[ G.R. No. 244115, February 03, 2021 ]
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, PETITIONER, VS. HEIRS OF ANDRES FRANCISCO, RESPONDENTS.
D E C I S I O N
Before the Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court seeking to annul and set aside the Decision[2] dated June 13, 2018 and the Resolution[3] dated January 10, 2019 of the Court of Appeals (CA) in CA-G.R. CV No. 108050. The CA partially granted the Decision[4] dated February 22, 2016 and the Order[5]
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.
The Facts
On October 19, 2012, petitioner filed a complaint for expropriation
against Andres Francisco and Socorro Luna (spouses Francisco) for the
acquisition of the 970.50-square meter (sq. m.) portion of Lot No.
962-D-3-C-3[6] and the 290-sq. m. portion of Lot No. 962-D-3-B,[7] residential lots located in Barangay
General T. De Leon, Valenzuela City, for the construction of the C-5
Northern Link Road Project Phase 2 (Segment 9) from North Luzon
Expressway to MacArthur Highway, Valenzuela City.[8]
Upon their death, the spouses Francisco were substituted by their
children Alejandro Francisco and Sonia Francisco Soriano (respondents).[9]
On November 23, 2012, petitioner deposited with the RTC Land Bank of the
Philippines (LBP) Manager's Check No. 698188 in the amount of
P1,559,560.62, representing the equivalent of 100% of the cost of the
improvements found in the subject lots. On December 13, 2012, it also
deposited with the RTC LBP Manager's Check No. 1185752 in the amount of
P2,647,050.00, representing the equivalent of 100% of the Bureau of
Internal Revenue (BIR) zonal value of the subject lots.[10]
On February 8, 2013, the RTC issued a Writ of Possession in favor of petitioner.[11]
On April 17, 2013, the RTC ordered the replacement of the LBP manager's
checks after they became stale while in the trial court's custody.[12]On August 29, 2013 and February 21, 2014, petitioner issued the replacement checks[13] and deposited the same with the trial court.
On June 20, 2013, the parties agreed to execute a compromise agreement to determine the valuation of the subject properties.[14]
On February 3, 2014, respondents declared that they are no longer amenable to enter into a compromise agreement.[15]
On August 7, 2014, the parties manifested that they would dispense with
the referral of the case to the Board of Commissioners for the
determination of the just compensation and thereafter submitted their
respective position papers.[16]
In their position paper, respondents claimed that they should be paid
the just compensation computed at P7,500.00 per sq. m. and P1,000,000.00
as consequential damages. But petitioner countered that the just
compensation should be fixed at P400.00 per sq. m. and P2,100.00 per sq.
m. Petitioner likewise prayed that the amount of P1,559,560.62
representing the replacement cost of the subject improvements be
considered as the full settlement of the just compensation thereon.
[17]
The Ruling of the RTC
On February 22, 2016, the RTC rendered a Decision
[18] with the dispositive portion as follows:
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.
SO ORDERED.[19]
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 Order
[21] dated September 1, 2016.
The Ruling of the CA
On June 13, 2018, the CA rendered a Decision, the
fallo of which reads:
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:
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]
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.
The CA upheld the 12% interest imposed by the RTC on the unpaid balance
of the just compensation clarifying that it should be reckoned from the
time of taking, which is on February 8, 2013. The 12% per annum
interest rate applies until June 30, 2013 and, thereafter, the interest
rate shall be at 6% per annum.[23]
The CA deleted the award of consequential damages for failure of
respondents to present substantive evidence that the remaining
unaffected properties had suffered an impairment amounting to
P1,000.000.00. Further, the award of attorney's fees is deleted because
of the lack of proof of malice or bad faith to justify its imposition.[24]
Petitioner moved for the reconsideration of the June 13, 2018 CA Decision, but the same was denied in a Resolution[25] dated January 10, 2019.
The Arguments of the Parties
Petitioner argues that the subject lots were taken after the payment of
the just compensation. Since there was no delay in the payment of the
value of the condemned properties, it asserts that the CA erred in
holding it liable to pay interest at the rate of 12% per annum on the
unpaid balance of the just compensation computed from the time of taking
until July 1, 2013, and thereafter, at the rate of 6% per annum. It
invokes the Court's ruling in the case of Republic v. Soriano[26]
that the payment of legal interest in expropriation cases only applies
when the property was taken prior to the deposit of payment with the
court and only to the extent that there is delay in payment. It further
maintains that assuming, without conceding, that respondents are
entitled to the payment of legal interest, the same should only be at
the rate of 6% per annum in accordance with Article 2209[27]
of the Civil Code.
