G.R. No. 197743, October 18, 2022,
♦ Decision,
Dimaampao, [J]
♦ Separate Opinion,
Caguioa, [J]
♦ Concurring and Dissenting Opinion,
Gaerlan, [J]
♦ Separate Opinion,
Gesmundo, [CJ]
♦ Concurring and Dissenting Opinion,
Lazaro-Javier, [J]
♦ Separate Opinion,
Leonen, [J]
EN BANC
[ G.R. No. 197743. October 18, 2022 ]
HEIRS OF JOSE MARIANO AND HELEN S. MARIANO, REPRESENTED BY DANILO DAVID S. MARIANO, MARY THERESE IRENE S. MARIANO, MA. CATALINA SOPHIA S. MARIANO, JOSE MARIO S. MARIANO, MA. LENOR S. MARIANO, MACARIO S. MARIANO AND HEIRS OF ERLINDA MARIANO VILLANUEVA, REPRESENTED IN THIS ACT BY IRENE LOURDES M. VILLANUEVA THROUGH HER ATTORNEY-IN-FACT EDITHA S. SANTUYO AND BENJAMIN B. SANTUYO, PETITIONERS, VS. CITY OF NAGA, RESPONDENT.
CONCURRENCE and DISSENT
LAZARO-JAVIER,
J.:
Antecedents
The facts relevant to the present second motion for reconsideration are narrated in
Heirs of Mariano v. City of Naga,
G.R. No. 197743, March 12, 2018:
On
July 3, 1954,
Eusebio M. Lopez, Sr., Soledad L. Dolor, Jose A. Gimenez and Eusebio Lopez, Jr. (Lopez, Jr.), as the President, Secretary, Treasurer and General Manager of the
City Heights Subdivision
(Subdivision), respectively, wrote to the mayor of the City of Naga (City),
offering to construct the Naga City Hall within the premises of the Subdivision.
Their letter indicated that the
City Hall would be built on an area of not less than two hectares within the Subdivision,
which would be designated as the open space reserved for a public purpose. The letter, which also indicated the terms of the construction contract, provided that
the City would be free to accept another party's offer to construct the City Hall
if it found the same to be more favorable.
The City's Municipal Board subsequently passed Resolution No. 75, dated July 12, 1954, asking the Subdivision for a bigger area
on which the City Hall would stand. Consequently,
on July 30, 1954, the Subdivision amended its offer and agreed to donate five hectares to the City. The area is a portion of the land registered in the names of Macario Mariano (Macario) and Jose A. Gimenez (Gimenez) under Transfer Certificate of Title (TCT) No. 671
of the Registry of Deeds for Naga City, measuring a total of 22.9301 hectares.
Along with its amended offer to construct the City Hall, the Subdivision specified the terms of its proposal to finance the construction.
The amended offer was signed by Macario and Gimenez
to indicate their "(c)onforme," and by their respective spouses, Irene P. Mariano (Irene) and Rose Fitzgerald De Gimenez (through one Josie A. Gimenez), to indicate their marital consent.
On August 11, 1954, the Municipal Board adopted Resolution No. 89 accepting the Subdivision's offer of donation
and
its proposed contract.
The Resolution also
authorized the City Mayor to execute the deed of donation
on the City's behalf.
The
parties submitted divergent accounts
on what happened
after Resolution No. 89 was passed.
According to the City, the City Mayor of Naga, Monico Imperial (Mayor Imperial), and the registered landowners, Macario and Gimenez, executed a Deed of Donation on August 16, 1954,
whereby
the latter donated five hectares of land
(subject property),
two hectares of which to be used as the City Hall site, another two hectares for the public plaza,
and
the remaining hectare for the public market. By virtue of said Deed,
the
City entered the property and began construction of the government center.
