compensation should be fixed only at Fifteen Thousand Pesos (P15,000.00) per square meter while Evergreen argued that the RTC erred in fixing the just compensation at merely Twenty Five Thousand Pesos (P25,000.00). Evergreen further asked for the payment of consequential damages as a result of its lost income with its billboard lessee and decrease in value of the Subject Property and legal interest on the amount of just compensation. In an Order dated 3 November 2011,[7] the RTC denied the motions. Thus, both parties appealed to the CA.
Plaintiff is directed to pay the said defendant the net amount of Three Million Two Hundred Eighty Eight Thousand Five Hundred Twenty Pesos (Php3,288,520.00) and subject to payment by defendant of any unpaid real property taxes and other taxes and fees due.
Other claims of defendant [are] denied, for lack of merit.
Cost of litigation is adjudged against the plaintiff.
SO ORDERED.[6]
In their separate Commissioner's Appraisal Report, Atty. Wy and Atty. Pablita Migrino stated, that: (1) the selling price of the properties in the surrounding area is within the range of P35,000.00 and P40,000.00 per square meter; and (2) in 2000, the just compensation of a nearby property was P26,100.00 per square meter as determined by RTC-Branch 70, Pasig City, and affirmed by the Supreme Court in Light Rail Transit Authority vs. Clayton Industrial Corporation, et al. Thus, just compensation of P25,000.00 per square meter set by the RTC, is far too low for a property expropriated in 2004.The CA, however, denied the claim of consequential damages or interest by Evergreen. The CA found that based on the records of the RTC, the Subject Premises expropriated by the Republic-DPWH did not include and would not encroach on the residential building and billboard owned by Evergreen. Evergreen also failed to present any. evidence to prove that its remaining properties would be adversely affected or damaged by the expropriation. As for the issue regarding the interest on the amount of just compensation until final payment, the CA held that Evergreen is not entitled to such interest as Republic-DPWH's payment was deposited in the account of Evergreen months before it was able to take possession of the Subject Premises pursuant to the Writ of Possession issued by the RTC. The dispositive portion of the CA Decision provides:
Consequently, it would be more in accord with justice and equity to increase the just compensation of the subject property to P35,000.00 per square meter, agreed to by two of the three commissioners, Atty. Wy and RTC Clerk of Court, Atty. Migrino, for a total of P6,057,800.00 for the 173.08 square meters sought to be expropriated.[9]
WHEREFORE, premises considered, both appeals are PARTIALLY GRANTED. The Decision dated June 30, 2011 of the Regional Trial Court, Branch 166, Pasig City, in SCA No. 2641, is AFFIRMED with MODIFICATION that the just compensation for the 173.08 square meters of the property expropriated is P35,000.00 per square meter, or a total of P6,057,800.00, minus the amount of P1,038,480.00 paid over by Republic-DPWH in order to take possession of the expropriated property, and withdrawn by Evergreen sometime on or after November 15, 2006. No costs.In a Resolution dated 25 May 2015,[11] the CA denied the Motions for Partial Reconsideration filed by both Evergreen and Republic-DPWH. Hence, Evergreen filed with this Court its petition for review on certiorari dated 3 August 2015[12] while Republic-DPWH filed its own petition for review on certiorari dated 29 July 2015.[13]
SO ORDERED.[10]
THE HONORABLE COURT OF APPEALS, WITH UTMOST DUE RESPECT, GRAVELY ERRED WHEN IT DENIED PETITIONER'S CLAIM FOR PAYMENT OF INTEREST FOR THE PROPERTY EXPROPRIATED BY THE RESPONDENT.[14]On the other hand Republic-DPWH raises the following arguments in its own petition:
THE QUESTIONED DECISION AND RESOLUTION OF THE COURT OF APPEALS ARE NOT IN ACCORD WITH LAW AND APPLICABLE JURISPRUDENCE, CONSIDERING THAT:
I. THE JUST COMPENSATION FIXED BY THE COURT OF APPEALS HAS NO BASIS IN FACT AND IN LAW.A. THE COMMISSIONERS' REPORTS ARE MANIFESTLY HEARSAY AND BEREFT OF ANY KIND OF EVIDENCE. THEREFORE, IT SHOULD BE DISREGARDED PURSUANT TO THE PRONOUNCEMENTS OF THE HONORABLE COURT IN NPC VS. YCLA SUGAR DEVELOPMENT CORPORATION AND NAPOCOR VS. DIATO-BERNAL.
B. SECTION 4, RULE 67 OF THE RULES OF COURT MANDATES THAT THE VALUE OF JUST COMPENSATION SHALL BE DETERMINED AS OF THE DATE OF THE TAKING OF THE PROPERTY OR THE FILING OF THE COMPLAINT, WHICHEVER COMES FIRST. HERE, THE AMOUNT OF JUST COMPENSATION FOR THE EXPROPRIATED INDUSTRIAL PROPERTY IS BASED ON THE "CURRENT" SELLING PRICE OF COMMERCIAL PROPERTIES.
