518 Phil. 750
TINGA, J.:
WHEREFORE, judgment is hereby rendered:The MIAA elevated the case to the Court of Appeals, imputing as errors: (i) the award of rentals commencing from 1972; (ii) the award of exemplary damages; and (iii) the order to pay P145,305,000.00 as purchase price of the property.[7] In its Decision of 4 July 2003, the Court of Appeals modified the trial court's Decision, holding that Rodriguez is entitled to back rentals only from the time he became the registered owner of the property in 1996. According to the appellate court, the award of rentals was not based on a contract of lease; rather, it was a grant of damages representing unearned rentals or unrealized profits. Such damages, it was explained, must have been inflicted directly upon the person seeking the indemnification; thus, Rodriguez cannot claim damages he did not personally sustain or unrealized profits before he acquired the property.[8]SO ORDERED.[6]
- Ordering defendant to pay plaintiff the amount of P70,868,936.72 as rental for the property from 1972 to 1998;
- Ordering defendant to pay P15,000.00 per square meter as purchase price of the property occupied by it;
- Ordering defendant to pay exemplary damages in the amount of P1,000,000.00;
- Ordering defendant to pay attorney's fees equivalent to 5% of the amount due.
WHEREFORE, premises considered, this Court resolves to:Both the MIAA and Atayde, as petitioners, have thus come before this Court. They claim that Rodriguez was a buyer in bad faith, having purchased the subject lot in a highly speculative and scheming manner,[11] and in anticipation of a grossly disproportionate amount of profit at the expense of the Government.[12] This bad faith, according to petitioners, was made evident by the fact that: (i)Rodriguez knew that the airport had been occupying the subject property even before he bought it, and he bought it at the very low price of P4,000,000.00; (ii) three months before he purchased the property, Rodriguez had written to Atayde, claiming to have the certificate of title in his name and offering to sell the lot to the MIAA for P2,350.00 per square meter; and (iii) after purchasing the property, Rodriguez increased his asking price to P9,000.00 per square meter.[13] Since Rodriguez was a buyer in bad faith, petitioners stress that the decisions of the courts below entitling him to amass profits of more than P200,000,000.00 is contrary to morals, good customs and public policy, and would lead to his unjust enrichment.[14]
(1) PARTIALLY GRANT plaintiff-appellees' motion for reconsideration by including the following rate of legal interest in the award of rentals: "Six (6%) percent per annum to be computed from the time of the judicial demand and twelve (12%) percent interest, in lieu of the six (6%) percent, upon the finality of the decision until the payment thereof."(2) DENY defendant-appellants' motion for reconsideration for lack of merit.
SO ORDERED.[10]
...there being no other legal provision cited which would justify a departure form the rule that just compensation is determined on the basis of the value of the property at the time of the taking thereof in expropriation by the Government, the value of the property as it is when the Government took possession of the land in question, not the increased value resulting from the passage of time which invariably brings unearned increment to landed properties, represents the true value to be paid as just compensation for the property taken.[21]In Ansaldo v. Tantuico, Jr.,[22] where the owners of two (2) lots used by the Government for road widening sought compensation twenty-six (26) years after the lots were taken, the Court ruled in the same vein, thus:
The sole question thus confronting the Court involves the precise time at which just compensation should be fixed, whether as of the time of actual taking of possession by the expropriating entity or, as the Ansaldos maintain, only after conveyance of title to the expropriator pursuant to expropriation proceedings duly instituted since it is only at such a time that the constitutional requirements of due process aside from those of just compensation may be fully met.[23]The ruling was reiterated in Eslaban v. Vda. De Onorio.[25] There, a main irrigation canal was constructed over a piece of land by the National Irrigation Administration but the property owner filed the complaint seeking compensation only nine (9) years later. The Court declared:
X X X X
It is as of the time of such a taking, to repeat, that the just compensation for the property is to be established. As stated in Republic v. Philippine National Bank,". . . (W)hen plaintiff takes possession before the institution of the condemnation proceedings, the value should be fixed as of the time of the taking of said possession, not of filing of the complaint and the latter should be the basis for the determination of the value, when the taking of the property involved coincides with or is subsequent to, the commencement of the proceedings. Indeed, otherwise, the provision of Rule 69, Section 3, directing that compensation 'be determined as of the date of the filing of the complaint' would never be operative. As intimated in Republic v. Lara (supra), said provision contemplates 'normal circumstances,' under which 'the complaint coincides or even precedes the taking of the property by the plaintiff."The reason for the rule, as pointed out in Republic v. Lara, is that —". . . (W)here property is taken ahead of the filing of the condemnation proceedings, the value thereof may be enchanced by the public purpose for which it is taken; the entry by the plaintiff upon the property may have depreciated its value thereby; or, there may have been a natural increase in the value of the