It also declared the five-hectare property in its name for tax purposes. Thereafter, the Land Transportation Office (LTO), the National Bureau of Investigation (NBI), the Department of Labor and Employment (DOLE), the Philippine Postal Corporation (PPC), the Fire Department and other government agencies and instrumentalities entered the same property and built their offices thereon.
In contrast,
petitioners averred
that the
landowners' plan to donate five hectares to the City did not materialize as the contract to build the City Hall was not awarded to the Subdivision.
As early as
August 23, 1954, Lopez, Jr., the Subdivision's General Manager, supposedly wrote to Macario telling him to suspend the signing of the deed of donation
as the Municipal Board could not agree on the specific site where the City Hall would be built. Petitioners alleged that the construction contract was eventually awarded by the Bureau of Public Works (BPW) to a local contractor, Francisco O. Sabaria (Sabaria), who won in a public bidding. Mayor Imperial opposed the award, arguing that he and not the BPW had the authority to initiate the public bidding for the project. The BPW, however, asserted its authority to bid out and award the contract on the ground that national funds would be used for the project. Mayor Imperial and Sabaria litigated the issue, with the former losing before the trial court and subsequently withdrawing his appeal before the CA. Afterwards, the Municipal Board adopted Resolution No. 11 dated January 20, 1959 authorizing the City Mayor to enter into a contract with Sabaria for the construction of the City Hall.
Petitioners claimed
that
on February 5, 1959,
Macario and officers of the Subdivision met with Mayor Imperial
to demand the return of the five-hectare lot
as the condition for the donation was not complied with. Mayor Imperial
purportedly assured
them that the City would buy the property from them. The
purchase, however, did not materialize.
Petitioners alleged that
ten years later,
or
on May 14, 1968, Macario wrote to Lopez, Jr., instructing him to make a follow-up on the City's payment for the subject lot. On December 2, 1971,
Macario died without receiving payment from the City.
In
1976,
a certain Tirso Mariano filed an
action for partition
of Macario's estate. The action was opposed by Macario's widow, Irene, and their adopted children, Jose (Jose) and Erlinda (Erlinda) Mariano. As an offshoot of this action, a petition to annul Jose and Erlinda's adoption was instituted.
Irene died in
1988
. Jose died the following year which was also when his and Erlinda's
adoption was declared valid
and
legal
by the appellate court. In 1994, Irene's marriage to one Rolando Reluccio (Reluccio) was declared bigamous and void ab initio. And after a
protracted litigation,
Jose, then represented by his heirs, and Erlinda were
declared as Irene's heirs
to the exclusion of Reluccio who was also declared to be without right to represent Irene in Macario's estate.
On
March 11, 1997,
the probate court issued
letters of administration
to one of the petitioners herein,
Danilo David S. Mariano (Danilo),
for the administration of Irene's estate. In
September 2003, Danilo demanded upon then City Mayor
of Naga, Jesse M. Robredo,
to vacate and return the subject property
. When
the City did not comply,
petitioners, as heirs of Jose and Erlinda, filed a
Complaint for unlawful detainer
against the City, docketed as Civil Case No. 12334.
The Unlawful Detainer Case
In their
Complaint, filed on February 12, 2004,
petitioners asked the MTC to order the City and all agencies, instrumentalities or offices claiming rights under it, including the LTO, NBI, DOLE, PPC and the Fire Department, to vacate the subject property, shown in the Sketch Plan as Blocks 25 and 26 (LRC) Psd-9674, and to return possession thereof to them. In addition to attorney's fees, they asked the City to pay them a monthly rental of P2.5 million from the date it received the demand to vacate until it surrendered possession, as reasonable compensation for the use of the property.
x x x x
Arguing that the issue involved is
one of ownership,
the City moved to dismiss the complaint for lack of jurisdiction. After the MTC denied the motion on March 22, 2004, the City filed its Answer. The parties subsequently submitted their respective Position Papers and evidence.
x x x x
In its
February 15, 2005 Decision,
the
MTC
gave weight to the Deed of Donation. Nonetheless, it
dismissed the complaint on the ground of lack of jurisdiction.