C. THERE IS NO BONA FIDE VALUATION OF THE EXPROPRIATED PROPERTY. THE COMMISSIONERS' REPORT HINGED COMPLETELY ON THE VALUATION OF THE BOARD OF COMMISSIONERS (BOC) IN THE LRTA CASE.1. THE JUST COMPENSATION PRONOUNCED IN LRTA WAS NOT INTENDED TO BECOME A PRECEDENT, MUCH LESS AN AUTHORITY TO BE APPLIED INVARIABLY IN OTHER EXPROPRIATION CASES. THE JUST COMPENSATION AWARDED THEREIN WAS A RESULT OF THE DELIBERATION OF THE BOC IN THAT CASE PURSUANT TO THE EVIDENCE PRESENTED BY THE PARTIES.[15]
The jurisdiction of the Court in cases brought before it from the appellate court is limited to reviewing errors of law, and findings of fact of the Court of Appeals are conclusive upon the Court since it is not the Court's function to analyze and weigh the evidence all over again. Nevertheless, in several cases, the Court enumerated the exceptions to the rule that factual findings of the Court of Appeals are binding on the Court: (1) when the findings are grounded entirely on speculations, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to that of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; er (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion.[18]In this case, given that the findings on the amount of just compensation of the RTC and CA differ, we find that a review of the facts is in order.
Notably, just compensation in expropriation cases is defined "as the full and fair equivalent of the property taken from its owner by the expropriator. The Court repeatedly stressed 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."[20]The determination of just compensation in expropriation proceedings is essentially a judicial prerogative.[21] This determination of just compensation, which remains to be a judicial function performed by the court, is usually aided by the appointed commissioners. In Spouses Ortega v. City of Cebu,[22] we held:
Likewise, in the recent cases of National Power Corporation v. dela Cruz and Forfom Development Corporation v. Philippine National Railways, we emphasized the primacy of judicial prerogative in the ascertainment of just compensation as aided by the appointed commissioners, to wit:Both the RTC and the CA relied on the reports of commissioners Atty. Wy and Atty. Migrino to determine the amount of just compensation for the Subject Premises. However, Republic-DPWH argues that the reports of these two commissioners were not supported by any documentary evidence and were based solely on opinions and hearsay. Further, Republic-DPWH argues that the recommendations of Atty. Wy and Atty. Migrino are incorrect as the value given by said commissioners was computed at the time the inspection was undertaken in 2008, and not at the time of taking, which was in 2004. It argues that the basis of just compensation should be the value of the expropriated property at the time of taking because the value of the property had already been greatly enhanced since then.
Though the ascertainment of just compensation is a judicial prerogative, the appointment of commissioners to ascertain just compensation for the property sought to be taken is a mandatory requirement in expropriation cases. While it is true that the findings of commissioners may be disregarded and the trial court may substitute its own estimate of the value, it may only do so for valid reasons; that is, where the commissioners have' applied illegal principles to the evidence submitted to them, where they have disregarded a clear preponderance of evidence, or where the amount allowed is either grossly inadequate or excessive. Thus, "trial with the aid of the commissioners is a substantial right that may not be done away with capriciously or for no reason at all."[23]
x x x. Likewise, this Court takes cognizance of the fact that the commissioner may avail or consider certain factors in determining the fair market value of the property apart from the proffered documentary evidences. Thus, the factors taken into account by the commissioner in arriving at the recommended fair market value of the property at Php800.00 per square meter, aside from the evidence available, were valid criteria or gauge in the determination of the just compensation of the subject property. (Boldfacing and underscoring supplied)This determination, however, should still reflect the value of the property as of the date of taking. In this case, the commissioners found that the properties in the area, as of the time of the ocular inspection in 2008, had a demand selling price ranging from P35,000.00 to P40,000.00 per square meter.[29] A reading of their individual reports shows that they considered the location of the Subject Premises, as well as its size and prospective uses, the neighborhood, and the nearby establishments. This was well within their prerogative to do so, as we have held that all the facts as to the condition of the property and its surroundings, as well as its improvements and capabilities, must thus be considered in determining just compensation.[30] However, these must be the conditions existing at the time the taking was made by the government. While the size and location of the property would not have changed from the time of taking until the time when the ocular inspection was conducted, the establishments and neighborhood surrounding the property may have undergone changes after the property was taken by the government. The improvements introduced after the time of taking should not unduly benefit the property owner by unnecessarily increasing the value of the property.