property from the time the complaint is filed, due to general economic conditions. The owner of private property should be compensated only for what he actually loses; it is not intended that his compensation shall extend beyond his loss or injury. And what he loses is only the actual value of his property at the time it is taken. This is the only way that compensation to be paid can be truly just; i.e., 'just not only to the individual whose property is taken,' 'but to the public, which is to pay for it.'"Clearly, then, the value of the Ansaldos' property must be ascertained as of the year 1947, when it was actually taken, and not at the time of the filing of the expropriation suit, which, by the way, still has to be done. It is as of that time that the real measure of their loss may fairly be adjudged. The value, once fixed, shall earn interest at the legal rate until full payment is effected, conformably with other principles laid down by case law.[24]
Thus, the value of the property must be determined either as of the date of the taking of the property or the filing of the complaint, "whichever came first." Even before the new rule, however, it was already held in Commissioner of Public Highways v. Burgos that the price of the land at the time of taking, not its value after the passage of time, represents the true value to be paid as just compensation. It was, therefore, error for the Court of Appeals to rule that the just compensation to be paid to respondent should be determined as of the filing of the complaint in 1990, and not the time of its taking by the NIA in 1981, because petitioner was allegedly remiss in its obligation to pay respondent, and it was respondent who filed the complaint. In the case of Burgos, it was also the property owner who brought the action for compensation against the government after 25 years since the taking of his property for the construction of a road.
Indeed, the value of the land may be affected by many factors. It may be enhanced on account of its taking for public use, just as it may depreciate. As observed in Republic v. Lara:[W]here property is taken ahead of the filing of the condemnation proceedings, the value thereof may be enhanced by the public purpose for which it is taken; the entry by the plaintiff upon the property may have depreciated its value thereby; or there may have been a natural increase in the value of the property from the time it is taken to the time the complaint is filed, due to general economic conditions. The owner of private property should be compensated only for what he actually loses; it is not intended that his compensation shall extend beyond his loss or injury. And what he loses is only the actual value of his property at the time it is taken. This is the only way that compensation to be paid can be truly just, i.e., "just" not only to the individual whose property is taken, "but to the public, which is to pay for it" . . . .In this case, the proper valuation for the property in question is P16,047.61 per hectare, the price level for 1982, based on the appraisal report submitted by the commission (composed of the provincial treasurer, assessor, and auditor of South Cotabato) constituted by the trial court to make an assessment of the expropriated land and fix the price thereof on a per hectare basis.[26]
The uniform rule of this Court, however, is that this compensation must be, not in the form of rentals, but by way of 'interest from the date that the company [or entity] exercising the right of eminent domain take possession of the condemned lands, and the amounts granted by the court shall cease to earn interest only from the moment they are paid to the owners or deposited in court x x x.[35]Petitioners claim that Rodriguez is a buyer in bad faith since prior to his purchase he was aware of the MIAA's occupation of the property and therefore proceeded with the purchase in anticipation of enormous profits from the subsequent sale to the MIAA. The point is irrelevant. Regardless of whether or not Rodriguez acted in bad faith, all that he will be entitled to is the value of the property at the time of the taking, with legal interest thereon from that point until full payment of the compensation by the MIAA. Besides, assuming the question is of any consequence, the circumstances surrounding Rodriguez's purchase may not even amount to bad faith. Bad faith has been defined as a state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for an ulterior purpose, and implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity.[36] There is nothing wrongful or dishonest in expecting to profit from one's investment. However, Rodriguez can fault but only himself for taking an obvious risk in purchasing property already being used for a public purpose. It was a self-inflicted misfortune that his investment did not generate the windfall he had expected. For ostensibly little did he know that he could not acquire more rights than the previous owners had since the government taking had taken place earlier.
No pronouncement as to costs.
- The MIAA is ordered to pay Joaquin Rodriguez just compensation for the subject lot, the portion actually occupied by the runway consisting of or based on the value thereof at the time of taking in 1972, with interest thereon at the legal rate of six percent (6%) per annum from the time of the taking until full payment is made. For the purpose of determining said value, the case is remanded to the lower court. Said court is ordered to make the determination with deliberate dispatch;
- The award of back rentals as damages is DELETED;
- The MIAA is ordered to PAY exemplary damages in the reduced amount of P200,000.00, and attorney's fees equivalent to one percent (1%) of the amount due.