It reasoned that the City's defense, which
involved a claim of ownership, removed
the issue from the case of
unlawful detainer
. (Emphases supplied)
x x x x
On
appeal to the Regional Trial Court,
the latter
reversed
the first level court and granted the complaint for ejectment. The City and other government offices thereat were
ordered ejected
and
liable
for the
special damages
of back rentals and legal costs.
On
review by the Court of Appeals,
the RTC decision was at first merely modified. However, on
motion for reconsideration,
the Court of Appeals
reversed
the RTC decision and
reinstated the MTC decision
dismissing the case for
lack of jurisdiction.
Issues
There are
two issues
in this second motion for reconsideration:
(i)
the identification of petitioners' true cause of action and remedy; and
(ii)
the proper relief to be awarded to them.
1. Identification of petitioners' true cause of action and remedy
On the
first issue,
the
ponencia
holds that
neither
recovery of physical and/or legal possession and/or ownership
nor
the remedies of ejectment and/or
accion publiciana
and/or
accion reivindicatoria
are petitioners'
true
cause of action and remedy. It rules that the proper cause of action is
inverse expropriation
and the remedy is a
complaint for just compensation
under the
Constitution
itself.
I concur that this is the
proper characterization
of the action below based on the factual allegations in the parties' pleadings and which was established during the actions' original and appellate proceedings. After all, "[i]t is worth reminding that the actual nature of every action is determined by the allegations in the body of the pleading or the complaint itself, not by the nomenclature used to designate the same."
1
2. Proper relief to petitioners
On the
second issue,
the key facts and law are as follows:
One,
the City
did not usurp
the property of petitioners and their predecessors. The City entered, possessed and improved the property on the basis of
its acceptance of the offer to donate
made by petitioners' predecessors. This was the meeting of their minds in the beginning and for some time after.
As regards timelines, this meeting of the minds started on
August 11, 1954
when the City decided to accept the predecessors' offer of donation and contract. From
August 16, 1954,
by the City's own
admission,
the donation was
partially executed
. Starting on
this date,
the City benefitted from the predecessors' property while the
predecessors
were
deprived
of and
lost this property.
As to when the meeting of the minds
came to an end,
the facts are not established.
Petitioners claim that as early as
February 5, 1959,
the predecessors met with the City Mayor to demand the return of the five-hectare lot. This was reiterated almost a decade later, on
May 14, 1968.
Nothing came out of it until the patriarch's death on December 2, 1971.
The
status quo
continued probably because of the internal family disputes that took place from 1976 until the appointment of an administrator on
March 11, 1997.
It took a while for the administrator to collate the properties since only in
September 2003
did the administrator send a notice to vacate and pay damages to the City. On
February 12, 2004,
the unlawful detainer complaint was filed against the City by petitioners.
Two,
just compensation is reckoned from the time of actual taking. The latter occurs when the
property owner
is
deprived of the land.
On the other hand,
just compensation
is defined as:
x x x "the
sum equivalent of the market value
of the property, broadly described as the
price fixed in open market by the seller in the usual and ordinary course
of legal action or competition, or the
fair value of the property as between one who receives and who desires to sell it,
fixed at the time of the
actual taking
by the government." The word "just" is used to emphasize the meaning of the word "compensation" so as to convey the idea that the
equivalent to be rendered for the property to be taken should be real, substantial, full and sample.
The
nature and character of the land
at the
time of taking
is thus the principal criterion in determining just compensation. All the facts as to the
condition of the property and its surroundings,
as well as its
improvements and capabilities,
must be considered. The "just"-ness of the compensation can only be attained by using reliable and actual data as bases in fixing the value of the condemned property.