The reason is that just compensation would not be "just" if the State does not pay the property owner interest on the just compensation from the date of the taking of the property. Without prompt payment, the property owner suffers the immediate deprivation of both his land and its fruits or income. The owner's loss, of course, is not only his property but also its income-generating potential.In the present case, we find that there is still unpaid compensation due to Evergreen. Republic-DPWH complied with Republic Act No. (RA) 8974,[38] the applicable law for expropriation in this case. Section 4 of RA 8974 provides in part:
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."[37] (Emphasis supplied)
Section 4. Guidelines for Expropriation Proceedings. — Whenever it is necessary to acquire real property for the right-of-way, site 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:Republic-DPWH had complied with the requirements of Section 4, paragraph (a) of RA 8974 when it deposited the equivalent of 100% of the value of the Subject Premises based on the BIR zonal valuation of the property for the account of Evergreen. This deposit was made before Republic-DPWH was able to take possession of the Subject Premises through the issuance of the writ of possession. Verily, under the law, the initial payment is a prerequisite for the issuance of the writ of possession. However, this payment alone and by itself does not constitute just compensation. We note that this is only the first of the two payments the government must make. Section 4 of RA 8974 specifically provides that "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." Thus, under RA 8974, there must be a completion of two payments before just compensation is deemed to have been 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;x x x x
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. (Emphasis supplied)
The Government's initial payment of just compensation does not excuse it from avoiding payment of interest on the difference between the adjudged amount of just compensation and the initial payment.Republic-DPWH avers that interest will only accrue if there is delay in the payment of just compensation, and that in-this case, there is no such unjustified delay because it has deposited the amount required by law before taking possession of the Subject Premises.
The initial payment scheme as a prerequisite for the issuance of the writ of possession under RA 8974 only provides the Government flexibility to immediately take the property for public purpose or public use pending the court's final determination of just compensation. Section 4(a) of RA 8974 only addresses the Government's need to immediately enter the privately owned property in order to avoid delay in the implementation of national infrastructure projects.
Otherwise, Section 4 of RA 8974 would be repugnant to Section 9, Article 3 of the 1987 Constitution which mandates that private property shall not be taken for public use without just compensation. To reiterate, the Constitution commands the Government to pay the property owner no less than the full and fair equivalent of the property from the date of taking.[40]
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:The delay in the payment of just compensation is a forbearance of money. As such, this is necessarily entitled to earn interest.[43] The difference in the amount between the final amount as adjudged by the court and the initial payment made by the government - which is part and parcel of the just compensation due to the property owner - should earn legal interest as a forbearance of money. In Republic v. Mupas,[44] we stated clearly:The 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 interest[s] 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.Aside from this ruling, Republic notably overturned the Court's previous ruling in National Power Corporation v. Angas which held that just compensation due for expropriated properties is not a loan or forbearance of money but indemnity for damages for the delay in payment; since the interest involved is in the nature of damages rather than earnings from loans, then Art. 2209 of the Civil Code, which fixes legal interest at 6%, shall apply.
In Republic, the Court recognized that the just compensation due to the landowners for their expropriated property amounted to an effective forbearance on the part of the State. Applying the Eastern Shipping Lines ruling, the Court fixed the applicable interest rate at 12% per annum, computed from the time the property was taken until the full amount of just compensation was paid, in order to eliminate the issue of the constant fluctuation and inflation of the value of the currency over time.[42] (Emphasis in the original)
Contrary to the Government's opinion, the interest award is not anchored either on the law of contracts or damages; it is based on the owner's constitutional right to just compensation. The difference in the amount between the final payment and the initial payment — in the interim or before the judgment on just compensation becomes final and executory — is not unliquidated damages which do not earn interest until the amount of damages is established with reasonable certainty. The difference between final and initial payments forms part of the just compensation that the property owner is entitled from the date of taking of the property.With respect to the amount of interest on the difference between the initial payment and final amount of just compensation as adjudged by the court, we have upheld in Eastern Shipping Lines, Inc. v. Court of Appeals,[45] and in subsequent cases thereafter,[46] the imposition of 12% interest rate from the time of taking when the property owner was deprived of the property, until 1 July 2013, when the legal interest on loans and forbearance of money was reduced from 12% to 6% per annum by BSP Circular No. 799. Accordingly, from 1 July 2013 onwards, the legal interest on the difference between the final amount and initial payment is 6% per annum.
Thus, when the taking of the property precedes the filing of the complaint for expropriation, the Court orders the condemnor to pay the full amount of just compensation from the date of taking whose interest shall likewise commence on the same date. The Court does not rule that the interest on just compensation shall commence [on] the date when the amount of just compensation becomes certain, e.g., from the promulgation of the Court's decision or the finality of the eminent domain case. (Emphasis supplied)