Respondents, on the other hand, counter that the just compensation in
expropriation cases earns interest and that petitioner is liable
therefor. Citing Evergreen Manufacturing Corp. v. Republic,[28]
they contend that that interest on the unpaid compensation becomes due
if there is no full compensation for the expropriated property, as in
this case where only the initial payment has been made.
The Issue
Whether or not the award of interest on the unpaid compensation is proper.
The Court's Ruling
The petition is denied.
The power of eminent domain of the State is enshrined in Section 9,
Article III of the 1987 Constitution which provides that "no private
property shall be taken for public use without just compensation." While
the power is inherent in nature and deeply ingrained in the exercise of
sovereignty, limitations still exist to cushion the blow to an
individual's right to property. Thus, no less than the Constitution
requires that the purpose of taking must be for public use and that just
compensation must be given to the owner of the private property.[29]
Clearly, the exercise of the right to reassert dominion over a private
property pivots on the recognition of the State's authority to
expropriate or condemn said property and the determination of the amount
and the payment of just compensation, the latter being the crux
of the instant petition.
Jurisprudence defines just compensation as the full and fair equivalent
of the property subject of expropriation. It is ascertained based on the
owner's loss and not the taker's gain. Hence, to recoup the loss
suffered by the owner of the private property, it is essential that the
compensation be just such that the equivalent to be given for the
property to be taken shall be real, substantial, full, and ample.[30] Simply put, the just compensation in condemnation proceedings envisages timely or prompt payment in full of the just compensation as finally determined by the courts.[31] In Republic v. Judge Mupas,[32]
the Court explained that prompt payment must be made to the property
owner so that he may derive income from both the condemned property and
its income-generating potential. This is because the property owner
suffers the immediate deprivation of both his land and its fruits or
income.
As to the manner of payment of the just compensation, Section 4 of
Republic Act (R.A.) No. 8974
[33] instructs:
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:
(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)
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.
In the present case, the findings of the RTC and the CA showed that
after the filing of the expropriation complaint, petitioner deposited
the amounts of P1,559,560.62 and P2,647,050.00 which correspond to 100%
of the cost of the improvements found on the subject lots and 100% of
the value of the subject lots based on its BIR zonal valuation,
respectively Thereafter, a writ of possession was issued in favor of
petitioner. At this juncture, the full and fair equivalent of the
properties have yet to be determined with finality by the court. On
February 22, 2016, the RTC pegged the amount of just compensation at
P7,500.00 per sq. m. or in the total amount of P9,453,750.00, exclusive
of the amount of P1,000,000.00 as consequential damages which petitioner
was directed to pay. Obviously, the amount of petitioner's initial
deposit is much less than that adjudged by the RTC. Hence, petitioner
must pay the difference between the final amount as fixed by the RTC and
the initial payment made by petitioner coupled with legal interest as a
forbearance of money, in line with Evergreen Manufacturing.
Incidentally, the CA did not agree with the amounts fixed by the RTC as
just compensation and ordered that the case be remanded for the proper
determination of just compensation vis-à-vis all the standards for the assessment of the value of properties as provided in Section 5[36]
of R.A. No. 8974. Even so, petitioner must still pay the legal interest
on the difference between the initial payment and the final amount of
just compensation, to be adjudged by the RTC anew. The reason is not
hard to discern. The variance between the final amount as fixed by the
court and the initial payment is part and parcel of the just
compensation that the property owner is entitled from the date of taking
of the properties.
The Court enunciated in
Republic v. Judge Mupas:
[37]
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. Soriano[41]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]
WHEREFORE, in view of the foregoing reasons, the Court DISMISSES the Petition for Review on Certiorari of the Republic of the Philippines, represented by the Department of Public Works and Highways (DPWH) and AFFIRMS
the Decision dated June 13, 2018 and the Resolution dated January 10,
2019 of the Court of Appeals in CA-G.R. CV No. 108050. 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.
SO ORDERED.
Leonen, (Chairperson), Hernando, Inting, and J. Lopez, JJ., concur.
[1] Rollo, 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).
[29] Apo 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).
[31] Evergreen 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.
[35] Republic 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).
[39] Felisa Agricultural Corporation v. National Transmission Corporation, 834 Phil. 861, 874 (2018).
[40] Land 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.
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