2
(Emphases supplied)
The
payment of compensation
must also be
timely
and
without delay — at the time of taking
— in order to be
just
. On this score, the Court's pronouncement in
Evergreen Manufacturing Corporation v. Republic,
3
is
apropos:
Again,
just compensation should be made at the time of taking,
and the amount of payment should be the fair and equivalent value of the property. In this case, Republic-DPWH was able to take possession of the Subject Premises even before making a full and fair payment of just compensation because RA 8974 allowed for the possession of the property merely upon the initial payment which forms part of the just compensation. Thus, it is clear that the government has not yet made the full and fair payment of just compensation to Evergreen.
As explained by this Court in Apo Fruits Corporation v. Land Bank of the Philippines,
the rationale for imposing interest on just compensation is to compensate the property owners for the income that they would have made if they had been properly compensated
— meaning
if they had been paid the full amount of just compensation — at the time of taking
when they were deprived of their property. The Court held:
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 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.
The
delay in the payment of just compensation is a forbearance of money.
As such, this is necessarily entitled to earn interest. 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, we stated clearly:
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.
1âшphi1
Thus, when
the taking of the property
precedes the filing of the complaint for expropriation, the Court orders the condemner
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.
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,
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
.
In the present case, Republic-DPWH filed the expropriation complaint on 22 March 2004. As this preceded the actual taking of the property, the just compensation shall be appraised as of this date. No interest shall accrue as the government did not take possession of the Subject Premises. Republic-DPWH was able to take possession of the property on 21 April 2006 upon the agreement of the parties. Thus, a
legal interest of 12%
per annum
on the difference between the final amount adjudged by the Court and the initial payment made shall
accrue from 21 April 2006 until 30 June 2013. From 1 July 2013 until the finality of the Decision of the Court,
the difference between the initial payment and the final amount adjudged by the Court
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.
(Emphases supplied)
Lastly, the
added value brought about by the improvements
in the expropriated property as a result of the expropriation is
discounted
from the amount of just compensation:
x x x
just compensation
refers to the
just and complete equivalent of the loss which the owner of the thing expropriated has to suffer
by reason of the expropriation and is ordinarily determined by
referring to the value of the land and its character at the time it was taken
by the expropriating authority. In fine, just compensation is the "equivalent for the value of the property at the time of its taking. Anything beyond that is more and anything short of that is less, than just compensation.
It means a fair and full equivalent for the loss sustained, which is the measure of the indemnity, not whatever gain would accrue to the expropriating authority."
In other words, the measure of just compensation "is not the taker's gain but the owner's loss."
Accordingly, the
State's obligation to compensate the landowner arises only if the owner suffered a loss
in the hands of the State.
4
(Emphases supplied)
3. Relief in the present case
Applying the facts and the law to determine the proper relief in the present case, I reckon the
date of the actual taking
to be the
same date
when petitioners' predecessors were
deprived of their property.
This was on
August 16, 1954
which the City admitted as the date when it
entered, possessed,
and
started improving
the property. It was on this date that petitioners' predecessors were
deprived
of their property. That the predecessors
consented
and
acquiesced
to this taking does not change the reality that the property was
taken from them
and they
suffered a loss
on this date.
On the amount of
just compensation,
the court below must determine the property's
fair market value
on
August 16, 1954.
This was the
amount of loss
that petitioners' predecessors and, by extension, petitioners suffered. The
fair market value
is the
amount of money
that a motivated seller will be receiving from a motivated buyer.
But since
payment
of just compensation was
not made
on August 16, 1954 and will not be forthcoming until the proceedings in the present case are decided, the property's
fair market value
on
August 16, 1954
will necessarily be
adjusted
according to the terms below:
First.
The property's
fair market value
on
August 16, 1954
must be the
equivalent value of money
at the
time of payment
. For example, the
value of PHP 100.00 on August 16, 1954
will
not be the same
as the
value of PHP 100.00 at the time of payment.
What the
predecessors lost
as say, PHP 100.00 on August 16, 1954, or the
fair market value
of the property on this date, will
not be compensated
by paying them PHP 100.00 or the
same face amount
of fair market value on the date of payment. The
ponencia
ordains that said fair market value must be computed using the formula in
Republic v. Spouses Nocom.
5
However, the fair market value arrived at using said formula, to my mind, does not sufficiently or
justly approximate
the
opportunity cost
of petitioners,
i.e.,
the foregone benefits from the missed opportunity to use the property under dispute—or the monetary value locked therein—for gainful objectives. A computation based on the inflation rate from August 16, 1954 to present would yield a
more equitable resolution
in this regard.
According to the Philippine Inflation Calculator available online,
6
the goods that PHP 100.00 could buy in 1960 would roughly cost PHP 12,307.11 or 12,207.11 % increase at the end of 2020. The cost of inflation must be factored in so that the true value of the loss suffered by the predecessors (or any landowner for that matter) is justly compensated.
Second.
While the
cost of inflation
speaks to justly compensating the
real value of the loss
suffered by the landowner, which is the
matter being compensated
according to our jurisprudence,
legal interest
must also be imposed on the
inflation-adjusted fair market value at the time of actual taking,
since there was a
forbearance of money
as a result of the
delay in the payment of just compensation.
Thus, a legal interest of 12%
per annum
on the
inflation-adjusted fair market value at the time of actual taking
shall
accrue
from
August 16, 1954
until
June 30, 2013.
From
July 1, 2013
until the
finality
of the present
Resolution
of the Court, the
inflation-adjusted fair market value at the time of actual taking
shall
earn legal interest
at the rate of
6%
per annum
.
Thereafter, the
total amount of just compensation
(
i.e.,
the
inflation-adjusted fair market value at the time of actual taking
plus
legal interests) shall
earn legal interest
of
6%
per annum
from the finality of this Resolution until
full payment
thereof.
Finally, the
determination of just compensation, how it is to be computed and from what date it is to be reckoned, should be remanded,
after the Court has finally decided the case, how it is to be computed, and from what date it is to be reckoned,
to the Court of Appeals
under
CA-G.R. SP No. 90547,
instead of the RTC. The
Court of Appeals
can hear evidence and pronounce judgment on this
sole issue,
and should there be a further appeal therefrom, it will be directly to this Court, thus removing a layer of proceedings and delay in forever settling this matter. An
expeditious final settlement
of this matter is
all the more necessary
because the
literal seat of government of Naga City is endlessly imperiled
so long as the issue about
its existence on its heartland
remains unsettled.
Conclusion
THUS,
I vote to
grant
petitioners' second motion for reconsideration, and to
reverse
the Decision dated March 12, 2018 and the Resolution dated July 23, 2018 of the First Division of this Court, in this wise:
1. The order for respondent and all government instrumentalities, agencies, and offices claiming right of possession through and under it to peacefully surrender and deliver to petitioners the physical possession of the land covered by Transfer Certificate of Title. No. 671, including all improvements and structures erected thereon should be
DELETED;
2. The award of monthly rental in favor of petitioners should also be
DELETED;
3. Respondent should be
ORDERED
to pay petitioners just compensation in accordance with the above formula; and
4. The case should be
REMANDED
to the Court of Appeals under CA-G.R. SP No. 90547 for the determination of just compensation. The Court of Appeals should also be
DIRECTED
to resolve it within two months from notice.
Footnotes
1
Mandanas v. Ochoa, Jr.,
835 Phil. 97, 135 (2018).
2
Rebadulla v. Republic,
824 Phil. 982, 995 (2018).
3
Evergreen Manufacturing Corporation v. Republic,
817 Phil. 1048, 1068-1071 (2017).
4
Philippine Veterans Bank v. Bases Conversion and Development Authority,
G.R. No. 217492, October 4, 2021.
5
G.R. No. 233988, November 15, 2021.
6
Philippine Inflation Calculator at https://acesubido.net/ph-inflation-calculator/ (last accessed on August 28, 2022).
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